ARCHIVED — Vol. 148, No. 18 — August 27, 2014

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Registration

SOR/2014-196 August 6, 2014

SPECIAL ECONOMIC MEASURES ACT

Regulations Amending the Special Economic Measures (Ukraine) Regulations

P.C. 2014-906 August 6, 2014

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 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 (Ukraine) Regulations.

REGULATIONS AMENDING THE SPECIAL ECONOMIC MEASURES (UKRAINE) REGULATIONS

AMENDMENTS

1. Part 1 of the schedule to the Special Economic Measures (Ukraine) Regulations (see footnote 1) is amended by adding the following after item 49:

  • 50. Pavel Yurevich GUBAREV
  • 51. Ekaterina Yurevna GUBAREVA
  • 52. Oksana TCHIGRINA
  • 53. Boris LITVINOV
  • 54. Sergey ABISOV

2. Part 2 of the schedule to the Regulations is amended by adding the following after item 4:

  • 5. Federal State of Novorossiya
  • 6. International Union of Public Associations “Great Don Army”
  • 7. Sobol
  • 8. Luhansk Guard
  • 9. Army of the Southeast
  • 10. Donbass People’s Militia
  • 11. Vostok battalion
  • 12. Kerch ferry
  • 13. Sevastopol commercial seaport
  • 14. Kerch commercial seaport
  • 15. Universal-Avia
  • 16. Resort “Nizhnyaya Oreanda”
  • 17. Azov distillery plant
  • 18. National Association of producers “Massandra”
  • 19. Magarach of the national institute of wine
  • 20. Factory of sparkling wine Novy Svet

APPLICATION PRIOR TO PUBLICATION

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

4. 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

Pro-Russian separatists continue to destabilize eastern Ukraine and facilitate Russian military action against the Ukrainian government.

Background

Acting in coordination with the United States and the European Union, the Governor in Council has found that the situation in Ukraine constitutes 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 (Ukraine) Regulations were approved on March 17, 2014. Further amendments to these Regulations were made on March 19, 2014, April 12, 2014, May 12, 2014, June 21, 2014, July 11, 2014 and July 24, 2014.

At the G7 Summit in Brussels in June 2014, leaders of the G7 countries issued a declaration condemning the Russian Federation’s continuing violation of the sovereignty and territorial integrity of Ukraine. Leaders reaffirmed the illegal nature of Russia’s annexation of Crimea, and that actions to destabilize eastern Ukraine are unacceptable and must stop. Leaders also called on the Russian Federation to meet the commitments it made in the Geneva Joint Statement of April 17, 2014, and cooperate with the Government of Ukraine as it implements its plans for promoting peace, unity and reform. Canada, along with G7 nations, has indicated readiness to intensify targeted sanctions and to implement significant additional measures to impose further costs on Russia should events so require.

In Berlin on July 2, 2014, the Foreign Affairs ministers of Ukraine, Germany, France and Russia issued a joint declaration stressing the need for a sustainable ceasefire to be monitored by the Organization for Security and Cooperation in Europe (OSCE), agreeing to “use their influence on the concerned parties” to make such a ceasefire happen, calling for continued talks between Kyiv and Russian-backed insurgents, welcoming Russia’s readiness to grant Ukrainian border guards access to Russian territory in order to participate in the control of border crossings, and calling for the deployment of OSCE monitors to border checkpoints while a ceasefire is in place.

Despite these international commitments and Ukraine’s military efforts, including the recapturing of Sloviansk and Kramatorsk, the insurgency has intensified in Donetsk and Luhansk regions as government forces step up efforts to disrupt the actions of illegal separatist groups, and reclaim more territory. Throughout July 2014, deadly clashes between Ukrainian security forces and pro-Russian separatists continued in eastern Ukraine, including an increasing number of incidents involving hostage taking.

Armed militia groups and insurgents currently control large parts of the Donetsk and Luhansk regions, and are basing their operations in numerous government and public buildings. There are daily reports of heavy fighting and civilian casualties. These armed groups have reportedly shot down at least five Ukrainian helicopters, three transport planes and most recently on July 24, 2014, two Ukrainian ground-attack jets.

On July 17, 2014, Malaysia Airlines flight MH17 carrying 298 passengers and crew crashed in eastern Ukraine, killing all on board. Evidence suggests the airliner was brought down by a surface-to-air missile fired from an area controlled by pro-Russian provocateurs. In the immediate aftermath of the tragedy, proRussian militants in the region of the crash impeded investigative and forensic work by international and Ukrainian authorities, as well as efforts to recover the remains of the victims. International experts are still unable to reach the crash site due to severe security constraints related to heavy shelling and gunfire.

According to the United Nations (UN), pro-Russian insurgents have deliberately targeted public utilities such as water, electricity and sewage plants, and forced essential services, including hospitals and clinics, to shut down. The UN reports that as of July 26, 2014, over 1 100 people have been killed (not including the MH17 victims), and over 3 400 people have been wounded. Additionally, more than 800 people have been abducted or detained by the insurgents, with many of them having been tortured. Approximately 200 000 people are believed to have fled the region since the Russian-backed militants launched their violent campaign in April 2014. Other reports from Ukrainian authorities indicate that over 300 members of the Ukrainian security forces have died in the conflict to date, and over 1 000 have been wounded.

Objectives

The proposed Regulations Amending the Special Economic Measures (Ukraine) Regulations (the Regulations) add five individuals and 16 entities to the Schedule.

Description

The proposed Regulations add five individuals and 16 entities to the list of designated persons under the Special Economic Measures (Ukraine) 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;
  • 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; and
  • providing any financial or related service to or for the benefit of a designated person.

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 nongovernmental organizations that have entered into a grant or contribution agreement with the Department of Foreign Affairs, Trade and Development;
  • 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.

“One-for-One” Rule

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) on small business, and small businesses would not be disproportionately affected.

Consultation

Foreign Affairs, Trade and Development Canada drafted the Regulations in consultation with the Department of Justice and Citizenship and Immigration Canada.

Rationale

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, every person who wilfully contravenes these 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.

Contact

Jennifer May
Director
East/Southeast Europe Bilateral and Commercial Relations
Foreign Affairs, Trade and Development Canada
125 Sussex Drive
Ottawa, Ontario
K1A 0G2
Telephone: 343-203-3603
Fax: 613-995-1277
Email: Jennifer.May@international.gc.ca