Regulations Amending the Special Economic Measures (Ukraine) Regulations: SOR/2022-202
Canada Gazette, Part II, Volume 156, Number 21
SOR/2022-202 September 29, 2022
SPECIAL ECONOMIC MEASURES ACT
P.C. 2022-1049 September 29, 2022
Whereas the Governor in Council is of the opinion that the situation in Ukraine constitutes a grave breach of international peace and security that has resulted in a serious international crisis;
Therefore, Her Excellency the Governor General in Council, on the recommendation of the Minister of Foreign Affairs, makes the annexed Regulations Amending the Special Economic Measures (Ukraine) Regulations under subsections 4(1)footnote a, (1.1)footnote b, (2)footnote c and (3) of the Special Economic Measures Act footnote d.
Regulations Amending the Special Economic Measures (Ukraine) Regulations
1 (1) The definitions DNR region of Ukraine and LNR region of Ukraine in section 1 of the Special Economic Measures (Ukraine) Regulations footnote 1 are repealed.
(2) Section 1 of the Regulations is amended by adding the following in alphabetical order:
- occupied region
- (a) the so-called Donetsk People’s Republic and the territory it controls in the Donetsk oblast of Ukraine;
- (b) the so-called Luhansk People’s Republic and the territory it controls in the Luhansk oblast of Ukraine;
- (c) the area of the Kherson oblast of Ukraine that is illegally occupied by the Russian Federation; and
- (d) the area of the Zaporizhzhia oblast of Ukraine that is illegally occupied by the Russian Federation. (région occupée)
2 Paragraph 4.1(f) of the French version of the Regulations is replaced by the following:
- f) de fournir à cette région ou à une personne qui s’y trouve des services financiers ou autres liés au tourisme ou encore, d’acquérir de tels services à l’égard d’activités touristiques dans cette région;
3 Section 4.2 of the Regulations is replaced by the following:
Prohibited activities — occupied regions
4.2 It is prohibited for any person in Canada and any Canadian outside Canada to
- (a) make an investment that involves a dealing in any property located in an occupied region that is owned — or that is held or controlled, directly or indirectly — by a person in an occupied region;
- (b) provide or acquire financial or other related services with respect to an investment referred to in paragraph (a);
- (c) import, purchase or acquire goods, wherever situated, from a person in an occupied region;
- (d) export goods destined for an occupied region or sell, supply or transfer goods, wherever situated, to any person in an occupied region;
- (e) provide technical assistance to a person in an occupied region;
- (f) provide financial or other services related to tourism to, or acquire such services from, a person in an occupied region; or
- (g) dock a cruise ship in an occupied region that is registered or licensed, or for which an identification number has been issued, under any Act of Parliament.
4 Section 4.3 of the Regulations is replaced by the following:
4.3 (1) Section 4.1 does not apply in respect of contracts entered into before the day on which that section came into force.
(2) Paragraphs 4.1(g) and 4.2(g) do not apply in respect of the docking of a cruise ship if the docking is necessary due to an emergency situation.
Existing contracts — occupied regions
(3) Section 4.2 does not apply in respect of the following until 30 days after the day on which this subsection comes into force:
- (a) an investment made under a contract entered into before that coming into force;
- (b) a service provided or acquired under a contract entered into before that coming into force;
- (c) a good imported, purchased, acquired, exported, sold, supplied or transferred under a contract entered into before that coming into force; or
- (d) technical assistance provided under a contract entered into before that coming into force.
5 Part 1 of the schedule to the Regulations is amended by adding the following in numerical order:
- 425 Sergey Vladimirovich YELISEYEV (born on May 5, 1971)
- 426 Vladimir BESPALOV
- 427 Oleksii Ivanovych KOVALEV (born on January 19, 1989)
- 428 Mikhail Leonidovich RODIKOV (born in 1958)
- 429 Tetyana Yuriivna TUMILINA (born in 1966)
- 430 Gennadiy Oleksandrovich SHELESTENKO
- 431 Oleksandr Fedorovich SAULENKO (born on May 9, 1962)
- 432 Andriy Leonidovich SIGUTA (born on May 5, 1979)
- 433 Oleksiy Sergeyevich SELIVANOV (born on December 7, 1980)
- 434 Anton Viktorovich KOLSTOV (born on June 24, 1973)
- 435 Anton Robertovich TYTSKIY (born on February 12, 1990)
- 436 Andrei TROFIMOV
6 Part 2 of the schedule to the Regulations is amended by adding the following in numerical order:
- 43 Salvation Committee for Peace and Order
Application Before Publication
7 For the purpose of paragraph 11(2)(a) of the Statutory Instruments Act, these Regulations apply according to their terms before they are published in the Canada Gazette.
