Regulations Amending the Special Economic Measures (Venezuela) Regulations: SOR/2019-106
Canada Gazette, Part II, Volume 153, Number 9
SOR/2019-106 April 15, 2019
SPECIAL ECONOMIC MEASURES ACT
P.C. 2019-340 April 12, 2019
Whereas, the Governor in Council is of the opinion that the Association Concerning the Situation in Venezuela, of which Canada is a member, has made a decision calling on its members to take economic measures against Venezuela;
Therefore, Her Excellency the Governor General in Council, on the recommendation of the Minister of Foreign Affairs, pursuant to subsections 4(1) footnote a, (1.1)footnote a, (2) and (3) of the Special Economic Measures Act footnote b, makes the annexed Regulations Amending the Special Economic Measures (Venezuela) Regulations.
Regulations Amending the Special Economic Measures (Venezuela) Regulations
1 The Schedule to the Special Economic Measures (Venezuela) Regulations footnote 1 is amended by adding the following after item 54:
- 55 Manuel Gregorio BERNAL MARTÍNEZ
- 56 Iván Rafael HERNÁNDEZ DALA
- 57 Manuel Ricardo Cristopher FIGUERA
- 58 Hildemaro José RODRÍGUEZ MÚCURA
- 59 Rafael Enrique BASTARDO MENDOZA
- 60 José Miguel DOMÍNGUEZ RAMÍREZ
- 61 Cristian Abelardo MORALES ZAMBRANO
- 62 Franklin GARCÍA DUQUE
- 63 Richard Jesús LÓPEZ VARGAS
- 64 José Miguel MONTOYA RODRÍGUEZ
- 65 Giuseppe Alessandro Martín Alessandrello CIMADEVILLA
- 66 José Adelino ORNELAS FERREIRA
- 67 Carlos Augusto Leal TELLERÍA
- 68 Jorge Alberto ARREAZA MONTSERRAT
- 69 Katherine Nayarith HARRINGTON PADRÓN
- 70 Reinaldo Enrique MUÑOZ PEDROZA
- 71 Alfredo RUIZ ANGULO
- 72 Larry Devoe MÁRQUEZ
- 73 Nelson Reinaldo LEPAJE SALAZAR
- 74 Carlos Erik MALPICA FLORES
- 75 Manuel Ángel FERNÁNDEZ MELÉNDEZ
- 76 Franco SILVA AVILA
- 77 Jorge Elieser MÁRQUEZ MONSALVE
- 78 José RIVAS
- 79 Luis Eduardo ORTEGA MORALES
- 80 Simón Alejandro ZERPA DELGADO
- 81 Manuel Salvador QUEVEDO FERNÁNDEZ
- 82 Víctor Hugo CANO PACHECO
- 83 Adrián Antonio PERDOMO MATA
- 84 Justo José NOGUERA PIETRI
- 85 Gladys REQUENA
- 86 Eduardo PIÑATE
- 87 Earle HERRERA
- 88 María Alejandra DÍAZ
- 89 Marco Antonio MEDINA
- 90 Bárbara Gabriela CÉSAR SIERO
- 91 Inocencio FIGUEROA
- 92 María Carolina AMELIACH VILLARROEL
- 93 Eulalia GUERRERO RIVERO
- 94 Omar José PRIETO FERNÁNDEZ
- 95 Ramón Alonso CARRIZALEZ RENGIFO
- 96 Jorge Luis GARCÍA CARNEIRO
- 97 Rafael Alejandro LACAVA EVANGELISTA
Application Prior to Publication
2 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
3 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.)
Despite growing international recognition of the constitutional legitimacy of Interim Venezuelan President Juan Guaidó, the Maduro regime continues to hold de facto power. Venezuelan citizens are increasingly unable to exercise their rights and the Venezuelan economy and humanitarian crisis are continuing to deteriorate. In the immediate term, prospects for restoration of democracy appear low.
