Regulations Amending the Special Economic Measures (Russia) Regulations: SOR/2023-163
Canada Gazette, Part II, Volume 157, Number 16
SOR/2023-163 July 19, 2023
SPECIAL ECONOMIC MEASURES ACT
P.C. 2023-747 July 19, 2023
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 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 (Russia) 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 (Russia) Regulations
1 Section 3.13 of the Special Economic Measures (Russia) Regulations footnote 1 is replaced by the following:
Arms and related material — import
3.13 (1) It is prohibited for any person in Canada and any Canadian outside Canada to import, purchase or acquire arms and related material from Russia or from any person in Russia.
Arms and related material — export
(2) It is prohibited for any person in Canada and any Canadian outside Canada to export, sell, supply or ship arms and related material, wherever situated, to Russia or to any person in Russia.
(3) Subsection (2) does not apply to
- (a) non-lethal military equipment intended solely for humanitarian, human rights monitoring or protective use, and related technical assistance and training; or
- (b) members of the Canadian Forces who are in or travel to Russia in the performance of official duties, including providing security to Canadian diplomatic staff, providing humanitarian assistance and engaging in other activities authorized by the Chief of the Defence Staff.
Arms and related material — services
(4) It is prohibited for any person in Canada and any Canadian outside Canada to provide any financial, technical or other services related to the sale, supply, transfer, manufacture, maintenance or use of arms and related material to Russia or to any person in Russia.
Definition of arms and related material
(5) For the purposes of this section, arms and related material means any type of weapon, ammunition, military equipment — including military vehicles — or paramilitary equipment, and their spare parts.
2 Part 1 of Schedule 1 to the Regulations is amended by adding the following in numerical order:
- 1295 Viktor Vladimirovich ZAPLATIN (born on May 8, 1957)
- 1296 Dmitry Sergeevich SYTYI (born on March 23, 1989)
- 1297 Yevgeniy KHODOTOV (born on March 21, 1964)
- 1298 Aleksei Alekseevich MALYAREVICH (born on August 27, 1965)
- 1299 Alexander Yurievich KUZIN (born on June 5, 1980)
- 1300 Dmitry Nikolaevich BEZRUKIKH (born on December 13, 1973)
- 1301 Maksim KHLOPIN
- 1302 Dmitry VOROTNEV (born on April 12, 1973)
- 1303 Mariya Vasilyevna KOLEDA (born on June 7, 1991)
- 1304 Oleg Vladimirovich TSARIK (born on August 5, 1975)
- 1305 Mikhail Sergeyevich POTEPKIN (born in September 1981)
- 1306 Andrei Sergeyevich MANDEL (born on March 2, 1990)
- 1307 Igor Valerievich LAVRENKOV (born on January 30, 1974)
- 1308 Evgeny Markovich PAKERMANOV (born on July 16, 1973)
- 1309 Andrey Vladimirovich BUROV (born on November 30, 1971)
- 1310 Ivan Aleksandrovich MASLOV (born on January 3, 1980)
- 1311 Igor Vladimirovich BOROVKOV (born on July 30, 1954)
- 1312 Ivan Mikhailovich KAMENSKIKH (born on February 3, 1946)
- 1313 Yuri Aleksandrovich OLENIN (born on November 13, 1953)
- 1314 Sergey Aleksandrovich OBOZOV (born on September 18, 1960)
3 Part 2 of Schedule 1 to the Regulations is amended by adding the following in numerical order:
- 399 The Moscow City Cossack Community
- 400 Lakhta Park Premium
- 401 Lakhta Plaza
- 402 Lakhta Park
- 403 SMT-iLogic
- 404 Russkaya Vesna
- 405 Africa Politology
- 406 Charter Green Light Moscow
- 407 Charter Green Light
- 408 Device Consulting
- 409 Prime Security and Development JSC
- 410 Odna Rodyna
- 411 Bank Tochka
- 412 Tinkoff Bank JSC
- 413 TELE2
- 414 MTS
- 415 Megafon
- 416 Yandex Pay
- 417 MIR Card
- 418 Beeline
- 419 M-Finans
Application Before Publication
4 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
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.)
Russia’s military-industrial complex, private military companies and their affiliates, and supply chains continue to provide support to Russia’s invasion of Ukraine via funding, recruitment, and logistical support. Additionally, Russia’s nuclear industry provides revenues to the Russian state budget, which is used to finance the ongoing violation of Ukraine’s sovereignty and territorial integrity and Russia’s reckless policy toward the Zaporizhzhia Nuclear Power Plant.
