Two recent developments in the Canadian economic sanctions regime are notable for Canadian financial institutions and businesses engaged in international trade: Canada has imposed new sanctions against Venezuela under the Special Economic Measures Act (SEMA) and removed the export ban it had in place against Belarus since 2006.
VENEZUELA SEMA REGULATIONS
The SEMA is the federal legislation through which Canada imposes sanctions on foreign jurisdictions and persons, where the Canadian government is of the opinion that a grave breach of international peace and security has occurred, or when Canada implements a decision of an international organization, other than the United Nations.
On September 22, 2017, the Government of Canada, citing concern over the Government of Venezuela’s “deepening descent into dictatorship”, imposed an asset freeze on 40 Venezuelans identified as key figures in the government of President Nicolas Maduro. More specifically, the Special Economic Measures (Venezuela) Regulations (Venezuela Regulations) prohibit any person in Canada and any Canadian-incorporated entity or a Canadian citizen outside Canada from:
- Dealing in any property owned, held or controlled by persons designated under the Venezuela Regulations or others acting on their behalf
- Entering into or facilitating any transaction related to dealing in property of a designated person
- Providing financial or related services in respect of any dealing in property of a designated person
- Making available any goods to designated persons or others acting on their behalf
- Providing any financial or related services to, or for the benefit of, a designated person.
The Venezuela Regulations require federally and provincially regulated financial institutions, including banks, authorized foreign bank branches, credit unions, trust and loan companies, insurers, securities dealers, and money services businesses, to determine on a continuing basis, whether they are in possession or control of property that is owned, held or controlled by or, on behalf of, a designated person. Further, these financial institutions are required to report monthly to their principal regulator on whether they hold property of a person designated under the Venezuela Regulations.
This monthly reporting obligation was previously limited to the terrorism-related designations and to the Iran and North Korea designations under the United Nations Act. Accordingly, financial institutions must ensure that their upcoming monthly sanctions report to be filed with their regulator reflects the new designations under the Venezuela Regulations. For federally regulated financial institutions, the Office of the Superintendent of Financial Institutions (OSFI) has published a revised version of its Form 590 that is required for the monthly filing.
In an advisory notice dated September 26, 2017, OSFI also reiterated its expectation that federally regulated financial institutions must screen against the designated names on an ongoing basis (at least weekly) and that the screening should extend to beneficial owners of corporate clients where such information is collected under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act.
All transactions involving designated persons under the Venezuela Regulations must also be reported without delay to the Royal Canadian Mounted Police or to the Canadian Security Intelligence Service.
BELARUS REMOVED FROM ACL
On June 20, 2017, Canada’s economic sanctions on Belarus were officially lifted by removing Belarus from Canada’s Area Control List (ACL).
The ACL, made pursuant to the Export and Import Permits Act (EIPA), is a list of countries against which the Canadian government has instituted a complete export prohibition. The export of any goods or technology to a country listed on the ACL is prohibited unless prior authorization has been obtained via the EIPA.
On May 7, 2016, Canada announced its intention to remove Belarus from the ACL, where it had been listed since December 14, 2006. However, the regulatory process to amend the ACL was not completed until June 20, 2017.
North Korea is presently the only country listed on Canada’s ACL.
For an overview of Canada’s sanctions regime, please see our Primer on Canadian Sanctions Legislation.