Coming into Force
8 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.
Following Russia’s illegal occupation and attempted annexation of Crimea in March 2014, the Canadian government, in tandem with partners and allies, enacted sanctions under the Special Economic Measures Act. These sanctions impose dealings prohibitions (an effective asset freeze) on designated individuals and entities in Russia and Ukraine supporting or enabling Russia’s violation of Ukraine’s sovereignty. Any person in Canada and Canadians outside Canada are thereby prohibited from dealing in the property of, entering into transactions with, providing services to, or otherwise making goods available to listed persons.
In late fall of 2021, after months of escalatory behaviour, Russia began massing troops, military equipment and military capabilities on Ukraine’s borders and around Ukraine. The build-up lasted into February 2022, eventually totalling 150 000 to 190 000 troops. On February 15, 2022, the Russian Duma (equivalent to the Canadian House of Commons) voted to ask President Putin to recognize the so-called Luhansk People’s Republic (LPR) and Donetsk People’s Republic (DPR) in eastern Ukraine, further violating Ukraine’s sovereignty as well as the Minsk agreements intended to bring about a peaceful resolution to the conflict in eastern Ukraine. On February 18, 2022, Russia-backed so-called authorities ordered the evacuation of women and children from the region, as well as the conscription of men aged 18 to 55. On February 20, 2022, Russia extended a joint military exercise with Belarus and announced that Russian troops would not leave Belarus. On February 21, 2022, following a meeting of the Russian Security Council, President Putin signed decrees recognizing the “independence” and “sovereignty” of the so-called LPR and DPR. Immediately following this, President Putin ordered Russian forces to perform “peacekeeping functions” in the so-called LPR and DPR regions. He also expressly abandoned the Minsk agreements, declaring them “non-existent.” On February 22, 2022, Russia’s Duma granted President Putin permission to use military force outside the country. Uniformed Russian troops and armoured vehicles then moved into the Donetsk and Luhansk regions for the first time under official orders. On February 24, 2022, President Putin announced a “special military operation” as Russian forces launched a full-scale invasion of Ukraine. The invasion began with targeted strikes on key Ukrainian military infrastructure and the incursion of Russian forces into Ukraine in the north from Russia and Belarus, in the east from Russia and the so-called LPR and DPR regions, and in the south from Crimea.
The deterioration of Russia’s relations with Ukraine has paralleled the worsening of its relations with the United States (U.S.) and the North Atlantic Treaty Organization (NATO), which has led to heightened tensions.
Since the beginning of the current crisis, Canada and the international community have been calling on Russia to de-escalate, pursue diplomatic channels, and demonstrate transparency in military activities. Diplomatic negotiations have been taking place along several tracks, including via (1) United States–Russia bilateral talks (e.g. the Strategic Stability Dialogue); (2) NATO; (3) the Organization for Security and Cooperation in Europe (OSCE); and (4) the Normandy Four format (Ukraine, Russia, Germany, France) for the implementation of the Minsk agreements.
On February 21, 2022, G7 Foreign Affairs ministers released a statement condemning Russian recognition of the so-called LPR and DPR regions and stating that they were preparing to step up restrictive measures to respond to Russia’s actions, while reaffirming their unwavering commitment to Ukraine’s sovereignty and territorial integrity. G7 Foreign Affairs ministers and NATO leaders continue to be united in promising significant consequences for Russia.
Canada continues to strongly condemn Russia’s behaviour toward Ukraine. Canada has announced several contributions to support Ukraine, including humanitarian, development, resilience, security, human rights and stabilization programming in Ukraine. This represents over $600 million since January 2022. To support Ukraine’s economic resilience, Canada also offered up to $1.25 billion in additional loan resources to the Ukrainian government through a new Administered Account for Ukraine at the International Monetary Fund (IMF); $1 billion has been disbursed.
Canada also sent weapons, such as rocket launchers, hand grenades, anti-armour weapons, and ammunition to support Ukraine. These contributions are in addition to more than $57 million in military equipment that Canada has provided Ukraine from 2015 to 2021, and the expansion of Canada’s commitment to Operation REASSURANCE, the Canadian Armed Forces’ contribution to NATO assurance and deterrence measures in Central and Eastern Europe.
