Regulations Amending Certain Regulations Made Under the Special Economic Measures Act: SOR/2023-175

Canada Gazette, Part II, Volume 157, Number 17

Registration
SOR/2023-175 August 4, 2023

SPECIAL ECONOMIC MEASURES ACT

P.C. 2023-788 August 4, 2023

Her Excellency the Governor General in Council, on the recommendation of the Minister of Foreign Affairs, makes the annexed Regulations Amending Certain Regulations Made Under the Special Economic Measures Act 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 Certain Regulations Made Under the Special Economic Measures Act

Special Economic Measures (Burma) Regulations

1 The portion of section 2 of the Special Economic Measures (Burma) Regulations footnote 1 before paragraph (a) is replaced by the following:

Designated person

2 A person whose name is listed in the schedule is a person who is in Burma, or is or was a national of Burma who does not ordinarily reside in Canada, and in respect of whom the Governor in Council, on the recommendation of the Minister, is satisfied that there are reasonable grounds to believe is

Special Economic Measures (Iran) Regulations

2 The portion of section 2 of the Special Economic Measures (Iran) Regulations footnote 2 before paragraph (a) is replaced by the following:

2 A person whose name is listed in Schedule 1 is a person who is in Iran, or is or was a national of Iran who does not ordinarily reside in Canada, and in respect of whom the Governor in Council, on the recommendation of the Minister, is satisfied that there are reasonable grounds to believe is

Special Economic Measures (Syria) Regulations

3 The definition designated person in section 1 of the Special Economic Measures (Syria) Regulations footnote 3 is replaced by the following:

designated person
means a person who is in Syria, or is or was a national of Syria who does not ordinarily reside in Canada, and whose name is listed in Schedule 1. (personne désignée)

Special Economic Measures (Russia) Regulations

4 The definition designated person in section 1 of the Special Economic Measures (Russia) Regulations footnote 4 is replaced by the following:

designated person
means a person who is in Russia, or is or was a national of Russia who does not ordinarily reside in Canada, and whose name is listed in either one of Schedules 1, 2 or 3. (personne désignée)

Special Economic Measures (Ukraine) Regulations

5 The definition designated person in section 1 of the Special Economic Measures (Ukraine) Regulations footnote 5 is replaced by the following:

designated person
means a person who is in Ukraine, or is or was a national of Ukraine who does not ordinarily reside in Canada, and whose name is listed in the schedule. (personne désignée)

Special Economic Measures (South Sudan) Regulations

6 The definition designated person in section 1 of the Special Economic Measures (South Sudan) Regulations footnote 6 is replaced by the following:

designated person
means a person who is in South Sudan, or is or was a national of South Sudan who does not ordinarily reside in Canada, and whose name is listed in the schedule. (personne désignée)

Special Economic Measures (Venezuela) Regulations

7 The portion of section 2 of the Special Economic Measures (Venezuela) Regulations footnote 7 before paragraph (a) is replaced by the following:

Listed person

2 A person whose name is listed in the schedule is a person who is in Venezuela, or is or was a national of Venezuela who does not ordinarily reside in Canada, and in respect of whom the Governor in Council, on the recommendation of the Minister, is satisfied that there are reasonable grounds to believe is

Special Economic Measures (Nicaragua) Regulations

8 The portion of section 2 of the Special Economic Measures (Nicaragua) Regulations footnote 8 before paragraph (a) is replaced by the following:

Listed person

2 A person whose name is listed in the schedule is a person who is in Nicaragua, or is or was a national of Nicaragua who does not ordinarily reside in Canada, and in respect of whom the Governor in Council, on the recommendation of the Minister, is satisfied that there are reasonable grounds to believe is

Special Economic Measures (Belarus) Regulations

9 The portion of section 2 of the Special Economic Measures (Belarus) Regulations footnote 9 before paragraph (a) is replaced by the following:

