Regulations Amending the Special Economic Measures (Russia) Regulations: SOR/2019-71
Canada Gazette, Part II, Volume 153, Number 7
SOR/2019-71 March 15, 2019
SPECIAL ECONOMIC MEASURES ACT
P.C. 2019-177 March 14, 2019
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 or is likely to result in a serious international crisis;
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 (Russia) Regulations.
Regulations Amending the Special Economic Measures (Russia) Regulations
1 Part 1 of Schedule 1 to the Special Economic Measures (Russia) Regulations footnote 1 is amended by adding the following after item 93:
- 94 Andrey (Andrei) Igorevich AKIMOV (born on September 22, 1953)
- 95 Andrey (Andrei) Vladimirovich CHEREZOV (born on October 12, 1967)
- 96 Alexey (Alexei, Aleksei) Gennadyevich DYUMIN (born on August 28, 1972)
- 97 Sergey (Sergei) Aleksandrovich FURSENKO (born on March 11, 1954)
- 98 Oleg Markovich GOVORUN (born on January 15, 1969)
- 99 Evgeny (Yevgeny, Yevgeni, Evgeni, Evgeniy) Petrovich GRABCHAK (born on July 18, 1981)
- 100 Konstantin Iosifovich KOSACHEV (born on September 17, 1962)
- 101 Andrey (Andrei) Leonidovich KOSTIN (born on September 21, 1956)
- 102 Igor Arkadyevich ROTENBERG (born on May 9, 1973)
- 103 Igor Ivanovich SECHIN (born on September 7, 1960)
- 104 Vladimir Vasilyevich USTINOV (born on February 25, 1953)
- 105 Timur Samirovich VALIULIN (born on December 20, 1962)
- 106 Vladimir Ivanovich YAKUNIN (born on June 30, 1948)
- 107 Aleksandr (Alexander) Aleksandrovich (Alexandrovich) ZHAROV (born on August 11, 1964)
- 108 Viktor Vasiliyevich ZOLOTOV (born on January 27, 1954)
- 109 Gennady (Gennadiy) Nikolayevich (Nikolaevich) MEDVEDEV (born on September 14, 1959)
- 110 Sergey (Sergei) Nikolayevich (Nikolaevich) STANKEVICH (born on January 27, 1963)
- 111 Andrey (Andrei) Borisovich SHEIN (born on June 10, 1971)
- 112 Aleksey (Aleksei, Oleksii) Mikhailovich SALYAEV (SALYAYEV, SALIAIEV) (born on December 4, 1975)
- 113 Andrey (Andrei, Andrii) Olegovich SHIPITSYN (born on December 25, 1969)
- 114 Ruslan Aleksandrovich ROMASHKIN (born on June 15, 1976)
- 115 Sergey (Sergei, Serhii) Alekseyevich SHCHERBAKOV (SHERBAKOV)
- 116 Vladimir Vladimirovich YERYGIN (ERYGIN) (born on November 25, 1955)
- 117 Aleksandr (Alexander) Vladimirovich DVORNIKOV (born on August 22, 1961)
- 118 Andrey (Andrei) Vyacheslavovich YUDIN (born on April 2, 1962)
2 Item 39 of Part 2 of Schedule 1 to the Regulations is repealed.
3 Part 2 of Schedule 1 to the Regulations is amended by adding the following after item 55:
- 56 AO Institute Giprostroymost – Saint-Petersburg
- 57 PJSC Mostotrest
- 58 Stroygazmontazh Most OOO
- 59 VAD AO
- 60 CJSC Interavtomatika (also known as ZAO Interavtomatika (IA))
- 61 LLC Foreign Economic Association Technopromexport
- 62 PJSC Power Machines
- 63 Oboronlogistika OOO
- 64 Sukhoi Aviation JSC
- 65 JSC Russian Aircraft Corporation MiG
- 66 Tupolev CJSC (also known as PJSC Tupolev)
- 67 Stroygazmontazh LLC
- 68 Ugolnye Tekhnologii OOO
- 69 Gaz-Alyans OOO (also known as Gas Alliance)
4 Schedule 2 to the Regulations is amended by adding the following after item 6:
- 7 JSC United Aircraft Corporation
Application Prior to Publication
Statutory Instruments Act
5 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
6 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.)
The Russian Federation continues to violate the sovereignty and territorial integrity of Ukraine.
In November 2013, the refusal of then Ukrainian President Viktor Yanukovych to sign a landmark association agreement with the European Union set off major protests in Kyiv, leading to the fall of the Yanukovych government. In March 2014, Russian forces occupied the Crimean peninsula of Ukraine. Following the unconstitutional “referendum” on March 16, 2014, President Putin signed a treaty purporting to incorporate Crimea into the Russian Federation on March 18, 2014. Canada, along with the international community, continues to condemn Russia’s illegal annexation of Crimea.
