SOR/2014-58 March 17, 2014
SPECIAL ECONOMIC MEASURES ACT
Special Economic Measures (Russia) Regulations
P.C. 2014-282 March 17, 2014
Whereas the Governor in Council is of the opinion that the actions of the Russian Federation constitute a grave breach of international peace and security that has resulted or is likely to result in a serious international crisis;
Therefore, His Excellency the Governor General in Council, on the recommendation of the Minister of Foreign Affairs, pursuant to subsections 4(1) to (3) of the Special Economic Measures Act (see footnote a), makes the annexed Special Economic Measures (Russia) Regulations.
SPECIAL ECONOMIC MEASURES (RUSSIA) REGULATIONS
1. The following definitions apply in these Regulations.
« Convention »
“Convention” means the Vienna Convention on Diplomatic Relations, done at Vienna on April 18, 1961.
« personne désignée »
“designated person” means a person who is in Russia, or is a national of Russia who does not ordinarily reside in Canada, and whose name is listed in the schedule.
« ministre »
“Minister” means the Minister of Foreign Affairs.
« pension »
“pension” means a benefit paid under the Old Age Security Act, the Canada Pension Plan or an Act respecting the Quebec Pension Plan, CQLR, c. R-9, any superannuation, pension or benefit paid under or in respect of any retirement savings plan or under any retirement plan, any amount paid under or in respect of the Garnishment, Attachment and Pension Diversion Act or the Pension Benefits Division Act, and any other payment made in respect of disability.
« Russie »
“Russia” means the Russian Federation and includes
- (a) any political subdivision of the Russian Federation;
- (b) the government, and any department, of the Russian Federation or of a political subdivision of the Russian Federation; and
- (c) any agency of the Russian Federation or of a political subdivision of the Russian Federation.
2. A person whose name is listed in the schedule is a person in respect of whom the Governor in Council, on the recommendation of the Minister, is satisfied that there are reasonable grounds to believe is
- (a) a person engaged in activities that directly or indirectly facilitate, support, provide funding for or contribute to the deployment of Russian armed forces to Crimea;
- (b) a former or current senior official of the Government of Russia;
- (c) an associate or family member of a person described in paragraph (a) or (b);
- (d) an entity owned or controlled by, or acting on behalf of, a person described in paragraph (a) or (b); or
- (e) a senior official of an entity described in paragraph (d).
Prohibited transactions and activities
3. It is prohibited for any person in Canada and any Canadian outside Canada to
- (a) deal in any property, wherever situated, held by or on behalf of a designated person;
- (b) enter into or facilitate, directly or indirectly, any transaction related to a dealing referred to in paragraph (a);
- (c) provide any financial or other related service in respect of a dealing referred to in paragraph (a);
- (d) make any goods, wherever situated, available to a designated person; or
- (e) provide any financial or related service to or for the benefit of a designated person.
4. Section 3 does not apply in respect of
- (a) any payment made by or on behalf of a designated person that is 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;
- (b) pension payments to any person in Canada or any Canadian outside Canada;
- (c) any transaction in respect of any account at a financial institution held by a diplomatic mission, if the transaction is required in order for the mission to fulfill its diplomatic functions as set out in Article 3 of the Convention or, if the diplomatic mission has been temporarily or permanently recalled, when the transaction is required in order to maintain the mission premises;
- (d) any transaction to international organizations with diplomatic status, United Nations agencies, the International Red Cross and Red Crescent Movement, or Canadian non-governmental organizations that have entered into a grant or contribution agreement with the Department of Foreign Affairs, Trade and Development;
- (e) any transactions necessary for a Canadian to transfer to a non-designated person any accounts, funds or investments of a Canadian held by a designated person on the day on which that person became a designated person;
- (f) financial services required in order for a designated person to obtain legal services in Canada with respect to the application of any of the prohibitions set out in these Regulations; and
- (g) loan repayments made to any person in Canada, or any Canadian outside Canada, in respect of loans entered into before the coming into force of these Regulations, enforcement of security in respect of those loans, or payments by guarantors guaranteeing those loans.
5. It is prohibited for any person in Canada and any Canadian outside Canada to do anything that causes, assists or promotes, or is intended to cause, assist or promote, any act or thing prohibited under section 3.
Duty to determine
6. Each of the following entities must determine on a continuing basis whether it is in possession or control of property owned or controlled by or on behalf of a designated person:
- (a) authorized foreign banks, as defined in section 2 of the Bank Act, in respect of their business in Canada or banks to which that Act applies;
- (b) cooperative credit societies, savings and credit unions and caisses populaires regulated by a provincial Act and associations regulated by the Cooperative Credit Associations Act;
- (c) foreign companies, as defined in subsection 2(1) of the Insurance Companies Act, in respect of their insurance business in Canada;
- (d) companies, provincial companies and societies, as those terms are defined in subsection 2(1) of the Insurance Companies Act;
- (e) fraternal benefit societies regulated by a provincial Act in respect of their insurance activities and insurance companies and other entities engaged in the business of insuring risks that are regulated by a provincial Act;
- (f) companies to which the Trust and Loan Companies Act applies;
- (g) trust companies regulated by a provincial Act;
- (h) loan companies regulated by a provincial Act;
- (i) entities that engage in any activity described in paragraph 5(h) of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act, if the activity involves the opening of an account for a client; and
- (j) entities authorized under provincial legislation to engage in the business of dealing in securities, or to provide portfolio management or investment counselling services.