Since February 24, 2022, the Government of Canada has enacted a number of punitive measures and imposed severe extensive economic sanctions against Russia for its war of aggression against Ukraine. Since the start of the crisis, under the Special Economic Measures Act (SEMA), Canada has sanctioned over 1 300 individuals and entities in Russia, Belarus and Ukraine. This has included senior members of the Russian government, including President Putin and members of the Duma, the Federation Council and the Security Council, military officials and oligarchs (namely Roman Abramovich, the Rotenberg brothers, Oleg Deripaska, Alisher Usmanov, Gennady Timchenko, Yevgeny Prigozhin), and their family members.
Canada also targeted Russia’s ability to access the global financial system, raise or transfer funds, and maintain funds in Canadian dollars by sanctioning several core Russian financial institutions, including Sberbank, VTB, and VEB, as well as the Central Bank of Russia, the Ministry of Finance and the National Wealth Fund. Canada also successfully advocated for the removal of several Russian banks from the SWIFT payment system.
Furthermore, Canada implemented measures to pressure the Russian economy and limit Russia’s trade with and from Canada. Russia’s economy depends heavily on the energy sector. Therefore, Canada moved ahead with a prohibition on the import of three distinct types of oil products, including crude oil, from Russia. Canada revoked Russia’s most favoured nation status, applying a 35% tariff on all imports from Russia. In response to Belarus’s support to Russia, Canada also revoked Belarus’s most favoured nation status.
Canada stopped the issuance of new permit applications and cancelled valid permits for exporting controlled military, strategic, and dual-use items to Russia, with exceptions to those for critical medical supply chains and humanitarian assistance.
Finally, Canada sanctioned 218 senior members of the so-called LPR and DPR authorities, including all members of the so-called People’s Councils of these regions, expanded prohibited activities under sections 4.1 and 4.2 to LPR and DPR regions, as well as sanctioned four Ukrainian agents of disinformation.
These amendments to the Special Economic Measures (Ukraine) Regulations (the Regulations) build upon Canada’s existing sanctions against Russia by further impeding Russian dealings with Canada. Canada continues to work on sanctions measures in coordination with partners, including in the U.S., the United Kingdom (U.K.), the European Union (EU), Australia and Japan.
Conditions for imposing and lifting sanctions
Pursunt to the Special Economic Measures Act, the Governor in Council may impose economic and other sanctions against foreign states, entities and individuals when, among other circumstances, a grave breach of international peace and security has occurred resulting in a serious international crisis.
Canada and like-minded partners have explicitly linked the duration of sanctions to the peaceful resolution of the conflict and the respect for Ukraine’s sovereignty and territorial integrity, within its internationally recognized borders, including Crimea, as well as Ukraine’s territorial sea. Canada’s G7 partners as well as Australia and New Zealand have continued to update their sanction regimes against individuals and entities in Ukraine, Belarus and Russia.
- Condemn the illegitimate referendums in Kherson and Zaporizhzhia.
- Impose further costs on the so-called authorities in areas of Ukraine illegally occupied by Russian forces or controlled by Russian-backed proxies for their support for Russia’s aggression and attack on Ukraine.
- Maintain the alignment of Canada’s measures with those taken by international partners to underscore continued unity with Canada’s allies and partners in responding to Russia’s ongoing actions in Ukraine.
The Regulations Amending the Special Economic Measures (Ukraine) Regulations (the amendments) add 12 individuals and one entity to Schedule 1 of the Regulations, who are subject to a broad dealings ban.
The individuals are so-called senior officials in the Russian-occupied territories of Kherson and Zaporizhzhia in Ukraine. The entity is a so-called government body in Kherson.
The amendments will also add new prohibitions to the Regulations that prohibit any person in Canada and any Canadian outside Canada from conducting certain transactions and activities in the Russian-occupied regions of Kherson and Zaporizhzhia in Ukraine. This includes making investments and dealing in goods exported from or destined to these regions.
The addition of these individuals and entity and the new prohibitions on the two Russian-occupied regions align with measures taken by like-minded partners.
Global Affairs Canada engages regularly with relevant stakeholders, including civil society organizations, cultural communities and other like-minded governments, regarding Canada’s approach to sanctions implementation.
With respect to the amendments targeting individuals and entities, public consultations would not be appropriate, given the risk of asset flight and the urgency to impose these measures in response to the ongoing breach of international peace and security in Ukraine.