In the wake of the illegal annexation of Crimea, Russian-backed militants quickly gained control of significant portions of the Donetsk and Luhansk regions of eastern Ukraine, declaring the creation of the “Donetsk People’s Republic” and the “Luhansk People’s Republic.” Fraudulent so-called “independence referendums,” initiated by pro-Russian separatists, were held on May 11, 2014, but gained no international recognition. In the months following, violence increased as Russian-backed insurgents clashed with Ukrainian government forces. Peace agreements were reached at talks held in Minsk, Belarus, in September 2014 and in February 2015. The February “Package of Measures” contains 13 commitments, including an immediate and complete ceasefire in the Donetsk and Luhansk regions; the full withdrawal of heavy weaponry by both sides; full exchange of prisoners; pullout of all foreign armed formations; and the regaining by Ukraine of control of its border with Russia, among other measures.
Despite ongoing diplomatic efforts to seek a resolution to the conflict, Russia continues to sponsor violent pro-Russian separatist groups in the Donetsk and Luhansk regions of Ukraine, including by providing troops and support to the insurgency in eastern Ukraine. In particular, Russia has failed to make any significant progress on disarming illegal groups, relinquishing control over the Ukrainian side of the border, and withdrawing armed formations, equipment and mercenaries.
Canada has been a consistent supporter of the Minsk peace process and believes that it represents the only feasible path to a durable and peaceful solution to the conflict in Ukraine. Canada continues to call on both parties, in particular Russia, to fully implement their commitments and obligations under the Minsk agreements. Russia’s direct military involvement in Ukraine and clear violation of Ukraine’s sovereignty and territorial integrity continue to be a grave concern for the international community.
Acting in coordination with the United States and the European Union (EU), the Governor in Council has found that the illegal annexation of Crimea by the Russian Federation 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 (Russia) Regulations (the Russia Regulations) and the Special Economic Measures (Ukraine) Regulations (the Ukraine Regulations) were approved on March 17, 2014. The Russia Regulations and Ukraine Regulations impose an asset freeze and dealings prohibition on designated individuals and entities. Any person in Canada and Canadians outside Canada are therefore prohibited from dealing in the property, entering transactions with, providing services to, or otherwise making goods available to listed persons. Amendments to the Russia Regulations were made on March 19, March 21, April 28, May 4, May 12, June 21, July 24, August 6, September 16, December 19, 2014, February 17 and June 29, 2015, and on March 18, 2016. Amendments to the Ukraine Regulations were made on March 19, April 12, May 12, June 21, July 11, July 24, August 6, December 19, 2014, February 17 and June 29, 2015, and on March 18 and December 14, 2016.
The Special Economic Measures (Russia) Permit Authorization Order and the Special Economic Measures (Ukraine) Permit Authorization Order, which came into force on March 17, 2014, authorize the Minister of Foreign Affairs to issue to any person in Canada and Canadian outside Canada a permit to carry out a specified activity or transaction, or any class of activity or transaction, that is otherwise prohibited pursuant to the Russia Regulations and the Ukraine Regulations.
At the G7 Leaders Summit in Charlevoix, in June 2018, Canada and fellow G7 partners urged Russia to live up to its international obligations, as well as its responsibilities as a permanent member of the United Nations Security Council, to uphold international peace and security. The G7 reiterated their condemnation of Russia’s illegal annexation of Crimea and reaffirmed their enduring support for Ukrainian sovereignty, independence, and territorial integrity within its internationally recognized borders. They also recalled that the continuation of sanctions is clearly linked to Russia’s failure to demonstrate complete implementation of its commitments in the Minsk agreements and respect for Ukraine’s sovereignty. Leaders further affirmed their readiness to take further restrictive measures in order to increase costs on Russia, should its actions so require.
Since Canada’s last amendments to the Russia Regulations on March 18, 2016, and to the Ukraine Regulations on December 14, 2016, Russia has continued to play a destabilizing role in Ukraine, while denying that it bears responsibility for the conflict. This stance has serious consequences for the implementation of a number of Minsk protocols aimed at ensuring the security and sovereignty of Ukraine, as does Russia’s continued support to separatists operating in Ukraine’s Donetsk, Luhansk, and Crimea regions and the most recent organization of illegitimate elections in Russian-occupied Donbas. In particular, Russia has failed to make any significant progress on disarming illegal groups, relinquishing control over the Ukrainian side of the border, and withdrawing armed formations, equipment, and mercenaries. Further, since 2014, Russia has taken measures to consolidate its control over the illegally annexed Crimean Peninsula through the construction of the illegal Kerch Strait Bridge, imposing administrative and technical delays against Ukrainian and international ships transiting through the Kerch Strait to the Ukrainian ports of Mariupol and Berdyansk, major export terminals for Ukraine. On November 25, 2018, the situation in the Azov Sea escalated, with Russia ramming, firing shots at, seizing several Ukrainian vessels and detaining their crew members.