7. (1) Every person in Canada and every Canadian outside Canada must disclose without delay to the Commissioner of the Royal Canadian Mounted Police
- (a) the existence of property in their possession or control that they have reason to believe is owned or controlled, directly or indirectly, by a designated person or by an entity owned or controlled by a designated person; and
- (b) information about a transaction or proposed transaction in respect of property referred to in paragraph (a).
(2) No person contravenes subsection (1) by disclosing in good faith under that subsection.
Application to no longer be a designated person
8. (1) A designated person may apply in writing to the Minister to have their name removed from the schedule.
(2) On receipt of the application, the Minister must decide whether there are reasonable grounds to recommend to the Governor in Council that the applicant’s name be removed from the schedule.
(3) The Minister must make a decision on the application within 90 days after the day on which the application is received.
(4) The Minister must give notice without delay to the applicant of the decision taken.
(5) If there has been a material change in circumstances since the last application was submitted, a person may submit another application under subsection (1).
Application for certificate
9. (1) A person claiming not to be a designated person may apply to the Minister for a certificate stating that they are not the person who has been designated under section 2.
(2) If it is established that the person is not a designated person, the Minister must issue a certificate to the applicant within 30 days after the day on which the application is received.
APPLICATION PRIOR TO PUBLICATION
Statutory Instruments Act
10. For the purpose of paragraph 11(2)(a) of the Statutory Instruments Act, these Regulations apply before they are published in the Canada Gazette.
COMING INTO FORCE
11. These Regulations come into force on the day on which they are registered.
(Sections 1, 2 and 8)
1. Sergey Yur’yevich GLAZ’YEV
2. Andrei KLISHAS
3. Valentina Ivanovra MATVIYENKO
4. Yelena Borisovna MIZULINA
5. Dmitry Olegovich ROGOZIN
6. Leonid Eduardovich SLUTSKIY
7. Vladislav Yur’yevich SURKOV
REGULATORY IMPACT ANALYSIS STATEMENT
(This statement is not part of the Regulations or the Order.)
Russia has deployed significant military forces to the Ukrainian province of Crimea, beyond the scope of its basing arrangements with Ukraine and in clear violation of Ukraine’s sovereignty and territorial integrity.
A week before Ukraine’s President, Viktor Yanukovych, was to sign an association agreement and free trade deal with the European Union (the EU) in November 2013, the Ukrainian government unexpectedly announced that it was suspending all preparations to sign the agreement. Instead, President Yanukovych announced that Ukraine would strengthen ties with Russia. Russia had threatened economic sanctions against Ukraine if it signed a deal with the EU.
In response, more than half a million Ukrainians took to the streets to protest. In December 2013, the Ukrainian government announced a deal with Russia that included $15 billion in loans and gas subsidies. This announcement generated a fresh wave of protests. The Yanukovych government used violence and repression in an attempt to suppress the protests. Activists were beaten, kidnapped and tortured. The Russian government encouraged and supported these measures. On three occasions, President Yanukovych flew to Russia to coordinate his actions with Russian President Vladimir Putin.
As the protests escalated, Ukrainian security forces fired on protesters with assault rifles and sniper rifles using live ammunition. On February 20, 2014, alone, more than 80 Ukrainians died and thousands more were injured. On February 22, 2014, the Ukrainian Parliament voted to impeach President Yanukovych. That same night, he fled Kyiv to take refuge in Russia.
The unit most responsible for the February 20, 2014, killings was the Berkut special police unit. Berkut snipers were filmed shooting protesters, including with sniper rifles. On March 1, 2014, Russia announced that it would give Russian citizenship to Berkut officers and, in a public ceremony, presented some with Russian passports.
On February 27, 2014, in Simferopol, the capital of the Ukrainian province of Crimea, uniformed and heavily armed men seized government buildings and the provincial Parliament. They had removed their insignia and were wearing masks, but their uniforms and equipment strongly suggested that they were Russian soldiers. Acting Ukrainian President Turchynov said that he had placed Ukraine’s armed forces on full readiness because of the threat of “potential aggression.”
On February 28, 2014, Russian troops occupied Crimea’s airports and other strategic facilities while more Russian troops arrived by aircraft. Ukraine’s Interior Minister described the situation as a “military invasion and occupation.”