The dismantling of Venezuela’s democracy accelerated in 2017 and 2018 under the administration of President Nicolás Maduro as he sought to consolidate power by gaining control of all Venezuela’s institutions. In addition to controlling the Supreme Court, and the Electoral National Council, Maduro’s government established, in the summer of 2017, the National Constituent Assembly (ANC), which has stripped the democratically elected, opposition-led National Assembly of its legislative powers. The election of this body took place without the constitutionally required referendum allowing the Venezuelan people to decide on whether it should be established. Regional and municipal elections in the fall of 2017, and presidential elections in May 2018, were plagued with irregularities and relied heavily on social coercion techniques to influence voters. The government-controlled Supreme Court subsequently confirmed that the opposition coalition, Mesa de la Unidad Democrática (MUD), would not be allowed to register as a party nor field a united coalition candidate to run in the presidential elections. The international community, including Canada, Lima Group members, the United States, the European Union countries, among others, did not recognize May 2018 elections as legitimate or democratic.
The Lima Group — an ad hoc grouping of countries in the hemisphere, including Canada, that are seeking a solution to the crisis in Venezuela — has met 11 times at the Foreign Minister level since August 2017. On January 4, 2019, the Lima Group agreed to, “[i]n accordance with respective national legislations, prevent high-level Venezuelan officials from entering the territory of Lima Group members and establish lists of natural and legal persons with whom financial and banking institutions of member countries should not conduct operations or should undertake special due diligence, preventing their access to the financial system, and, where applicable, freezing their funds and other assets or economic resources.”
On January 10, 2019, Mr. Maduro swore himself in for a second term based on the illegitimate and anti-democratic elections of May 2018. The legitimacy of his claim to the presidency from this date forward was rejected not only by Canada and the international community, but by Venezuela’s democratically elected National Assembly; on January 15, 2019, a united democratic opposition passed an agreement at the National Assembly declaring the usurpation of power by Maduro. On January 23, 2019, Juan Guaidó assumed the interim presidency of Venezuela, based on article 233 of the Venezuelan Constitution which, in the case of vacancy of the office of the presidency, designates the leader of the National Assembly as Interim President and is required to call new presidential elections. More than 50 countries, including Canada, most of its Lima Group partners, Australia, Ecuador, Japan, and most European Union member states, have recognized Guaidó as the Interim President of Venezuela.
Since the last round of Canadian sanctions under the Special Economic Measures Act (SEMA) were imposed in May 2018, the economic, political and humanitarian crisis in Venezuela has continued to worsen as the country slid into full dictatorship. In recent months, the regime has increased the persecution of political opponents and journalists, as well as perceived threats within the government and the military. Regime opponents are regularly intimidated, censored, and punished. The judiciary has become a tool to punish dissent, with harsh consequences for the judges that do not carry out the objectives of the Maduro regime. There are more than 200 political prisoners facing extremely poor conditions. Additional serious concerns include extrajudicial killings of dissidents and lack of media freedom. Meanwhile, perpetrators of human rights violations enjoy impunity.
In the past year, reports by the Inter American Commission on Human Rights (IACHR), the Panel of Independent International Experts appointed by the OAS Secretary General, the Office of the UN High Commissioner for Human Rights (OHCHR), and Amnesty International have highlighted the worsening human rights situation in Venezuela. On February 8, 2018, the Prosecutor of the International Criminal Court (ICC) announced that she would open a preliminary examination into the situation in Venezuela. On September 27, 2018, a resolution on human rights in Venezuela was adopted at the 39th session of the Human Rights Council (HRC) with the support of Canada and the Lima Group. On September 26, 2018, Canada and five Latin American countries (Peru, Colombia, Chile, Argentina and Paraguay) formally referred the situation in Venezuela to the ICC for allegations of crimes against humanity.