The duration of sanctions by Canada and like-minded partners has been explicitly linked to the complete implementation of the Minsk agreements by all parties. Since Canada’s last amendments to the Russia Regulations in 2016, the EU and the United States have added a number of individuals and entities to their respective sanctions lists. On July 5, 2018, the European Council (the Council) prolonged EU economic sanctions against Russia until January 31, 2019. These measures target the financial, energy, and defence sectors, as well as dual-use goods. On September 13, 2018, the Council extended the EU restrictive measures for a further six months, until March 15, 2019. These measures consist of asset freezes and travel restrictions. Recent actions were also taken by the United States in April 2018, including the addition of a number of Russian individuals and entities to the various executive orders (13660, 13661, 13662 and 13685) which form the basis of their Ukraine-related sanctions.
The cost of the conflict in human terms has been high. Since the conflict in eastern Ukraine began in mid-April 2014, the United Nations has documented at least 34 056 casualties (10 090 killed, 23 966 injured) among Ukrainian armed forces, civilians, and members of the armed militias. Of those killed, more than a quarter are estimated to be civilians. Ukraine’s Ministry of Social Policy has registered over 1.6 million internally displaced persons throughout Ukraine, though actual numbers are widely judged to be much higher.
- (1) Align with actions taken by international partners to underscore continued trans-Atlantic unity in responding to Russia’s actions in Ukraine.
- (2) Maintain pressure on Russia to fully implement its Minsk commitments.
- (3) Demonstrate Canada’s commitment to a policy of non-recognition of Russia’s illegal annexation of Crimea.
- (4) Signal to Russia that its most recent actions in the Kerch Strait, connected to its illegal annexation and ongoing occupation of Crimea, carry consequences and that Canada is willing to increase costs to Russia for the continued destabilization in Ukraine.
The Regulations Amending the Special Economic Measures (Russia) Regulations (the Amending Russia Regulations) add 25 individuals to Part 1, 14 entities to Part 2 of Schedule 1, and moves one entity (JSC United Aircraft Corporation) from Part 2 of Schedule 1 to Schedule 2.
The Regulations Amending the Special Economic Measures (Ukraine) Regulations (the Amending Ukraine Regulations) add 89 individuals and one entity to Schedule 1.
Public consultation would not be appropriate, as publicizing the names of the listed individuals and entities targeted by sanctions would have resulted in asset flight prior to the coming into force of the amendments.
Modern treaty obligations and Indigenous engagement and consultation
An assessment has been conducted and no modern treaty implications have been identified.
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 with the listed companies, as well as costs associated with any applications they might make for permits to conduct dealings with one of the listed individuals and entities. As such, there may be a small administrative cost increase, 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 amendments. 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 or entities.
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
The proposal is not related to a work plan or commitment under a formal regulatory cooperation forum. While sanctions regulatory mechanisms of Canada, the United States and the EU are inherently different, a number of the proposed amendments will help align the sanctions listings on both Russia and Ukraine.
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 (GBA+)
No GBA+ impacts have been identified for this proposal.
The individuals and entities added to the schedules of the Russia and Ukraine Regulations are linked to Russia’s illegal annexation and ongoing occupation of Crimea, and the continuing violation of Ukraine’s sovereignty and territorial integrity. Russia continues to consolidate its illegal control over Crimea, including through the illegal construction of the Kerch Strait Bridge, which was partially opened in May 2018, and attempts to block and delay the passage of Ukrainian and foreign vessels through the Kerch Strait. Russia’s aggressive actions of November 25, 2018, including the ramming, shooting, seizure of Ukrainian vessels, and detention of Ukrainian sailors were disproportionate and unacceptable. These actions further contribute to insecurity in Ukraine and destabilization of the region, and demonstrate a fundamental disregard by Russia for Ukraine’s sovereignty. The listings signal Canada’s strong condemnation of Russia’s continued aggression in Ukraine. It has also been determined that Canada’s Schedule 1 prohibitions under the Russia Regulations (which freeze assets and prohibits any dealings) on the entity JSC United Aircraft Corporation go beyond the sanctions actions of our like-minded partners, and in turn, have negatively affected the competitiveness of the Canadian civil aviation industry. This entity has been moved to Schedule 2 (no new debt financing greater than 30 days), which aligns Canada with the sanctions actions of our like-minded partners.
A significant impact on Canadian business activity is not expected and no significant Canadian interests have been identified with any of the individuals or entities recommended to be listed as part of the amendments.
Implementation, compliance and enforcement, and service standards
Canada’s sanctions regulations are enforced by the Royal Canadian Mounted Police. In accordance with section 8 of the Special Economic Measures Act, 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 or not more than five years.
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