Listed person

2 A person whose name is listed in Schedule 1 is a person who is in Belarus, or is or was a national of Belarus who does not ordinarily reside in Canada, and in respect of whom the Governor in Council, on the recommendation of the Minister, is satisfied that there are reasonable grounds to believe is

Special Economic Measures (People’s Republic of China) Regulations

10 The portion of section 2 of the Special Economic Measures (People’s Republic of China) Regulations footnote 10 before paragraph (a) is replaced by the following:

Listed person

2 A person whose name is listed in the schedule is a person who is in the People’s Republic of China, or is or was a national of the People’s Republic of China who does not ordinarily reside in Canada, and in respect of whom the Governor in Council, on the recommendation of the Minister, is satisfied that there are reasonable grounds to believe is

Special Economic Measures (Haiti) Regulations

11 The portion of section 2 of the Special Economic Measures (Haiti) Regulations footnote 11 before paragraph (a) is replaced by the following:

Listed person

2 A person whose name is listed in the schedule is a person who is in Haiti, or is or was a national of Haiti who does not ordinarily reside in Canada, and in respect of whom the Governor in Council, on the recommendation of the Minister, is satisfied that there are reasonable grounds to believe is

Special Economic Measures (Sri Lanka) Regulations

12 The portion of section 2 of the Special Economic Measures (Sri Lanka) Regulations footnote 12 before paragraph (a) is replaced by the following:

Listed person

2 A person whose name is listed in the schedule is a person who is in Sri Lanka, or is or was a national of Sri Lanka who does not ordinarily reside in Canada, and in respect of whom the Governor in Council, on the recommendation of the Minister, is satisfied that there are reasonable grounds to believe is

Special Economic Measures (Moldova) Regulations

13 The portion of section 2 of the Special Economic Measures (Moldova) Regulations footnote 13 before paragraph (a) is replaced by the following:

Listed person

2 A person whose name is listed in the schedule is a person who is in Moldova, or is or was a national of Moldova who does not ordinarily reside in Canada, and in respect of whom the Governor in Council, on the recommendation of the Minister, is satisfied that there are reasonable grounds to believe is

Coming into Force

14 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.)

Issues

Individuals and entities listed under Canadian sanctions are finding increasingly creative ways, including loopholes found in Canada’s country-specific sanctions regulations, to circumvent sanctions in an effort to reduce their full impact. As such, 13 of Canada’s Special Economic Measures Act (SEMA) sanctions regulations are being amended to modify the definition of “designated person” under each respective SEMA regulation to clarify the scope of who can be listed in order to prevent sanctions circumvention.

Background

The Special Economic Measures Act (SEMA) allows Canada to impose sanctions in four situations: when a grave breach of international peace and security has occurred and has resulted in, or is likely to result in, a serious international crisis; when an international organization calls on members to impose sanctions; circumstances of gross and systematic human rights violations; or when acts of significant corruption have been committed. Under the SEMA, the Governor in Council may impose sanctions on a foreign state; any person in that foreign state; a national of that foreign state who does not ordinarily reside in Canada; or persons outside of Canada who are not Canadian under the specific regulations for that country regime. Specific criteria for being a designated person varies between SEMA regulations.

There are a broad range of prohibitions that can be imposed, including a dealings ban on individuals/entities and restrictions on trade or financial transactions. Listed individuals are also rendered inadmissible to Canada under the Immigration and Refugee Protection Act.

At present, there are SEMA sanctions on 16 countries: Belarus; Democratic People’s Republic of Korea; Haiti; Iran; Libya; Moldova (related to Russian invasion of Ukraine); Myanmar; Nicaragua; People’s Republic of China; Russia; South Sudan; Sri Lanka; Syria; Ukraine (related to Russian invasion); Venezuela; and Zimbabwe.

Each of these SEMA regulations defines how persons can be listed under their respective regimes, known as “designated persons.” Thirteen of these sanctions regimes include language that provides the Governor in Council with the authority to list persons who are nationals or ordinary residents of the foreign state of the respective country-specific SEMA regulation. This applies to the following SEMA regulations: Belarus; Haiti; Iran; Moldova; Myanmar; Nicaragua; People’s Republic of China; Russia; South Sudan; Sri Lanka; Syria; Ukraine; and Venezuela.