As a result of the economic crisis caused by the regime, Venezuelans are facing severe shortages of basic necessities, including food and medicine. The Maduro regime uses the shortages as a tool for social control by distributing subsidized food and goods among its supporters. Meanwhile, malnutrition, starvation and preventable deaths are growing. Almost 90% of Venezuela’s population has dropped below the poverty line; 280 000 children have acute malnutrition, and up to 140 000 could be at risk of dying. From 2016 to 2017, maternal mortality rose by 66% and infant mortality by 30%. There is a resurgence of preventable and treatable diseases like measles, diphtheria and tuberculosis, both within the country and among the migrant population. Meanwhile, credible analysis indicates that the Maduro regime’s inner circle takes advantage of the access to official rate exchange to buy foreign currency to sell it in the black market, resulting in massive profits.
On September 5, 2017, the Governments of the United States of America (U.S.) and Canada decided, in Ottawa, Ontario, to form an association (the Canada–U.S. Association on Venezuela, or the Association) for the purpose of discussing and recommending measures to respond to the situation in Venezuela. The Association called upon its members to take economic measures against Venezuela and persons responsible for the current situation Venezuela. The Association has met five times to date to assess the situation and recommend responses which are implemented in Canadian domestic law through the Special Economic Measures (Venezuela) Regulations (the Regulations).
Subject to certain exceptions to allow the delivery of humanitarian assistance to provide some mitigation of the impact of sanctions on vulnerable groups, the Regulations prohibit any person in Canada and any Canadian outside Canada from
- (a) dealing in any property, wherever situated, that is owned, held or controlled by a listed person or by a person acting on behalf of a listed person;
- (b) entering into or facilitating any transaction related to a dealing referred to in paragraph (a);
- (c) providing any financial or related services in respect of a dealing referred to in paragraph (a);
- (d) making any goods available, wherever situated, to a listed person or to a person acting on behalf of a listed person; and
- (e) providing any financial or related services to or for the benefit of a listed person.
On September 22, 2017, in accordance with the recommendation of the Canada–U.S. Association on Venezuela, Canada imposed sanctions under the SEMA on 40 Venezuelan officials and individuals, including President Nicolás Maduro, for their role in the deterioration of democracy in Venezuela. This sanction imposed an asset freeze and a dealing prohibition on the 40 listed persons, which included high-level officials of the National Constituent Assembly, the National Electoral Commission, and others involved in the erosion of democratic rights in Venezuela. In addition, on November 3, 2017, Canada sanctioned 19 Venezuelan nationals (three of whom were also sanctioned under SEMA) under the Justice for Victims of Corrupt Foreign Officials Act (Sergei Magnitsky Law). These officials were deemed responsible for, or complicit in, “gross violations of internationally recognized human rights” and/or significant acts of corruption.
On May 21, 2018, in response to the Maduro regime’s attacks on Venezuelans’ democratic and human rights, Canada announced that it would downgrade its diplomatic relations and restrict engagement with Venezuela. On May 30, 2018, following the presidential elections, Canada announced targeted sanctions against an additional 14 Venezuelans under SEMA, bringing the total number of those sanctioned by Canada to 70.
At the Association’s most recent meeting on March 19, 2019, it agreed that a response to the deteriorating situation in Venezuela remains urgent, and agreed on the need to maintain pressure on members of the regime and the continued value of sanctions in this regard.
Like-minded states’ sanctions
The United States has imposed targeted sanctions on 87 persons from Venezuela since 2014, including members of the executive, military, judiciary, National Guard, National Electoral Council, National Constituent Assembly, and state-owned oil company Petróleos de Venezuela, S.A. (PDVSA). On January 28, 2019, the United States imposed sanctions on the Venezuelan oil sector prohibiting U.S. businesses from engaging in transactions with PDVSA, thus cutting the regime’s main source of revenue and foreign currency. Additionally, recent U.S. sanctions announcements have targeted Venezuelan government officials associated with violence and obstruction of humanitarian aid delivery, as well as Venezuela’s the state-owned mining company for its links to the illegal gold exploitation in the south of the country.
