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CANADIAN EXPORT CONTROLS

MORE ENFORCEMENT COMING ON CANADIAN EXPORT SANCTIONS?

Canada, like many of its trading partners has a significant framework of export sanctions, targeting the controlled export of goods and technology to sensitive destinations, governments, and foreign actors worldwide.  Yet, for the duration of my International Law practice to date — some 35+ years — the unspoken joke has been that Canada’s enforcement actions were almost nonexistent, at least relative to the situation in the US.  (Indeed, one needs to look far and wide for caselaw regarding Canadian export controls enforcement).

With the recent trade wars and President Trump‘s desire to strengthen borders, this appears to have changed.  We review a recent Canadian arrest for sanctions evasion below, which may be a harbinger of greater action to come despite the rarity of such cases.

Sanctions Investigation & Arrest

Following a three-year investigation by the Royal Canadian Mounted Police’s (“RCMP”)  Sanctions Unit, the Attorney General of Canada consented to the arrest and prosecution of a Toronto-based individual (the “Accused”) for sanctions violations on May 5, 2025. 

The Accused was charged in relation to Canadian sanctions which prohibit technology trade and exports to Russia, with the goods in question being microelectronic components used in the construction of Russia’s Orlan-10 drones.  The specific offences the Accused has been charged with are the following:

• Export, sell, supply or ship a good referred to in Column 1 of Schedule 7 to Russia, contrary to subsection 3.09(1) of the Special Economic Measures (Russia) Regulations (the "Regulations"), thereby committing an offence contrary to section 8 of the Special Economic Measures Act ("SEMA").
• Export, sell, supply or ship a good referred to in the Restricted Goods and Technologies List to Russia, contrary to subsection 3.06 (1) of the Regulations, thereby committing an offence contrary to section 8 of the SEMA.
• Possess proceeds of property obtained by crime, contrary to subsection 354(1) of the Criminal Code of Canada.

Sanctions Prosecutions A Rarity

The arrest and pending prosecution of the Accused appears to be the first such instance an RCMP investigation has culminated in charges being laid in relation to Canada’s Russian sanctions under SEMA. 

In fact, a review of case law suggests there has only ever been one other prosecution under section 8 of SEMA for a violation of Canadian sanctions, R. v. Kalai, 2020 NSSC 351 (“Kalai”), and the conclusion of that case remains unclear.

The accused in Kalai was charged under section 8 of SEMA for violating section 3.1(c) of the Special Economic Measures (Syria) Regulations, with the allegations being that he made a prohibited investment dealing with property in Syria while he was physically in Canada.  The Crown was ultimately successful in introducing multiple documents into evidence in the pre-trial voir dire.  However,  that is the last and only reported decision in Kalai, which demonstrates the rarity of section 8 SEMA prosecutions prior to May 5, 2025.

Takeaways

When it comes to export controls and other international sanctions, Canada has historically NOT instituted a huge number of prosecutions.  One doubts that is because Canada does not have that problem.  We do!  The recent impetus to strengthen our border may be changing that.  Navigating one’s Export Compliance obligations can be tricky, but experienced International Trade Counsel can help!

For help with navigating export compliance obligations, click here.

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