Vol. 151, No. 23 — November 15, 2017

Registration

SOR/2017-233 November 3, 2017

JUSTICE FOR VICTIMS OF CORRUPT FOREIGN OFFICIALS ACT (SERGEI MAGNITSKY LAW)

Justice for Victims of Corrupt Foreign Officials Regulations

P.C. 2017-1346 November 2, 2017

Whereas the Governor in Council is of the opinion that one or more of the circumstances described in subsection 4(2) of the Justice for Victims of Corrupt Foreign Officials Act (Sergei Magnitsky Law) (see footnote a) have occurred;

Therefore, Her Excellency the Governor General in Council, on the recommendation of the Minister of Foreign Affairs, pursuant to sections 4 and 14 of the Justice for Victims of Corrupt Foreign Officials Act (Sergei Magnitsky Law) (see footnote b), makes the annexed Justice for Victims of Corrupt Foreign Officials Regulations.

Justice for Victims of Corrupt Foreign Officials Regulations

List

Listed foreign national

1 An individual whose name is listed in the schedule is a foreign national who, in the opinion of the Governor in Council, has committed an act set out in subsection 4(2) of the Justice for Victims of Corrupt Foreign Officials Act (Sergei Magnitsky Law).

Prohibitions

Prohibited activities

2 It is prohibited for any person in Canada or any Canadian outside Canada to engage in any activity set out in paragraphs 4(3)(a) to (e) of the Justice for Victims of Corrupt Foreign Officials Act (Sergei Magnitsky Law).

Application Before Publication

Statutory Instruments Act

3 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

Registration

4 These Regulations come into force on the day on which they are registered.

SCHEDULE

(Section 1)

Foreign Nationals

REGULATORY IMPACT ANALYSIS STATEMENT

(This statement is not part of the Regulations or the Order.)

Issues

A number of incidents of gross violations of internationally recognized human rights and acts of significant corruption have occurred in countries around the world. The individuals responsible for or complicit in those acts have not been held accountable. Instead, such persons have, in many cases, profited from those acts. The Government of Canada has made the Justice for Victims of Corrupt Foreign Officials Regulations (the Regulations) as a means of combatting the impunity of those responsible for or complicit in human rights abuses and acts of significant corruption.

Background

The Justice for Victims of Corrupt Foreign Officials Act (Sergei Magnitsky Law) is a new legislation that allows the Governor in Council (GIC) to make orders and regulations to restrict dealings in property and freeze the assets of listed foreign nationals, if the GIC is of the opinion that the circumstances described below have occurred:

Related amendments to the Immigration and Refugee Protection Act render persons, other than permanent residents, who are subject to orders and regulations made under the new Act inadmissible to Canada.

Listed persons are not listed in the Act itself. The Governor in Council, pursuant to subsection 4(1) of the Act, makes these Regulations in order to list foreign nationals and thus give effect to the prohibitions in subsection 4(3) of the Act.

At present, the Regulations include the names of 52 foreign nationals who, in the opinion of the Governor in Council are responsible for or complicit in gross human rights violations or acts of significant corruption as set out below.

In the years since the detention and death of Sergei Magnitsky, Canada has expressed deep concern about his case. Sergei Magnitsky, a Russian lawyer and accountant, died in a Russian prison, after seeking to expose illegal activity carried out by public officials in Russia. Magnitsky had uncovered an alleged $230 million tax fraud by Russian public officials and was subsequently detained without trial for almost a year. In the course of his year-long incarceration, Magnitsky was subjected to inhumane conditions and denied urgently required medical care. His mistreatment led to his death. The Regulations include a list of foreign nationals who, in the opinion of the Governor in Council, are responsible for or complicit in the gross violations of Mr. Magnitsky’s human rights. The Regulations also list public officials, or their associates, responsible for or complicit in acts of significant corruption that Mr. Magnitsky sought to expose.

Canada has also expressed concern with respect to the numerous incidents of gross abuses of human rights and acts of significant corruption associated with the current economic and political crises in Venezuela. The Regulations also list individuals in Venezuela who, in the opinion of the Governor in Council, are responsible for or complicit in acts of significant corruption including incidents of money laundering and public officials diverting state revenues for personal use. Examples of individuals listed for gross violations of internationally recognized human rights include

On September 22, 2017, Canada imposed targeted autonomous sanctions under the Special Economic Measures Act on 40 senior officials, including President Maduro, in response to the increasing authoritarianism of the state. Listings under the Justice for Victims of Corrupt Foreign Officials Regulations are in addition to listings under the Special Economic Measures (Venezuela) Regulations.

Canada is deeply concerned with the actions of certain individuals who have played a role in worsening the situation in South Sudan. The country is facing unprecedented food insecurity. Lack of access to those in need and violence against humanitarian workers and civilians has reached alarming levels. The Regulations also list foreign public officials who, in the opinion of the Governor in Council, are responsible for or complicit in acts of significant corruption in South Sudan, gross violations of human rights, or both. Examples include

These listings are in addition to individuals listed under the Special Economic Measures (South Sudan) Regulations and designated under the United Nations Act with respect to South Sudan.