On March 1, 2014, the Russian troop presence intensified at key locations in the province of Crimea. President Putin asked the Russian Parliament for approval to send troops to Ukraine, without limiting the request to Crimea only, saying that troops were needed to protect Russian lives. Parliament granted his request. Ukraine’s interim President Oleksandr Turchynov accused Russia of aggression, saying Moscow was “trying to provoke” Kyiv into an “armed conflict.”
By March 2, 2014, Russia reportedly had more than 6 000 troops in Crimea, and Ukraine appealed for international help. In response, the G7 suspended preparations for the G8 Summit in Sochi, Russia, scheduled for June 2014.
Between March 2, 2014, and March 14, 2014, Russian forces steadily took operational control of the Crimean peninsula, capturing key installations and chokepoints, and increasing their troop presence to an estimated 20 000.
With the Crimean provincial legislature under Russian military control, the legislature’s Speaker announced legislators had passed a vote of non-confidence in the provincial government of Crimea. The Speaker also announced that legislators had voted to appoint Serhiy Aksyonov as the new prime minister of Crimea. On March 6, 2014, the self-appointed Crimean Parliament adopted a resolution declaring its unanimous decision to become part of Russia, and set a referendum on this question for March 16, 2014.
The Special Economic Measures (Russia) Regulations (the Regulations) impose targeted economic sanctions against Russian officials and/or entities responsible for violating international law by violating the sovereignty and territorial integrity of the Ukraine.
These Regulations have been implemented in order to respond to the gravity of the situation in the Ukrainian province of Crimea, which, in the opinion of the Governor in Council, constitutes a grave breach of international peace and security that has resulted or is likely to result in a serious international crisis.
The Schedule to the Regulations establishes a list of seven designated persons. The criteria for listing persons are established in section 2 of the Regulations. The Regulations prohibit any person in Canada and any Canadian outside Canada from
- dealing in any property, wherever situated, held by or on behalf of a designated person;
- entering into or facilitating, directly or indirectly, any transaction related to such a dealing;
- providing any financial or related service in respect of such a dealing;
- making goods, wherever situated, available to a designated person; and
- providing any financial or related service to or for the benefit of a designated person.
Exceptions to the above-noted prohibitions are available for the following:
- Payments made by or on behalf of designated persons pursuant to contracts entered into prior to the coming into force of the Regulations, provided that the payments are not made to or for the benefit of a designated person;
- Pension payments to any person in Canada or any Canadian outside Canada;
- Transactions in respect of accounts at financial institutions held by diplomatic missions, provided that the transaction is required in order for the mission to fulfill its diplomatic functions under the Vienna Convention on Diplomatic Relations, or, transactions required in order to maintain the mission premises if the diplomatic mission has been temporarily or permanently recalled;
- Transactions by international organizations with diplomatic status, agencies of the United Nations, the International Red Cross and Red Crescent Movement, or Canadian nongovernmental organizations that have entered into a grant or contribution agreement with the Department of Foreign Affairs, Trade and Development;
- Transactions necessary for a Canadian to transfer to a non-designated person any accounts funds or investments of a Canadian held by a designated person on the day on which that person became designated;
- Financial services required in order for a designated person to obtain legal services in Canada with respect to the application of any of the prohibitions in the Regulations; and
- Loan repayments made to any person in Canada or any Canadian abroad in respect of loans entered into before the coming into force of the Regulations, enforcement of security in respect of those loans, or payments by guarantors guaranteeing those loans.
A separate Special Economic Measures (Russia) Permit Authorization Order, made pursuant to subsection 4(4) of the Special Economic Measures Act, authorizes the Minister of Foreign Affairs to issue to any person in Canada and any Canadian outside Canada a permit to carry out a specified activity or transaction, or any class of activity or transaction, with a designated person that is otherwise restricted or prohibited pursuant to the Regulations.
The “One-for-One” Rule applies to this proposal, as there are minimal administrative costs to business, because of the reporting requirement. However, the administrative burden associated with these Regulations is carved out from the “One-for-One” Rule as they address unique, exceptional circumstances.
Small business lens
The small business lens does not apply to this proposal, as there are no costs (or insignificant costs) to small business, and small businesses would not be disproportionately affected.
Foreign Affairs, Trade and Development Canada drafted the Regulations in consultation with the Department of Justice and Citizenship and Immigration Canada.
The measures contained in the Regulations demonstrate that Canada is extremely concerned about the situation in Crimea. The measures in the Regulations target individuals in positions of power who are responsible for Russia’s military intervention on the territory of Ukraine, in contravention of Russia’s international obligations.
Implementation, enforcement and service standards
Canada’s sanctions regulations are enforced by the Royal Canadian Mounted Police and the Canada Border Services Agency. In accordance with section 8 of the Special Economic Measures Act, every person who wilfully contravenes these Regulations is liable upon summary conviction to a fine of not more than $25,000 or to imprisonment for a term of not more than one year or to both, or upon conviction on indictment, to imprisonment for a term of not more than five years.
East/Southeast Europe Bilateral and Commercial Relations
Foreign Affairs, Trade and Development Canada
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- Footnote a
S.C. 1992, c. 17