Vol. 150, No. 7 — April 6, 2016
SOR/2016-50 March 18, 2016
SPECIAL ECONOMIC MEASURES ACT
Regulations Amending the Special Economic Measures (Russia) Regulations
P.C. 2016-134 March 18, 2016
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 Paragraph 2(d) of the Special Economic Measures (Russia) Regulations (see footnote 1) is replaced by the following:
- (d) an entity owned or controlled by, or acting on behalf of, a person described in paragraph (a), (b) or (c); or
2 Part 1 of Schedule 1 to the Regulations is amended by adding the following after item 91:
- 92 Eduard IOFFE
- 93 Aleksander OMELCHENKO
3 Part 2 of Schedule 1 to the Regulations is amended by adding the following after item 45:
- 46 Inresbank LLC
- 47 JSCB Mosoblbank OJSC
- 48 OAO Volgogradneftemash
- 49 Izhevsky Mekhanichesky Zavod JSC
- 50 JSP SPA Izhmash
- 51 JSC Technopromexport
- 52 Technodinamica Holding, JSC
- 53 JSC Tecmash (also known as Tehmash)
- 54 Ruselectronics, JSC
- 55 Shvabe Holding, JSC
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 (U.S.) and the European Union (EU), 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 (the Russia Regulations) were approved on March 17, 2014. Amendments to the Russia 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, February 17, 2015, and June 29, 2015.
Canada and fellow G7 partners reiterated their condemnation of Russia’s illegal annexation of the Crimean peninsula and reaffirmed their policy of non-recognition of Crimea at the G7 Leaders Summit, in Schloss Elmau, Germany, in June 2015. They 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 further affirmed readiness to take further restrictive measures in order to increase the cost on Russia if required, and called on Russia to both stop trans-border support for separatist forces and ensure that separatists meet their Minsk commitments in full.
Since Canada’s last amendments to the Russia Regulations on June 29, 2015, Russia has continued to play a destabilizing role in Ukraine, but denies that it bears responsibility for the conflict. This stance has serious consequences for the implementation of a number of Minsk protocols aimed at ensuring the security and sovereignty of Ukraine, as does Russia’s continued support to separatists operating in Ukraine’s Donetsk, Luhansk and Crimea regions. In particular, Russia has failed to make any significant progress on disarming illegal groups, relinquishing control over the Ukrainian side of the border, and withdrawing armed formations, equipment and mercenaries.
The duration of sanctions by Canada and our like-minded partners has been explicitly linked to the complete implementation of the Minsk agreements by all parties. With the expectation that the Minsk agreements would not be fully implemented by the December 31, 2015, deadline, the European Council has recently prolonged EU economic sanctions against Russia until July 31, 2016. Recent actions were also taken by the United States in their December 22, 2015, announcement of a package of measures designed to maintain the efficacy of existing sanctions. The U.S. actions reflect a continued effort to counter attempts to circumvent sanctions and to align measures with international allies.
The work within the “Normandy Four” format (France, Germany, Russia and Ukraine) and the Trilateral Contact Group (the Organization for Security and Cooperation in Europe [OSCE], Russia and Ukraine) continues. On December 30, 2015, Normandy format leaders reaffirmed their commitment to a ceasefire in eastern Ukraine, among other Minsk measures. However, much remains to be done toward achieving concrete results and the situation in eastern Ukraine remains tense and volatile. In recent weeks, the Special Monitoring Mission (SMM) of the OSCE has reported on the difficulties encountered in maintaining a tenable ceasefire between Ukraine and the Russian-backed separatists. The separatists continue to receive Russian support, including the suspected provision of supplies delivered by large convoys which cross the border from Russia into Ukraine.
Ceasefire violations and skirmishes increased in December, 2015, and occur on a near daily basis in the Donetsk and Luhansk regions of eastern Ukraine. The SMM has noted concerns over live-fire exercises, shelling in separatist-controlled areas by multiple launch rocket systems, as well as a mounting number of tragic incidents involving mines and unexploded ordnance along the line of contact. Russian-backed separatist insurgents frequently deny OSCE SMM observers access to areas under their control.
The cost of the conflict in human terms is high. The United Nations (UN) has recorded at least 29 830 casualties (Ukrainian armed forces, civilians and members of the armed groups) in the armed conflict area of eastern Ukraine from mid-April 2014 to mid-November 2015, including at least 9 098 killed and 20 732 injured. As of November 15, 2015, the Ministry of Social Policy of Ukraine had registered 1 578 925 internally displaced persons throughout Ukraine. Actual numbers are widely judged to be much higher.
The Regulations Amending the Special Economic Measures (Russia) Regulations (the Regulations) amend the Special Economic Measures (Russia) Regulations by adding 2 individuals and 10 entities to Schedule 1. The Regulations also expand the category of entities that may be listed in Schedule 1.
These measures are being taken to align with recent actions taken by international partners, to underscore continued trans-Atlantic unity in responding to Russia’s actions in Ukraine, to maintain pressure on Russia to fully implement its Minsk commitments, and to demonstrate our commitment to a policy of non-recognition of Russia’s illegal annexation of Crimea.
The Regulations add 2 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 Global Affairs 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.
The Regulations also amend paragraph 2(d) to enlarge the category of entities to include those that are owned or controlled by, or acting on behalf of an associate or family member of a person described in paragraph (a) or (b). This amendment allows such entities to be directly listed under Schedule 1 and maintains the pressure that existing sanctions exert on persons described in paragraph 2(c).
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) imposed on small business, and small businesses would not be disproportionately affected.
Global Affairs Canada drafted the Regulations in consultation with the Department of Justice Canada and Immigration, Refugees and Citizenship 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 Special Economic Measures (Russia) 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
Global Affairs Canada
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