The remaining three SEMA regulations, related to the Democratic People’s Republic of Korea; Libya; and Zimbabwe, also include language that provides the Governor in Council with the authority to list persons who meet the listing criteria set out in their specific country-specific SEMA regulations, but in a manner that is not related to nationality of the foreign state of the country-specific SEMA regulation.

Canada and its Russian Elites, Proxies, and Oligarchs (REPO) Task Force allies are committed to effective implementation of sanctions against Russia. This includes identifying and addressing circumvention opportunities to maximize the impact of sanctions.

Objective

These regulatory amendments aim to

Description

The Regulations Amending Certain Regulations Made Under the Special Economic Measures Act (the Regulations) amend 13 country-specific SEMA regulations (Belarus; Haiti; Iran; Moldova; Myanmar; Nicaragua; People’s Republic of China; Russia; South Sudan; Sri Lanka; Syria; Ukraine; and Venezuela). These amendments clarify the concept of “designated person” in these 13 regulations by adding the authority to list former nationals of a foreign state under each respective country-specific SEMA regulation. This builds upon the previously existing authority to list foreign nationals under SEMA regulations.

The amendments seek to close a circumvention loophole whereby renunciation of citizenship by a listed person would remove the regulatory basis for maintaining a listing regardless of their actions. Sanctioned persons, particularly wealthy oligarchs, may be able to use this type of approach to avoid Canadian sanctions if they have a dual or multiple citizenship, for example.

Regulatory development

Consultation

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, public consultation would not be appropriate, given the urgency to impose these measures in response to possible sanctions circumvention.

Modern treaty obligations and Indigenous engagement and consultation

An assessment has been conducted and no modern treaty implications have been identified.

Instrument choice

Regulations are the sole method to enact sanctions in Canada. No other instrument could be considered.

Regulatory analysis

Benefits and costs

The Regulations clarify the definition of a designated person under country-specific SEMA regulations and do not impose any additional sanctions. This would likely result in minor changes for the implementation of sanctions in Canada. Additional direct costs of the regulations will be limited to impacts on designated persons, as intended by the sanctions. These individuals are non-Canadian and engaged in activities that exclude them from standing within the cost-benefit analysis framework.

These changes will enable Canada to limit pathways for designated persons to attempt to circumvent sanctions, allowing for more efficient achievement of intended outcomes of sanctions under the Special Economic Measure Act.

Small business lens

Analysis under the small business lens concluded that the amendments will not impact Canadian small businesses.

One-for-one rule

The one-for-one rule does not apply, as there is no incremental change in administrative burden on business and no regulatory titles are repealed or introduced.

Regulatory cooperation and alignment

The amendments are not related to a work plan or commitment under a formal regulatory cooperation forum. They are being implemented to strengthen Canada’s sanctions enforcement.

More broadly, Canada is a member of various like-minded groups, such as the REPO Task Force whose objectives include strengthening coordinated sanctions implementation and identification of potential sanctions evasion or circumvention activities. On March 9, 2023, the REPO Task Force issued a global advisory which included a typology of Russian sanctions evasion. These amendments, while not focused solely on the Russian context, can be considered to align with the work of the REPO Task Force and signal Canada’s cooperation with these objectives.

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 diverse peoples. 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. The broadened definition of a designated person under country-specific SEMA regulations constitutes would not impose any additional sanctions and therefore would likely not result in direct impacts on vulnerable groups and individuals effects.

Implementation, compliance and enforcement, and service standards

The amendments come into force on the day on which they are registered.

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 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.

Contact

Sanctions Policy and Operations Division
Global Affairs Canada
125 Sussex Drive
Ottawa, Ontario
K1A 0G2
Telephone: 343‑203‑3975 / 1‑833‑352‑0769
Email: sanctions@international.gc.ca