On November 29, 2018, Canada’s Minister of Foreign Affairs announced sanctions against 17 Saudi Arabian nationals. The individuals have been designated in the regulations made under the Justice for Victims of Corrupt Foreign Officials Act (Sergei Magnitsky Law) (SML).
SML authorizes the government to designate foreign nationals or foreign public officials (or their associates) who, in the government’s view, are responsible for, or complicit in, gross violations of internationally recognized human rights or acts of significant corruption.
In this case, the designations target Saudi Arabian nationals who are, in the government’s view, linked to the murder of journalist Jamal Khashoggi. Designations have previously been made under SML in respect of foreign nationals of Russia, South Sudan, Venezuela and Myanmar.
The designated Saudi Arabian nationals became subject to the asset freeze requirements under the SML regulations. Specifically, the SML regulations prohibit persons in Canada, Canadian-incorporated entities and Canadian citizens outside Canada from:
- Dealing, directly or indirectly, in any property of a designated foreign national
- Entering into or facilitating, directly or indirectly, any financial transaction related to a dealing in property of a designated foreign national
- Providing financial services or any other services to, for the benefit of, or on the direction or order of, a designated foreign national
- Acquiring financial services or any other services for the benefit of, or on the direction or order of, a designated foreign national
- Making available any property to a designated foreign national or to a person acting on his or her behalf.
SML also requires federally and provincially regulated financial institutions to determine on a continuing basis, whether they are in possession or control of property that they have reason to believe is the property of a foreign national designated under the SML regulations. The financial institutions that are subject to this requirement include banks, authorized foreign bank branches, credit unions, trust and loan companies, insurers, securities dealers, and money services businesses.
These institutions must therefore ensure that the new SML designations are incorporated into the sanctions lists against which they conduct customer screening — whether in-house or through a third-party service provider. The Office of the Superintendent of Financial Institutions expects federally regulated financial institutions to screen existing clients’ names against newly designated persons’ names and/or amended names as soon as reasonably possible after initial listing or amendment.
Both federal and provincial financial institutions must report monthly to their principal regulator on whether they hold property of a foreign national designated under the SML regulations. Financial institutions must include any property they hold in respect of the newly designated Saudi Arabian nationals in their next monthly report due on December 17, 2018.
In addition, all persons in Canada and all Canadians outside Canada must report without delay transactions involving the newly designated Saudi Arabian nationals to the Royal Canadian Mounted Police or Canadian Security Intelligence Service.
2018 CANADIAN SANCTIONS: OTHER DEVELOPMENTS
In addition to the designation of Saudi Arabian nationals under SML, the Canadian government made the following changes to Canada’s sanctions regulations in 2018.
New Mali Regulations
On October 10, 2018, new regulations under the United Nations Act implemented the United Nations Security Council’s (UNSC) resolutions on Mali, which include asset freeze, screening and reporting obligations in respect of designated persons.
Amended Libya Regulations
On May 16, 2018, the government published amended regulations under the United Nations Act and the Special Economic Measures Act in respect of Libya.
Part I of the Regulations Implementing the United Nations Resolutions and Imposing Special Economic Measures on Libya (Libya Regulations) implement resolutions of the UNSC not already incorporated into Canadian law.
Part II of the Libya Regulations imposes Canadian special economic measures beyond the measures set out in the UNSC resolutions. The amended Libya Regulations continue to impose asset freeze, screening and reporting obligations in respect on persons designated under specified UN resolutions, as well as in respect of additionally listed persons (none currently published).
Amended North Korea Regulations
On January 11, 2018, the government amended the regulations under the United Nations Act in respect of North Korea. The amended regulations continue to impose asset freeze, screening and reporting obligations in respect of designated persons. They also add a new prohibition against forming, maintaining or operating a joint venture or a cooperative entity with North Korea or with any person in North Korea, and add new goods subject to the prohibitions against the sale or purchase of certain goods to or from North Korea, among other amendments.
Other Designations under SML
On June 25, 2018, the government amended the regulations under the Special Economic Measures Act in respect of Myanmar to include additional designated persons.
On May 30, 2018, the government amended regulations under the Special Economic Measures Act in respect of Venezuela to include additional listed persons.