On March 5, 2014, at the request of Ukraine’s Prosecutor General, the Government of Canada imposed targeted economic sanctions against former Ukrainian President Viktor Yanukovych, members of his family, close associates, and senior officials in his regime pursuant to the Freezing Assets of Corrupt Foreign Officials (Ukraine) Regulations (the “Regulations”) under the Freezing Assets of Corrupt Foreign Officials Act (FACFOA). Canada will freeze the assets of 18 designated persons to facilitate the recovery of misappropriated and embezzled Ukrainian property and to ensure accountability, rule of law, and a transition to democracy in Ukraine.1
Under the Regulations, all persons and entities in Canada, as well as every Canadian outside of Canada, are prohibited from dealing directly or indirectly with any property, wherever situated, that is owned or controlled by a designated person or a person acting on behalf of a designated person, or entering into or facilitating any financial transaction related to a dealing in respect of such property. It is also prohibited to provide financial services or any related services with respect to such property.2
Any person who willfully contravenes or fails to comply with the measures is guilty of an offence and is liable to a fine or to imprisonment or to both.3
In addition, all persons and entities in Canada, as well as every Canadian outside of Canada, must advise the Commissioner of the Royal Canadian Mounted Police (RCMP) if they have reason to believe that they are in possession of any property that is owned or controlled by a designated person, and have any information about a transaction or proposed transaction in respect of such property.4
As with all economic measures of this sort, Canadian-regulated financial institutions have an ongoing duty to search, monitor, freeze, block, and disclose whether they are in possession or control of property that they have reason to believe is owned or controlled by or on behalf of a designated person. The Office of the Superintendent of Financial Institutions Canada (OSFI) expects regulated financial institutions to search their customer records at least on a weekly basis in order to identify financial assets to which the asset freeze applies and identify prohibited financial transactions.5
Please be advised that various members of former President Yanukovych’s regime that are listed as designated persons in the Regulations have considerable interests in the Ukrainian economy. Canadian companies should be cognizant of their Ukrainian customers and commercial relationships, even where transactions occur outside of Ukraine considering that many designated persons have fled the country.