Objectives

The main objectives of the Regulations are

  1. to signal Canada’s international condemnation of the individuals responsible for or complicit in the gross violations of internationally recognized human rights and acts of significant corruption that occurred in the case of Sergei Magnitsky and that continue to occur in Venezuela and in South Sudan;
  2. to end impunity for those responsible for or complicit in these acts by denying such individuals the ability to store their wealth in Canada or otherwise use Canada and the Canadian financial system for their benefit; and
  3. 3. to establish a mechanism to list individuals in the future through amendments to the Regulations.

Description

The Regulations provide the regulatory basis for listing foreign nationals under the newly created Justice for Victims of Corrupt Foreign Officials Act (Sergei Magnitsky Law).

Pursuant to the Regulations, it is prohibited for any person in Canada or any Canadian outside Canada to engage in any activity set out in paragraphs 4(3)(a) to (e) of the Act, including

For example, if a listed foreign national has money in a bank account in Canada, the Canadian bank would be prohibited from providing this person with any financial services related to these assets, thereby freezing the assets of the listed foreign national in Canada.

Fifty-two listed foreign nationals are found in the Schedule of the Regulations because the Governor in Council is of the opinion that they are responsible for or complicit in at least one of the acts described below:

The Justice for Victims of Corrupt Foreign Officials Act Permit Authorization Order accompanies the Regulations, pursuant to subsection 4(4) of the Act. This authorizes the Minister of Foreign Affairs to issue to any person in Canada and Canadian outside Canada a permit to carry out a specified activity or transaction, or any class of activity or transaction, that is otherwise prohibited under the Act or under the Regulations. It also authorizes the Minister to issue a general permit to allow any person in Canada and any Canadian outside Canada to carry out a class of activity or transaction that is otherwise prohibited under the Act or under the Regulations.

The Immigration and Refugee Protection Act renders inadmissible to Canada persons, other than permanent residents, subject to orders and regulations made under the new Act. Therefore, the individuals listed in the Regulations are inadmissible to Canada.

“One-for-One” Rule

The circumstances that have triggered these Regulations are of an exceptional nature; in some cases they related to crisis situations and require a unique response. These Regulations are made to address these exceptional circumstances and therefore fit within the circumstances in which the application of the “One-for-One” Rule would be inappropriate or unworkable. The Regulations are therefore exempted from the application of the “One-for-One” Rule.

Small business lens

The small business lens does not apply to this proposal, as small businesses would not be disproportionately affected by the Regulations and the nationwide impacts of the Regulations are not expected to exceed $1 million annually. While the Regulations may result in small businesses forgoing opportunities with the individuals listed in these Regulations, or may incur costs related to seeking sanctions-related legal counsel, including permit request, for the vast majority of small businesses, these Regulations will have no costs.

Consultation

Public consultation on the Regulations would not be appropriate, as publicizing the list of individuals targeted by sanctions could result in asset flight prior to the coming into force of the Regulations.

Rationale

The Government of Canada has articulated its commitment to the promotion and advancement of human rights. Canada has a robust toolkit to address human rights issues that includes engagement and dialogue bilaterally and multilaterally. Canada will stand for its values and speak out against human rights violations and abuses, wherever they have occurred.

Significant acts of corruption have the ability to undermine the rule of law and destroy public trust. Although the global community and national governments have made strides in addressing the problem, unchecked corruption will continue to produce its nefarious effects. Corruption also skews competition, impedes investment and trade, and distorts resource allocation.

Canada condemns the gross violations of human rights and acts of significant corruption that occurred in the case of Sergei Magnitsky, that continue to occur in Venezuela as the government there suppresses opposition voices, and that are occurring in South Sudan. To that end, Canada has listed individuals responsible for or complicit in these activities in order to take actions against those individuals. By directly imposing prohibitions on dealings with those individuals, Canada can deny these individuals the ability to store their wealth in Canada, or otherwise use Canada and the Canadian financial system for their benefit, or to enter into Canada. These measures are not directed at the states of which these individuals are nationals. These measures are targeted such that there should not be a significant impact on Canadian business activities.

Implementation, enforcement and service standards

Canada’s sanction regulations are enforced by the Royal Canadian Mounted Police and the Canada Border Services Agency. In accordance with section 11 of the Justice for Victims of Corrupt Foreign Officials Act (Sergei Magnitsky Law), every person who willfully contravenes the 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 or not more than five years.

Contact

Cory Anderson
Director
Economic Policy and Analysis Division
Global Affairs Canada
125 Sussex Drive
Ottawa, Ontario
K1A 0G2
Telephone: 343-203-3277
Email: Cory.Anderson@international.gc.ca