Following Russia’s illegal occupation and attempted annexation of Crimea in March 2014, the Canadian government, in tandem with partners and allies, enacted sanctions through the Special Economic Measures (Russia) Regulations (the Regulations) under the Special Economic Measures Act (SEMA). 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.
On February 24, 2022, Russian President Putin announced a “special military operation” as Russian forces launched a full-scale invasion of Ukraine from Russian and Belarusian territory. The war has become a grinding war of attrition which sees little prospect of a quick victory for either side, and both continue to incur heavy losses. The Russian military has committed horrific atrocities against civilians, including in Izium, Bucha, Kharkiv and Mariupol. Experts, including the Organization for Security and Cooperation in Europe (OSCE) Moscow Mechanism fact-finding missions, the Independent International Commission of Inquiry on Ukraine and United Nations’ (UN) Office of the High Commissioner for Human Rights (OHCHR), have concluded that Russia is committing serious human rights violations, war crimes, possible crimes against humanity, and conflict-related sexual violence. These studies have linked Russian external aggression with systematic repression and human rights abuses domestically. According to Ukraine’s State Emergency Department, 30% of Ukrainian territory (approximately the size of Austria) is mined. President Putin’s military invasion has been paired with significant malicious cyber operations and disinformation campaigns that falsely portray the West as the aggressor; and claim Ukraine is developing chemical, biological, radiological and/or nuclear weapons with North Atlantic Treaty Organization (NATO) support. The deterioration of Russia’s relations with Ukraine has paralleled the worsening of its relations with the United States and the NATO, which has led to heightened tensions.
The coalition of countries supporting Ukraine includes, but is not limited to, G7 and European countries and some of Ukraine’s neighbours. This group is working to support Ukraine across a number of areas, including energy security, nuclear safety, food security, humanitarian assistance, combatting Russian disinformation, sanctions and economic measures, asset seizure and forfeiture, military assistance, accountability, recovery and reconstruction. Canada and G7 countries are engaged in intense diplomacy with the broader international community to encourage support for Ukraine and counter false Russian narratives. Key votes in multilateral forums have effectively isolated Russia, including resolutions in the UN General Assembly condemning Russian aggression against Ukraine (March 2022), deploring the humanitarian consequences of Russian aggression against Ukraine (March 2022), suspending Russian membership in the UN Human Rights Council (April 2022) and condemning Russia’s illegal annexation of Ukrainian territories (October 2022). Many developing countries have refrained from openly criticizing Russia or imposing penalties due to geopolitical considerations, commercial incentives, or simply fear of retaliation, with some also arguing the conflict is less of a priority for their regions. Russia continues to use its position as a permanent member of the UN Security Council (UNSC) to block UNSC action on its war on Ukraine and its corrosive disinformation policies.
Since February 2022, Canada has committed or delivered over Can$5 billion in assistance to Ukraine. This includes military aid, cyber defence and training to Ukrainian troops in the United Kingdom and Poland under the aegis of Operation UNIFIER. Economic resilience support includes new loan resources, a loan guarantee, and Ukraine Sovereignty Bonds. Canada is helping Ukraine repair its energy infrastructure and has temporarily removed trade tariffs on Ukrainian imports. Canada has also committed development and humanitarian assistance, and is countering disinformation through the G7 Rapid Response Mechanism. Canada is also providing security and stabilization programming, including support for civil rights organizations and human rights defenders. Canada announced two new immigration streams for Ukrainians coming to Canada: the temporary Canada Ukraine Authorization for Emergency Travel and a special permanent residence stream for family reunification.
Since 2014, in coordination with its allies and partners, Canada has imposed sanctions on more than 2 500 individuals and entities in Russia, Belarus, Ukraine and Moldova, who are complicit in the violation of Ukraine’s and Moldova’s sovereignty and territorial integrity. In addition, Canada implemented targeted restrictions against Russia and Belarus in financial, trade (goods and services), energy and transport sectors. Canada is part of the Oil Price Cap Coalition, which limits the provision of maritime services to Russian crude oil and petroleum products above a price set by the coalition. These proposed amendments to the Regulations build upon Canada’s existing sanctions by further impeding Russian dealings with Canada. Canada seeks to align its measures with its partners, including the United States, the United Kingdom, the European Union, Australia, New Zealand, Japan and Ukraine.