In addition to the United States, other Lima Group members have imposed migratory or financial punitive measures, including Argentina, Colombia, Panama and Peru. The European Union and Switzerland have also imposed sanctions on 18 Venezuelan officials to date.
The objectives of the Regulations Amending the Special Economic Measures (Venezuela) Regulations (the Amending Regulations) are to
- respond to the ongoing anti-democratic actions of the Maduro regime;
- send a message to members of the Government of Venezuela that their anti-democratic actions have consequences;
- demonstrate to Canadians more broadly that the Government is prepared to take action when regional norms of democratic good governance are flouted; and
- show solidarity with the actions of like-minded countries in the hemisphere.
The Amending Regulations add another 43 individuals to the Schedule of listed persons in the Special Economic Measures (Venezuela) Regulations.
Public consultation would not have been appropriate, as publicizing the names of the listed persons targeted by sanctions would have resulted in asset flight prior to the coming into force of the amendments to list additional individuals.
Modern treaty obligations and Indigenous engagement and consultation
An initial assessment of the geographical scope of the initiative was conducted and did not identify any modern treaty obligations, as the Amending Regulations will 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
There may be costs to business in lost business opportunities, as well as costs associated with any applications they might make for permits to conduct dealings with one of the listed individuals. There is therefore an increased, albeit small, administrative cost for both small and other businesses.
Canadian banks and financial institutions will have to meet their existing regulatory compliance burden. The names of the listed individuals will be available online for financial institutions to review and will also be added to the Consolidated List of individuals listed under autonomous sanctions regulations in Canada, which will help to facilitate compliance with the Amending Regulations. Financial institutions will add the new names to their existing monitoring systems to ensure that they are in compliance with sanctions, which may result in a minor compliance cost.
Small business lens
The amendments potentially create additional administrative 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 businesses have dealings with the newly listed individuals. No significant loss of opportunities for small businesses is expected as a result of the amendments; the levels of trade and investments with Venezuela have continued to decline as the economic and political crisis continues and the risks of doing business increase.
The “One-for-One” Rule applies to the amendments, as there are incremental administrative costs for businesses seeking permits that would authorize them to carry out specified activities or transactions that are otherwise prohibited.
However, the administrative burden associated with the amendments is exempted from the “One-for-One” Rule, as the amendments are made to address a unique and exceptional circumstance.
Regulatory cooperation and alignment
While the Amending Regulations are not related to a work plan or commitment under a formal regulatory cooperation forum, they are being taken to align with actions taken and recommended by international partners, including the United States and the Lima Group.
Strategic environmental assessment
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
The new sanctions made under the Amending Regulations focus impact on figures believed responsible for key roles in the deteriorating situation in Venezuela, rather than on Venezuela as a whole. This results in minimizing collateral effects to those dependent on those individuals. Canada has included exemptions in sanctions regulations and issues permits to allow the delivery of humanitarian assistance to provide some mitigation of the impact of sanctions on vulnerable groups. As a result, these new sanctions are likely to have limited impact on the citizens of Venezuela.
While Canada has engaged strongly to hold Venezuela to account, the Maduro regime continues to strengthen its authoritarian control. The individuals added to the Schedule of listed persons in the Special Economic Measures (Venezuela) Regulations are directly linked to the regime’s antidemocratic actions, particularly in relation to repression, the use of force and censorship, and the control of public institutions to personal benefit. Imposing additional sanctions will demonstrate to the Maduro regime that anti-democratic actions have consequences and, more broadly, that the Government of Canada is prepared to take action when regional norms of democratic good governance are flouted.
These measures are in line with, and support the actions of like-minded countries in the hemisphere and globally; 23 of the 43 individuals have already been sanctioned by the United States and/or the European Union. In addition, Argentina, Colombia, Panama, Peru and Switzerland have also applied punitive measures against the Maduro regime.
Implementation, compliance and 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 willfully contravenes the Special Economic Measures (Venezuela) Regulations, as amended by the Amending 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.
Venezuela Task Force
Global Affairs Canada
125 Sussex Drive