Modern treaty obligations and Indigenous engagement and consultation
An initial assessment of the geographical scope of the amendments was conducted and did not identify any modern treaty obligations, as the amendments do not take effect in a modern treaty area.
Regulations are the sole method to enact sanctions in Canada. No other instrument could be considered.
Benefits and costs
Sanctions targeting specific individuals and entities have less impact on Canadian businesses than traditional broad-based economic sanctions, and have limited impact on the citizens of the country of the listed individuals and entities. It is likely that the newly listed individuals and entities have limited linkages with Canada and, therefore, do not have business dealings that are significant to the Canadian economy.
Canadian banks and financial institutions are required to comply with sanctions. They will do so by adding the newly listed individuals and entities to their existing monitoring systems, which may result in a minor compliance cost.
The amendments could create additional costs for businesses seeking permits that would authorize them to carry out specified activities or transactions that are otherwise prohibited.
Small business lens
The amendments could create additional costs for small businesses seeking permits that would authorize them to carry out specified activities or transactions that are otherwise prohibited. However, costs will likely be low, as it is unlikely that Canadian small businesses have or will have dealings with the newly listed individuals and entities. No significant loss of opportunities for small businesses is expected as a result of the amendments.
The permitting process for businesses meets the definition of “administrative burden” in the Red Tape Reduction Act and would need to be calculated and offset within 24 months. However, the amendments address an emergency circumstance and are therefore exempted from the requirement to offset administrative burden and regulatory titles under the one-for-one rule.
Regulatory cooperation and alignment
While the amendments are not related to a work plan or commitment under a formal regulatory cooperation forum, they align with actions taken by Canada’s allies.
Strategic environmental assessment
The amendments are unlikely to result in important environmental effects. In accordance with the Cabinet Directive on the Environmental Assessment of Policy, Plan and Program Proposals, a preliminary scan concluded that a strategic environmental assessment is not required.
Gender-based analysis plus (GBA+)
The subject of economic sanctions has previously been assessed for effects on gender and diversity. Although intended to facilitate a change in behaviour through economic pressure on individuals and entities in foreign states, sanctions under the Special Economic Measures Act can nevertheless have an unintended impact on certain vulnerable groups and individuals. Rather than affecting Russia as a whole, these targeted sanctions impact individuals believed to be engaged in activities that directly or indirectly support, provide funding for, or contribute to, a violation of the sovereignty or territorial integrity of Ukraine. Therefore, these sanctions are unlikely to have a significant impact on vulnerable groups as compared to traditional broad-based economic sanctions directed toward a state, and limit the collateral effects to those dependent on those targeted individuals and entities.
The amendments are in direct response to the Russian invasion of Ukraine that began on February 24, 2022, which continues Russia’s blatant violation of Ukraine’s territorial integrity and sovereignty under international law. In coordination with actions being taken by Canada’s allies, the amendments seek to impose a direct economic cost on Russia and its Ukrainian proxies and signal Canada’s strong condemnation of Russia’s latest violations of Ukraine’s territorial integrity and sovereignty.
The 12 individuals and one entity are being added to Schedule 1 of the Regulations in relation to the latest developments regarding Russia’s ongoing violations of Ukraine’s sovereignty and territorial integrity and illegal occupation of Crimea. The individuals are so-called senior officials in the Russian-occupied territories of Kherson and Zaporizhzhia in Ukraine. The entity is a so-called government body in Kherson. In coordination with actions being taken by allies, the amendments seek to impose a direct economic cost on Russia and the so-called authorities in these two regions occupied by Russia, and signal Canada’s strong condemnation of Russia’s latest violations of Ukraine’s territorial integrity and sovereignty.
These sanctions show Canada’s solidarity with like-minded countries, which have already imposed similar restrictions. The addition of these individuals and entities aligns with measures taken by partners in response to the illegitimate referendums that took place in those Russian-occupied territories.
Implementation, compliance and enforcement, and service standards
The amendments come into force on the day on which they are registered.
The names of the listed individuals and entities will be available online for financial institutions to review, and will be added to the Consolidated Canadian Autonomous Sanctions List. This will help to facilitate compliance with the Regulations.
Canada’s sanctions regulations are enforced by the Royal Canadian Mounted Police and the Canada Border Services Agency (CBSA). In accordance with section 8 of the Special Economic Measures Act, every person who knowingly contravenes or fails to comply with the Special Economic Measures (Ukraine) 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.
The CBSA has enforcement authorities under SEMA and the Customs Act, and will play a role in the enforcement of these sanctions.
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