Conditions for imposing and lifting sanctions
Pursuant to SEMA, the Governor in Council may impose economic and other sanctions against foreign states, entities and individuals when, among other circumstances, a person has participated in gross and systematic human rights violations in Russia.
The duration of sanctions by Canada and like-minded partners has been explicitly linked 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. The United States, the United Kingdom, the European Union and Australia have continued to update their sanction regimes against individuals and entities in both Ukraine and Russia.
- Impose further macroeconomic costs on Russia and its decision-making bodies.
- Undermine Russia’s ability to conduct its military aggression against Ukraine.
- Align Canada’s measures with those taken by international partners.
- Increase pressure on Russia to cease its reckless actions in Ukraine that have specifically increased the risk of a nuclear incident, particularly at the Zaporizhzhia Nuclear Power Plant.
The amendments to the Regulations add 20 individuals and 21 entities to Schedule 1 of the Regulations, who are subject to a broad dealings ban. They include persons connected to Russia’s military-industrial complex (including Private Military Company Wagner, the paramilitary sector, and the Orlan drone supply chain), and the nuclear sector that contribute to Russia’s revenues.
The amendments will also prohibit persons in Canada and Canadians abroad from exporting, selling, supplying or shipping arms and related material, wherever situated, to Russia or to any person in Russia. Further, the amendment seeks to prohibit providing to Russia or to any person in Russia any technical or financial assistance, technical or financial services or brokerage or other services related to the supply, sale, transfer, manufacture or use of arms and related materials. Canada has already (i) prohibited the export to Russia of certain chemical elements for use in electronics; (ii) banned the import, purchase, or acquisition of Russian arms, ammunition, and other weapons, wherever situated or processed, from Russia or from any person in Russia; and (iii) prohibited the export of goods that could be used in the production and manufacture of weapons by Russia.
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. Global Affairs Canada research also draws from analysis from pro-democracy movements inside and outside of Russia.
With respect to the amendments targeting individuals and entities, public consultation 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
Likewise, 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 exempt 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 seek to impose a direct economic cost on Russia and signal Canada’s strong condemnation of Russia’s violation of Ukraine’s sovereignty and territorial integrity. They target individuals and entities that directly or indirectly provide support to Russia’s military invasion of Ukraine. As the conflict continues into its second year, the amendments seek to further degrade Russia’s military capabilities that are being used to invade Ukraine by targeting private military companies, associated companies and others that facilitate payments to them. It also targets parts of Russia’s nuclear industry that provide revenues to Russia’s budget while Russia is pursuing a reckless nuclear policy vis-à-vis the Zaporizhzhia Nuclear Power Plant.
These amendments align Canada’s efforts with those of its international partners and expose individuals and entities engaged in activities that undermine international peace and security.
The regulatory amendments will prohibit persons in Canada and Canadians abroad from exporting, selling, supplying or shipping arms and related materials, wherever situated, to Russia or any person in Russia to ensure that Russia does not access Canadian weaponry in its illegal war against Ukraine. Further, the amendments seek to prohibit providing to Russia or to any person in Russia any technical or financial assistance, technical or financial services or brokerage or other services related to the supply, sale, transfer, manufacture or use of arms and related materials. This aligns with Canada’s sanctions measures in response to other armed conflicts, for example in Zimbabwe and in Myanmar, where an arms embargo is often the first sanctions measure imposed by Canada. While Canada is not granting permits for export to Russia of controlled or restricted goods since February 24, 2022, their export to Russia is not outright prohibited by the Export and Import Permits Act (EIPA).
As Canada continues to implement its existing sanctions, there is an increasing trend of diversion, circumvention, and backfilling through third countries (i.e. goods exported from Canada to a country other than Russia, ending up in Russia). For example, an exporter seeking a permit to export firearms to a third country known to the sanctions team to re-export those goods to Russia could in theory receive an export permit under the EIPA. Such an activity would completely contradict the intent of Canada’s sanctions against Russia, which currently ban the export of goods used to manufacture weapons, but don’t yet ban the export of weapons themselves. A clear prohibition under the Special Economic Measures (Russia) Regulations would be more effective and enforceable, including for instances where arms and related materials are reaching Russia through third countries.
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 SEMA, every person who knowingly contravenes or fails to comply with 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 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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