The Special Economic Measures
On March 17, 2014, the Canadian Government announced that it intended to impose economic sanctions against Ukraine through the Special Economic Measures (Ukraine) Regulations (the “Ukraine Regulations”). The Ukraine Regulations impose an asset freeze on a list of designated persons.
On April 12, 2014 the list of designated individuals was expanded from 9 to 11. Those designated persons are:
- Serhiy Valeriyovich AKSYONOV
- Volodymyr Andriyovych KONSTANTYNOV
- Viktor Volodymyrovich MEDVEDCHUK
- Rustam Ilmirovich TEMIRGALIEV
- Deniz Valentinovich BEREZOVSKIY
- Aleksei Mikhailovich CHALIY
- Pyotr Anatoliyovych ZIMA
- Yuriy ZHEREBTSOV
- Sergey Pavlovych TSEKOV
- Mikhail MALYSHEV
- Valery MEDVEDEV
The April 12, 2014 amendments also expanded application of the Ukraine Regulations to a designated entity, Chernomorneftegaz. Chernomorneftegaz is a gas company based in the Crimean region.
The Ukraine Regulations prohibit persons in Canada and Canadians abroad from:
- Dealing in any property held by or on behalf of a designated person, or facilitating or providing financial or other related services in respect of such a dealing;
- Making any goods available to a designated person or entity; and,
- Providing any financial or related services to or for the benefit of a designated person.
“Causing, assisting, or promoting” these prohibited activities is also not permitted. There are some exceptions, including the following:
- Payments made by or on behalf of designated persons pursuant to contracts entered to before their designation, provided the payment is not for their benefit;
- Pension payments to any person in Canada or Canadian abroad;
- Certain transactions in respect of diplomatic missions;
- Transactions to UN agencies, the International Red Cross and Red Crescent Movement, and Canadian NGOs in certain circumstances;
- Transactions necessary for a Canadian to transfer to a non-designated person any accounts, funds or investments held by a designated person when that person became a designated person;
- Financial services required in order for a designated person to obtain certain legal services in Canada; and
- Payments to any person in Canada or any Canadian abroad in respect of loans entered into prior to March 17, 2014.
It is worth noting that the Minister of Foreign Affairs does have the power to issue to any person in Canada or a Canadian abroad a permit to carry out any of the activities or transactions that are currently restricted or prohibited by way of the Ukraine Regulations.
Those conducting business in Ukraine, or with Ukrainian business partners outside of Ukraine, may wish to consider implementing incremental processes and procedures to ensure compliance with these new Canadian laws. The economic sanctions imposed on Ukraine have rapidly evolved and ongoing vigilance with respect to developments is the prudent course.