Vol. 149, No. 14 — July 15, 2015
SOR/2015-178 June 29, 2015
SPECIAL ECONOMIC MEASURES ACT
Regulations Amending the Special Economic Measures (Russia) Regulations
P.C. 2015-1040 June 29, 2015
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 Regulations Amending the Special Economic Measures (Russia) Regulations.
REGULATIONS AMENDING THE SPECIAL ECONOMIC MEASURES (RUSSIA) REGULATIONS
1. Part 1 of Schedule 1 to the Special Economic Measures (Russia) Regulations (see footnote 1) is amended by adding the following after item 88:
- 89. Aleksandr DUGIN
- 90. Pavel KANISHCHEV
- 91. Andrey KOVALENKO
2. Part 2 of Schedule 1 to the Regulations is amended by adding the following after item 35:
- 36. Eurasian Youth Union
- 37. JSC Sirius
- 38. JSC Tula Arms Plant
- 39. JSC United Aircraft Corporation
- 40. Marshall Capital Fund
- 41. Night Wolves Motorcycle Club
- 42. OAO JSC Chemcomposite
- 43. OAO Wysokototschnye Kompletski
- 44. OJSC Stankoinstrument
- 45. OPK Oboronprom
3. Schedule 3 to the Regulations is amended by adding the following after item 2:
- 3. OJSC Gazprom
- 4. OJSC Gazprom Neft
- 5. OJSC Surgutneftegas
- 6. Transneft OAO
APPLICATION PRIOR TO PUBLICATION
4. 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
5. These Regulations come into force on the day on which they are registered.
REGULATORY IMPACT ANALYSIS STATEMENT
(This statement is not part of the Regulations.)
The Russian Federation continues to violate the sovereignty and territorial integrity of Ukraine.
Acting in coordination with the United States and the European Union, the Governor in Council has found 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. As a result, the Special Economic Measures (Russia) Regulations were approved on March 17, 2014. Amendments to these Regulations were made on March 19, 2014, March 21, 2014, April 28, 2014, May 4, 2014, May 12, 2014, June 21, 2014, July 24, 2014, August 6, 2014, September 16, 2014, December 19, 2014, and February 17, 2015.
Multiple recent reports indicate significant Russian artillery, tanks and troops along the Russia-Ukraine border, including large convoys crossing the border from Russia into Ukraine with suspected supplies for the Russian-backed insurgents operating in eastern Ukraine. Despite widespread evidence of Russian military presence, weapons and support, Russia continues to deny involvement in the conflict in eastern Ukraine. Ukrainian President Petro Poroshenko stated that 9 000 Russian troops are already inside eastern Ukraine.
There has been a significant escalation in the number and intensity of attacks in eastern Ukraine in recent weeks, resulting in the highest level of violence since the February 12, 2015, “Package of Measures for the Implementation of the Minsk Agreements.” Flare-ups have occurred not only around Donetsk City airport (a regular hotspot), but also increasingly in nearby cities such as Mariinka, 30 km west of Donetsk. On June 3, 2015, Russian-backed forces mounted a major but unsuccessful assault on Mariinka. In the south, the Mariupol area remains a concern. The suburb of Shyrokyne has been a particular hotspot, with the Organization for Security and Cooperation in Europe (OSCE) Special Monitoring Mission unable to visit the city between May 14 and June 9, 2015, due to escalating violence.
A meeting among Foreign Affairs ministers of “Normandy format” countries (Ukraine, Russia, Germany, France) in Berlin on April 13, 2015, yielded little progress on implementation of Minsk commitments, beyond an agreement to establish working groups on humanitarian assistance, security issues, the political process and economic reconstruction in eastern Ukraine. The four working groups created under the “Trilateral Contact Group” of Russia, Ukraine and the OSCE have met three times in Minsk since mid-May 2015, but have not yielded tangible results. There are also reports of non-attendance and disruptive behaviour of Russian delegates in the Trilateral Contact Group and its working groups.
At the G7 Leaders Summit in Schloss Elmau, Germany, on June 7 and 8, 2015, leaders reiterated their condemnation of Russia’s illegal annexation of the Crimean peninsula and reaffirmed their policy of non-recognition of Crimea. Leaders also indicated that the duration of sanctions should be clearly linked to Russia’s complete implementation of the Minsk Agreements and respect for Ukraine’s sovereignty, and that sanctions could be rolled back only when Russia met these commitments. Leaders affirmed readiness to take further restrictive measures in order to increase the cost on Russia if required. Leaders further called on Russia to stop trans-border support for separatist forces and to ensure that separatists meet their Minsk commitments in full.
According to the United Nations, over 6 400 people have been killed in eastern Ukraine since violence began in April 2014. It is estimated that 5.2 million Ukrainians live in conflict-affected areas; 1.3 million people are reported to be internally displaced (97% from the eastern regions of Ukraine); and 640 000 have fled to neighbouring countries.
Canada believes that a firm and united response to Russian aggression in Ukraine continues to be essential. Canada continues to maintain pressure on Russia to adhere to the Minsk Agreements and respect Ukraine’s sovereignty and territorial integrity.
The Regulations Amending the Special Economic Measures (Russia) Regulations (the Regulations) amend the Special Economic Measures (Russia) Regulations by adding 3 individuals and 10 entities to Schedule 1 and 4 entities to Schedule 3.
The Regulations add 3 individuals and 10 entities to the list of designated persons in Schedule 1 of the Special Economic Measures (Russia) Regulations. Any person in Canada and any Canadian outside Canada are prohibited from
- dealing in any property, wherever situated, held by or on behalf of a designated person whose name is listed in Schedule 1;
- 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 listed in Schedule 1; and
- providing any financial or related service to or for the benefit of a designated person listed in Schedule 1.
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 non-governmental organizations that have entered into a grant or contribution agreement with Foreign Affairs, Trade and Development Canada;
- 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.
In addition, the Regulations also add four entities to the list of designated persons in Schedule 3 of the Special Economic Measures (Russia) Regulations. It is prohibited for any person in Canada and any Canadian outside Canada to transact in, provide financing for or otherwise deal in new debt of longer than 90 days’ maturity, including bonds, loans, debentures, extensions of credit, loan guarantees, letters of credit, bank drafts, bankers’ acceptances, discount notes, treasury bills, commercial paper and other similar instruments, in relation to
- a designated person listed in Schedule 3;
- the property of a designated person listed in Schedule 3; or
- the interests or rights in property of a designated person listed in Schedule 3.
The prohibition noted above does not apply in respect of a loan that was made or a bond or debenture that was issued before the designated person was listed in Schedule 3.
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 Canada’s concern about the continuing violation of Ukraine’s sovereignty and territorial integrity.
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 (SEMA), every person who wilfully contravenes the Regulations under the SEMA 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.
Eastern Europe and Eurasia Division
Foreign Affairs, Trade and Development Canada
125 Sussex Drive