Vol. 148, No. 10 — May 7, 2014
SOR/2014-98 April 28, 2014
SPECIAL ECONOMIC MEASURES ACT
Regulations Amending the Special Economic Measures (Russia) Regulations
P.C. 2014-470 April 28, 2014
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 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 (Russia) Regulations.
REGULATIONS AMENDING THE SPECIAL ECONOMIC MEASURES (RUSSIA) REGULATIONS
1. Paragraph 2(a) of the Special Economic Measures (Russia) Regulations (see footnote 1) is replaced by the following:
- (a) a person engaged in activities that directly or indirectly facilitate, support, provide funding for or contribute to a violation or attempted violation of the sovereignty or territorial integrity of Ukraine;
2. Part 1 of the schedule to the Regulations is amended by adding the following after item 32:
- 33. Vyaecheslav VOLODIN
- 34. Dmitry KOZAK
- 35. Aleksey PUSHKOV
- 36. Alexander Mikhailovich BABAKOV
- 37. Oleg Evgenyevich BELAVENTSEV
- 38. Evgeniy Alexsevevich MOROV
- 39. Vladimir Volfovich ZHIRINOVSKY
- 40. Arkady ROTENBERG
- 41. Boris ROTENBERG
3. Part 2 of the schedule to the Regulations is amended by adding the following after item 1:
- 2. ExpoBank
- 3. RosEnergoBank
APPLICATION PRIOR TO PUBLICATION
Statutory Instruments Act
4. 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
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 has deployed significant military forces to the Ukrainian province of Crimea, beyond the scope of its basing arrangements with Ukraine and in clear violation of Ukraine’s sovereignty and territorial integrity. Further destabilization efforts are occurring in eastern Ukraine, as government buildings have been seized by heavily armed pro-Russian militants. Multiple reports suggest that Russia is mobilizing, supporting and organizing the militants, and Russian forces continue to mass near the Ukrainian border.
In late February, in Simferopol, the capital of the Ukrainian province of Crimea, uniformed and heavily armed men seized government buildings and the provincial parliament. Although these men had removed their insignia and were wearing masks, their uniforms and equipment strongly suggested that they were Russian soldiers. Russian troops also occupied Crimea’s airports and other strategic facilities while more Russian troops arrived by aircraft. Ukraine’s Interior Minister described the situation as a “military invasion and occupation.” On March 1, 2014, President Putin asked the Russian Parliament for approval to send troops to Ukraine, without limiting the request to Crimea only, saying that troops were needed to protect Russian lives. Parliament granted his request.
By March 2, 2014, Russia reportedly had more than 6 000 troops in Crimea leading Ukraine to appeal for international help. In response, the G7 suspended preparations for the G8 Summit in Sochi, Russia, scheduled for June 2014. Despite repeated requests from the international community to disengage, Russian forces steadily took operational control of the Crimean peninsula, capturing key installations and chokepoints, and increasing their military presence to an estimated 20 000 troops.
With the Crimean provincial legislature under Russian military control, the legislature’s Speaker announced that legislators had passed a vote of non-confidence in the provincial government of Crimea. The self-appointed Crimean Parliament declared its unanimous decision to become part of Russia, and set a referendum on this question. On March 16, 2014, the referendum was held in Crimea while the province was under the control of an illegal and coercive Russian military presence, resulting in an announced vote of 97 % in favour of Crimea becoming a subject of the Russian Federation.
On March 19, 2014, President Putin introduced a bilateral treaty on Crimea’s admission to the Russian Federation as well as a constitutional law to the same effect. On March 22, 2014, President Putin finalized the legal process of Crimea’s annexation to the Russian Federation with the signing of the treaty into Russian law. President Putin also signed a decree which established Crimea as the ninth federal district of the Russian Federation and appointed Oleg Belavintsev, a close associate of Sergei Shoigu, the Russian Minister of Defence, as the President’s representative in Crimea. President Putin then ordered the confirmation of plans for the creation of the territorial executive bodies of the Russian Federation in Crimea and Sevastopol by March 29, 2014.
These events and actions resulted in widespread criticism from the international community. On March 27, 2014, the United Nations (UN) General Assembly passed a resolution that overwhelmingly affirmed Ukraine’s territorial integrity and declared the illegality of the referendum that led to Russia’s annexation of the Crimean peninsula. In a decisive rebuke to Russia, 100 UN member states voted in favour of resolution A/68/L.39, 58 abstained and only 11 voted against the resolution.
In April 2014, a series of coordinated events took place reminiscent of events that preceded Russia’s annexation of Crimea less than a month before. Unidentified gunmen stormed police stations, seized government buildings and set up checkpoints in several cities in eastern Ukraine, particularly in Donetsk Oblast. The Ukrainian government asserts that Russian intelligence officers are directly involved in orchestrating these actions, and that some of the gunmen have uniforms and weapons similar to those of Russian soldiers.
The Donetsk basin is Ukraine’s coal-mining heartland and, apart from Kyiv, is the most densely populated part of Ukraine. The towns targeted by the militants are close to the Russian border and have traditionally voted for “pro-Russia” politicians such as Viktor Yanukovych.
Russia’s actions seem to be aimed at severing Kyiv’s control over this economically vital area, in order to further destabilize the government led by Prime Minister Arseniy Yatsenyuk, undermine its legitimacy, provoke armed clashes, and prevent the presidential elections planned for May 25, 2014. Russia could also potentially use its de facto control over the Donetsk region to cut off revenue flows to Kyiv and attempt to force the government to devolve power to the provinces.
On March 17, 2014, finding that the situation with respect to Crimea constituted a grave breach of international peace and security that has resulted or is likely to result in a serious international crisis, and acting in coordination with the United States and the European Union, the Governor in Council passed the Special Economic Measures (Russia) Regulations. Two days later, on March 19, 2014, the Governor in Council amended the Regulations by adding an additional 11 individuals to the list of designated persons. On March 21, 2014, the Governor in Council amended the Regulations again by adding an additional 14 individuals to the list of designated persons, as well as one entity (a Russian bank).
The proposed Regulations Amending the Special Economic Measures (Russia) Regulations (the Regulations) amend section 2 of the Regulations and add 11 persons (9 individuals and 2 entities) to the Schedule.
The proposed Regulations amend section 2 of the Special Economic Measures (Russia) Regulations, which describe who may be listed as a designated person. This includes broadening paragraph 2(a) to include persons whose activities have directly or indirectly facilitated, supported, provided funding for, or contributed to, a violation or attempted violation of the sovereignty or territorial integrity of Ukraine. This amended category continues to capture all designations that fell within the description in paragraph 2(a) prior to these Regulations.
The Regulations also add nine individuals and two entities to the list of designated persons under the Special Economic Measures (Russia) 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.
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.
Foreign Affairs, Trade and Development Canada drafted the Regulations in consultation with the Department of Justice and Citizenship and Immigration Canada.
The measures contained in the Regulations demonstrate Canada’s concern about Russia’s 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.
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