Canada’s use of economic sanctions over the past year or so has been unprecedented in modern history, with the imposition of over 70 rounds of sanctions measures. Although many of these have focused on Russia and the occupied regions of Ukraine, these recent measures also target Belarus, Iran, Haiti, Sri Lanka and Moldova. On May 17, 2023, the Canadian Senate’s Standing Committee on Foreign Affairs and International Trade (the “Senate Foreign Affairs Committee”) released a report based on its five year legislative review of two of Canada’s legislative sanctions tools, the Justice for Victims of Corrupt Foreign Officials Act (Sergei Magnitsky Law) and the Special Economic Measures Act (collectively, the “Acts”) entitled “Strengthening Canada’s Autonomous Sanctions Architecture” (the “Report”).
The Senate Foreign Affairs Committee proposed 19 recommendations to improve the effectiveness of the Acts and ensure they are “fit for purpose”. The Recommendations cover a wide variety of topics, including improved coordination with allies, greater guidance, fairness and transparency, and recommendations related to the creation of a specialized sanctions bureau which had previously been announced by the Canadian government.
The Report comes at a time where there has been greater scrutiny in the media of Canada’s sanctions regime and, as noted below, right before the launch of a similar exercise by the House of Commons. Scrutiny has been particularly focused on the ever-expanding sanctions targeting Russia in response to its invasion of Ukraine. There have been reports of the implementation and administration of Canadian sanctions causing unintended harm to Canadians and other innocent parties – for example, making it impossible to make child support payments and preventing Canadians who had been teaching abroad in Kazakhstan from transferring their earnings back home, with questions being raised as to how these actions support Canada’s opposition to the Russian invasion.
In this update, we provide an overview of the Report and the Recommendations made by the Senate Foreign Affairs Committee, and discuss how the Canadian government may respond to these Recommendations.
Overview of the Report
The Report is divided into two parts. The first provides an overview of Canada’s legislative regime around sanctions and discusses both international coordination and the objectives of the sanctions regime. In this part, the Report makes six recommendations around the legislative framework, transparency and alignment with international partners. For example, the Report notes that the Canadian government “should always seek to impose autonomous sanctions in concert with its allies” and recommends the implementation of a formal mechanism for this coordination. With regards to transparency, the Report noted the confusion around the fact that there were two acts used to implement Canada’s autonomous sanctions and recommended that the Canadian government “outline objectives associated with a given sanctions regime and clearly communicate those objectives to the public”.
The second part of the Report addresses the administration and enforcement of the Acts. It discusses the $76 million investment announced late last year to establish a specialized sanctions bureau within Global Affairs Canada (“GAC”), noting that this new funding “will mean that Canada’s capacity to implement its sanctions regimes will be more in line with that of its allies”. The Report makes several recommendations regarding this new sanctions bureau, including training of staff and expanding interdepartmental coordination.
Transparency and Communication Concerns
The second part of the Report also addresses Canada’s lack of transparency and ineffective communications in implementing its sanctions. Its recommendations for the Canadian government include:
- The Government of Canada should provide more detailed identifying information on sanctioned individuals and entities in the regulations made pursuant to the [Acts]. The government should also include detailed identifying information in the Consolidated Canadian Autonomous Sanctions List, along with the justifications for listing individuals and entities.
- The Government of Canada should amend the [Acts] to require the government to table in Parliament a detailed annual report on the implementation of Canada’s sanctions regimes. This report could include information on the impact and effectiveness of Canada’s sanctions regimes and the value of frozen assets and blocked transactions under each sanctions regime.
- The Government of Canada should make it a priority to develop and provide the public and the private sector with specific and comprehensive written guidance on the interpretation of Canada’s autonomous sanctions laws and regulations. This guidance should be updated in a regular and timely manner to reflect new regulations made under Canada’s sanctions regimes.
In addition, the Report recommends that the Canadian government evaluate its usage of general permits to exempt certain activities from the application of the sanctions. Other jurisdictions, including the United States and United Kingdom, frequently use these general licences or permits to allow for activities such as winding down transactions with sanctioned parties, humanitarian assistance, and other activities that are not contrary to the objectives of the economic sanctions regimes.
Due Process and Procedural Fairness
The second part of the Report also addresses issues related to due process and procedural fairness. Some of the recommendations here focus on the significant delays encountered by persons who submit permit applications or delisting applications.
The establishment of specific service standards is among the recommendations made to encourage a more predictable response timeline from GAC. The Senate also recommends that persons who are listed or designated under Canada’s sanctions be provided with notice along with an explanation as to why they have been sanctioned, similar to practices in other jurisdictions.
The final recommendation made in the Report is that a sunset clause be implemented for sanctions regimes. The report notes that jurisdictions like the UN and EU include similar mechanisms in sanctions measures, and it helps to ensure that the application of sanctions is not an open-ended exercise – forcing the Canadian government to explicitly make a decision to renew a sanctions regime if it continues to view it as necessary.
The Canadian government has not officially responded to the Report, and it is unlikely that all of the recommendations in the Report will be taken up. Among those that are most likely to be taken up are recommendations calling for increased coordination with allies and recommendations associated with the creation of the new sanctions bureau, both of which align with the Canadian government’s stated priorities for its sanctions regime.
The extent to which the Canadian government may heed the Report’s recommendations regarding increased transparency and guidance, as well as due process and fairness, is more difficult to predict. Notably, a number of similar recommendations were made in the House of Commons Foreign Affairs Committee’s April 2017 report on Canada’s sanctions regimes and have yet to be adopted by the government.
These recommendations take on a much greater significance today given the broader impact of Canada’s rapidly expanding sanctions regimes, and especially in light of recently proposed amendments to the Acts. These include an amendment to implement a rule for the deemed ownership of property held by entities considered to be “controlled” by persons listed under sanctions regulations. As we have discussed in a prior post, in the continued absence of any interpretive guidance, these amendments create additional ambiguity and are out of step with the approaches taken by Canada’s allies, leading to further difficulties for Canadian companies, humanitarian groups, and NGOs. Therefore, even actions taken by the Canadian government that may be intended to bring clarity to the Acts could simply muddy the waters further if not done thoughtfully.
As noted above, this Report also comes as the House of Commons commences its own review of Canada’s sanctions laws. This review, conducted by the House of Commons’ Standing Committee on Foreign Affairs and International Development (“House Foreign Affairs Committee”), commenced on June 1, 2023 and is a five year follow-up study from the House Foreign Affairs Committee’s 2017 report mentioned above.
There will therefore be continued examination of Canada’s sanctions regime, and likely continued pressure on the Canadian government to improve the implementation and administration of its economic sanctions regimes.