Canada: Canada Hits The Crimea Region With Economic Sanctions And Adds 17 Parties To Its Russia Sanctions Blacklist

Today, Canada significantly expanded its economic sanctions against Russia by imposing a wide ban on activities related to the Crimea region, including export, import, technical data and services bans. With these latest amendments, Canada joins the United States and European Union in implementing Crimea-related broad economic sanctions measures.

Today's new measures also add 17 entities and individuals to the lists of designated (i.e., blacklisted) persons under the Special Economic Measures (Russia) Regulations (the "Russia Regulations"). As a result, there are now 290 entities and individuals blacklisted under Canada's Russia and Ukraine-related sanctions.

Canadian companies doing business abroad should be carefully reviewing and revising their trade control compliance procedures to reflect these latest changes.

Broad Economic Sanctions Against the Crimea Region

These new sanctions measures, an unofficial version of which can be accessed here, amend Canada's Special Economic Measures (Ukraine) Regulations (the "Ukraine Regulations") by prohibiting persons in Canada and any Canadians outside Canada from engaging in any of the following with respect to the Crimea region of Ukraine:

1. making an investment in the region that involves a dealing in any property located in the region that is held by or on behalf of the region or a person in the region;
2. providing or acquiring financial or other related services to, from or for the benefit of or on the direction or order of the region or any person in the region for the purpose of making such an investment;
3. importing, purchasing, acquiring, shipping or otherwise dealing in goods, wherever situated, that are exported from the region after the day on which these measures come into force;
4. export, sell, supply, ship or otherwise deal in goods, wherever situated, destined for the region or any person in the region;
5. transferring, providing or communicating technical data or services to, from or for the benefit of or on the direction or order of the region or any person in the region;
6. providing or acquiring financial or other services related to tourism to, from or for the benefit of or on the direction or order of the region or any person in the region; and
7. docking a cruise ship in the region that is registered or licensed, or for which an identification number has been issued, pursuant to any Act of Parliament.

If a contract for a prohibited activity described above was entered into before these measures came into force, there is an exemption from the particular prohibition. The Ukraine Regulations have also been amended to define the Crimea region of Ukraine as "the Autonomous Republic of Crimea and the city of Sevastopol and includes their land areas and territorial sea."

Because the Crimea region is not a recognized country (and may not commonly appear in address or location information), companies may encounter significant challenges in monitoring their international activities to ensure they are compliant with these new restrictions.

Newly Designated Persons Under Canada's Russia Sanctions

An amendment to the Russia Regulations also adds 13 parties to the Schedule 1 list of designated persons that are subject to very broad sanctions measures. No person in Canada and no Canadian outside Canada may engage in any of the following activities with such designated persons:

1. dealing in any property, wherever situated, held by or on behalf of such designated persons;
2. entering into or facilitating, directly or indirectly, any transaction related to such a dealing;
3. providing any financial or other related service in respect of such a dealing;
4. making any goods, wherever situated, available to such designated persons; and
5. providing any financial or related service to or for the benefit of such designated persons.

These restrictions now apply to the following individuals and entities that have been added to the Schedule 1 list:

The Russia Regulations have also been amended to add four energy sector companies - OJSC Gazprom, OJSC Gazprom Neft, OJSC Surgutneftegas, and Transneft OAO – to Schedule 3 of the Russia Regulations. These and other entities listed in Schedule 3 are subject to significant debt financing restrictions. Specifically, persons in Canada and any Canadians outside Canada are prohibited from transacting in, providing financing for or otherwise dealing in new debt of longer than 90 days' maturity (including bonds, loans, debentures, extensions of credit, loan guarantees, letters of credit, bank drafts, bankers' acceptances, discount notes, treasury bills, commercial paper and other similar instruments) in relation to:

1. these Schedule 3 entities;
2. their property; or
3. the interests or rights in their property.

Impact on Canadian Firms Doing Business Abroad

Today's amendments, along with recently intensified enforcement efforts by the Canada Border Services Agency, the Royal Canadian Mounted Police and authorities in other jurisdictions, highlight the need for careful due diligence in conducting business activities abroad.

At the present time, Canada imposes trade controls of varying degrees on activities involving the following countries (and over 2,000 listed entities and individuals associated with them): Belarus, Burma (Myanmar), the Central African Republic, Côte d'Ivoire, Cuba, the Democratic Republic of the Congo, Egypt, Eritrea, Guinea, Iran, Iraq, Lebanon, Liberia, Libya, North Korea, Pakistan, Russia, Somalia, South Sudan, Sudan, Syria, Tunisia, Ukraine, Yemen and Zimbabwe. Any involvement of these countries or any designated person in proposed transactions or other activities should raise a red flag for further investigation to ensure compliance with export and technology transfer controls and economic sanctions.

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