Yesterday, the Canadian government announced new sanctions against Syria which include targeted measures involving the petroleum industry and prohibitions on dealings with additional designated individuals and entities. Canadian businesses that engage in cross-border transactions, including those who do not normally do business involving Syria, should be reviewing the new measures carefully to ensure they are reflected in their compliance programs and screening procedures.
Canada first imposed sanctions against Syria on May 24, 2011 – see our legal alert for an overview of these measures. These included asset freezes and prohibitions against dealings with designated individuals and entities associated with the Syrian regime. On August 13, 2011, additional individuals and entities, including the Commercial Bank of Syria and Syriatel, were added to the list of designated persons under the Canadian sanctions program.
New Petroleum Measures
Yesterday, in response to continuing reports of escalating violence against civilians, Canada amended its sanctions measures to prohibit any person in Canada and any Canadian citizen and entity outside of Canada from engaging in the following activities:
- importing, purchasing, acquiring, carrying or shipping any petroleum or petroleum products, excluding natural gas, that are exported, supplied or shipped from Syria after October 4, 2011;
- providing or acquiring financial or other related services to, from or for the benefit of or on the direction or order of Syria or any person in Syria for the purpose of facilitating the importation, purchase, acquisition, carriage or shipment of any petroleum or petroleum products, excluding natural gas, from Syria;
- making an investment in an entity in Syria that is engaged in the oil industry if that investment involves a dealing in any property, wherever situated, held by or on behalf of Syria, a person in Syria or a national of Syria who does not ordinarily reside in Canada; and
- providing or acquiring financial or other related services to, from or for the benefit of or on the direction or order of Syria or any person in Syria for the purpose of investing in the oil industry in Syria.
New Designated Persons
The amendments also include the addition of 12 entities and 27 individuals to the list of designated persons. These include companies in the investment, financial services, real estate, construction, transportation, media and government sectors in Syria.
Canadian companies are prohibited from engaging in a wide range of dealings with designated persons under Canada’s sanctions regime. Canadians are also subject to reporting requirements in respect of property owned or controlled by designated persons and related proposed or actual transactions.
Financial institutions, including federally-regulated banks and provincial trust and loan companies and securities dealers, are required to monitor and determine on a continuing basis whether they are in possession or control of property owned or controlled by or on behalf of a designated person.
Permits and Exclusions
One may apply for permits to allow activities or transactions to proceed that are otherwise prohibited under these sanctions measures. These are issued at the discretion of the Minister of Foreign Affairs.
These new prohibitions are also subject to the existing exclusions in the Canadian sanctions measures against Syria, including for (i) payments made by or on behalf of a designated person that are due under a contract entered into before the person became a designated person, provided that the payment is not made to or for the benefit of a designated person, (ii) activities engaged in pursuant to an agreement or arrangement between Canada and Syria, and (iii) goods made available by certain international aid agencies for purposes of humanitarian assistance.
Canada’s Economic Sanctions
The increasing use of economic sanctions by Canada and its trading partners, including the United States and the European Union, is significantly raising exposure to financial, operational and reputational risk. It is important for any company doing business internationally to have in place comprehensive internal control measures for compliance with economic sanctions, export controls and related requirements.
These new measures against Syria add 39 parties to the list of designated persons that must be screened for any involvement in your firm’s transactions. Companies should also be reviewing other components of their internal trade control regime, including their compliance manual and processes, employee and executive training programs, internal audit procedures, and their contract review process, to ensure they are fully up to date.
Canada currently imposes trade controls of varying degrees on activities involving the following countries, besides Syria: Belarus, Burma, Cuba, Cote d’Ivoire, Democratic Republic of the Congo, Egypt, Eritrea, Guinea, Iraq, Iran, Lebanon, Liberia, Libya, North Korea, Pakistan, Sierra Leone, Somalia, Sudan, Tunisia and Zimbabwe.