On October 18, 2017, the Justice for Victims of Corrupt Foreign Officials Act (Sergei Magnitsky Law) (the “Act”) entered into force. The Act gives Canada the ability to impose unilateral sanctions against “foreign nationals” who are involved in corruption or gross violations of human rights.
For years, the Special Economic Measures Act (“SEMA”) has been the primary mechanism by which the Government of Canada (the “Government”) could impose unilateral sanctions against certain individuals and entities. Under SEMA, unilateral sanctions could only be imposed where the Government was of the opinion that a grave breach of international peace and security had occurred that had resulted or was likely to result in a serious international crisis.
The Act broadens the ability of the Government to impose sanctions by specifically identifying the following circumstances:
(a) a foreign national is responsible for, or complicit in, extrajudicial killings, torture or other gross violations of internationally recognized human rights committed against individuals in any foreign state who seek
(i) to expose illegal activity carried out by foreign public officials, or
(ii) to obtain, exercise, defend or promote internationally recognized human rights and freedoms, such as freedom of conscience, religion, thought, belief, opinion, expression, peaceful assembly and association, and the right to a fair trial and democratic elections;
(b) a foreign national acts as an agent of or on behalf of a foreign state in a matter relating to an activity described in paragraph (a);
(c) a foreign national, who is a foreign public official or an associate of such an official, is responsible for or complicit in ordering, controlling or otherwise directing acts of corruption — including bribery, the misappropriation of private or public assets for personal gain, the transfer of the proceeds of corruption to foreign states or any act of corruption related to expropriation, government contracts or the extraction of natural resources — which amount to acts of significant corruption when taking into consideration, among other things, their impact, the amounts involved, the foreign national’s influence or position of authority or the complicity of the government of the foreign state in question in the acts; or
(d) a foreign national has materially assisted, sponsored, or provided financial, material or technological support for, or goods or services in support of, an activity described in paragraph (c).
“Foreign national” is defined broadly to mean an individual who is not (a) a Canadian citizen; or (b) a permanent resident under the Immigration and Refugee Protection Act.
Just over two weeks after the Act came into force, on November 3, 2017, the Government issued the first set of sanctions under the Act through the Justice for Victims of Corrupt Foreign Officials Regulations (the “Regulations”). The Schedule to the Regulations lists 52 foreign nationals from Russia, Venezuela and South Sudan that the Government has identified as being “responsible for, or complicit in, gross violations of internationally recognized human rights or acts of significant corruption.” Listed foreign nationals can be found here.
The Act prohibits the following:
(a) the dealing, directly or indirectly, by any person in Canada or Canadian outside Canada in any property, wherever situated, of the foreign national;
(b) the entering into or facilitating, directly or indirectly, by any person in Canada or Canadian outside Canada, of any financial transaction related to a dealing referred to in paragraph (a); and
(c) the provision by any person in Canada or Canadian outside Canada of financial services or any other services to, for the benefit of or on the direction or order of the foreign national;
(d) the acquisition by any person in Canada or Canadian outside Canada of financial services or any other services for the benefit of or on the direction or order of the foreign national; and
(e) the making available by any person in Canada or Canadian outside Canada of any property, wherever situated, to the foreign national or to a person acting on behalf of the foreign national.
All of the prohibitions above apply to any “person in Canada or Canadian outside Canada”. The Act defines “person” to mean “an individual or an entity”. “Canadian” is defined to mean “a person who is a citizen within the meaning of the Citizenship Act or a corporation incorporated or continued by or under the laws of Canada or of a province.”
Global Affairs Canada, the federal agency tasked with administering Canada’s sanctions regime, has published Backgrounders on its website for each of Russia, Venezuela and South Sudan, identifying the listed foreign nationals that are associated with each country, and the reasons for imposing the sanctions.