The Canadian government can and does impose sanctions against foreign States and non-state entities through a complex formula involving several different Acts and regulation sets. Navigating through this myriad of rules can be daunting.
Overview of Canada’s Sanctions Regime
Global Affairs Canada is the overall regulator of Canadian sanctions, and has just released some long-awaited clarifications on the scope of Canada’s current sanctions, which comes in response to the Canadian Senate’s 2023 Standing Committee Report on Foreign Affairs and International Trade.
The recommendations followed a five-year review of Canada’s sanctions regime, its legislative framework, application tools and associated regulations. Unfortunately for Global Affairs, the Report both noted that Canada’s economic sanctions have dramatically increased in recent years (due to the recent sanctioning of Russia for its war on Ukraine), AND characterized some of Canada’s other sanctions as “overreaching” and “vague” – harming trade and catching a number of innocent Canadians in their crossfire.
Finer Detail
Canada imposes its sanctions through regulations under three main pieces of legislation: the United Nations Act, the Special Economic Measures Act and the Justice for Victims of Corrupt Foreign Officials Act (the “Acts”). However, enforcing these regulations requires the application of several other pieces of legislation, including the Criminal Code, the Export and Import Permits Act, the Freezing Assets of Corrupt Foreign Officials Act, and the Immigration and Refugee Protection Act.
There are five (5) main types of sanctions in Canada’s rule set: export and import restrictions, arms embargos, technical assistance prohibitions, asset freezes and financial prohibitions. However, the broad language in the various legislation and regulations often creates challenges for compliance.
Global Affairs Canada Clarifications
Global Affairs recent clarifications were aimed at clarifying two types of prohibitions, namely dealing “in any property, wherever situated, held by or on behalf of a designated person”, and “entering into or facilitate[ing], directly or indirectly, any transaction related to such a dealing.”
Global Affairs has provided some clarifications to the following four FAQs on its website:
1. Can I deal with an entity that deals with a designated person?
2. Can I deal with the subsidiaries of a designated company?
3. What happens when a person is designated?
4. When does a prohibition apply?
Best Practices
Best practices in this area really require local and specialized legal advice. Canada’s sanctions regime is complex and dynamic. Staying informed and seeking the advice that is called for is probably a better bet than unintentionally violating any of these rules, as the consequences of non-compliance can include heavy fines and, in some cases, a stay at the local crow-bar hotel.