Special Economic Measures (Nicaragua) Regulations: SOR/2019-232

Canada Gazette, Part II, Volume 153, Number 14

Registration
SOR/2019-232 June 21, 2019

SPECIAL ECONOMIC MEASURES ACT

P.C. 2019-887 June 21, 2019

Whereas the Governor in Council is of the opinion that gross and systematic human rights violations have been committed in Nicaragua;

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 Special Economic Measures (Nicaragua) Regulations.

Special Economic Measures (Nicaragua) Regulations

Interpretation

Definitions

1 The following definitions apply in these Regulations.

Minister means the Minister of Foreign Affairs. (ministre)

Nicaragua means the Republic of Nicaragua and includes

• (a) any of its political subdivisions;
• (b) its government and any of its departments or any government or department of its political subdivisions; and
• (c) any of its agencies or any agency of its political subdivisions. (Nicaragua)

List

Listed person

2 A person whose name is listed in the schedule is a person who is in Nicaragua, or is 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

• (a) a person who has participated in gross and systematic human rights violations in Nicaragua;
• (b) a current or former senior official of the Government of Nicaragua;
• (c) an associate or family member of a person referred to in paragraphs (a) or (b);
• (d) an entity owned, held or controlled, directly or indirectly, by a person referred to in paragraphs (a), (b) or (c) or acting on behalf of or at the direction of a person referred to in paragraphs (a), (b) or (c); or
• (e) a senior official of an entity referred to in paragraph (d).

Prohibitions

Prohibited dealings and activities

3 It is prohibited for any person in Canada or any Canadian outside Canada to

• (a) deal 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) enter into or facilitate any transaction related to a dealing referred to in paragraph (a);
• (c) provide any financial or related services in respect of a dealing referred to in paragraph (a);
• (d) make available any goods, wherever situated, to a listed person or to a person acting on behalf of a listed person; or
• (e) provide any financial or related services to or for the benefit of a listed person.

Non-application

4 Section 3 does not apply in respect of

• (a) any payment made by or on behalf of a listed person that is due under a contract entered into before the person became a listed person, provided that the payment is not made to a listed person or to a person acting on behalf of a listed person;
• (b) any transactions necessary for a Canadian to transfer to a non-listed person any accounts, funds or investments of a Canadian held by a listed person on the day on which that person became a listed person;
• (c) any dealings with a listed person required with respect to loan repayments made to any person in Canada, or any Canadian outside Canada, for loans entered into with any person other than a listed person, and for enforcement and realization of security in respect of those loans, or payments by guarantors guaranteeing those loans;
• (d) any dealings with a listed person required with respect to loan repayments made to any person in Canada, or any Canadian outside Canada, for loans entered into with a listed person before that person became a listed person, and for enforcement and realization of security in respect of those loans, or payments by guarantors guaranteeing those loans;
• (e) any benefit paid under the Old Age Security Act, the Canada Pension Plan or an Act respecting the Québec Pension Plan, CQLR, c. R-9, any superannuation, pension or benefit paid under or in respect of any retirement savings plan or under any retirement plan, any amount paid under or in respect of the Garnishment, Attachment and Pension Diversion Act or the Pension Benefits Division Act, and any other payment made in respect of disability to any person in Canada or any Canadian outside Canada;
• (f) financial services required in order for a listed person to obtain legal services in Canada with respect to the application of any of the prohibitions set out in these Regulations;
• (g) any transaction in respect of any account at a financial institution held by a diplomatic mission, if the transaction is required in order for the mission to fulfill its diplomatic functions as set out in Article 3 of the Vienna Convention on Diplomatic Relations or, if the diplomatic mission has been temporarily or permanently recalled, when the transaction is required in order to maintain the mission premises;
• (h) any transaction with any international organization with diplomatic status, with any United Nations agency, with the International Red Cross and Red Crescent Movement, or with any entity that has entered into a grant or contribution agreement with the Department of Foreign Affairs, Trade and Development; and
• (i) a transaction by the Government of Canada that is provided for in any agreement or arrangement between Canada and Nicaragua.

Assisting in a prohibited activity

5 It is prohibited for any person in Canada or any Canadian outside Canada to knowingly do anything that causes, facilitates or assists in, or is intended to cause, facilitate or assist in, any activity prohibited by section 3.

Duty to determine

6 The following entities must determine on a continuing basis whether they are in possession or control of property that is owned, held or controlled by or on behalf of a listed person:

• (a) authorized foreign banks, as defined in section 2 of the Bank Act, in respect of their business in Canada, and banks regulated by that Act;
• (b) cooperative credit societies, savings and credit unions and caisses populaires regulated by a provincial Act and associations regulated by the Cooperative Credit Associations Act;
• (c) foreign companies, as defined in subsection 2(1) of the Insurance Companies Act, in respect of their insurance business in Canada;
• (d) companies, provincial companies and societies, as those terms are defined in subsection 2(1) of the Insurance Companies Act;
• (e) fraternal benefit societies regulated by a provincial Act in respect of their insurance activities and insurance companies and other entities regulated by a provincial Act that are engaged in the business of insuring risks;
• (f) companies regulated by the Trust and Loan Companies Act;
• (g) trust companies regulated by a provincial Act;
• (h) loan companies regulated by a provincial Act;
• (i) entities that engage in any business described in paragraph 5(h) of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act if the business involves the opening of an account for a client; and
• (j) entities authorized under provincial legislation to engage in the business of dealing in securities or to provide portfolio management or investment counselling services.

Duty to disclose — RCMP or CSIS

7 (1) Every person in Canada, every Canadian outside Canada and every entity set out in section 6 must disclose without delay to the Commissioner of the Royal Canadian Mounted Police or to the Director of the Canadian Security Intelligence Service

• (a) the existence of property in their possession or control that they have reason to believe is owned, held or controlled by or on behalf of a listed person; and
• (b) any information about a transaction or proposed transaction in respect of property referred to in paragraph (a).

Immunity

(2) No proceedings under the Special Economic Measures Act and no civil proceedings lie against a person for a disclosure made in good faith under subsection (1).

Applications

Application to no longer be a listed person

8 (1) A listed person may apply to the Minister in writing to have their name removed from the schedule.

Reasonable grounds

(2) On receipt of an application, the Minister must decide whether there are reasonable grounds to recommend to the Governor in Council that the applicant’s name be removed from the schedule.

New application

9 If there has been a material change in circumstances since the last application was submitted, a person may submit another application under section 8.

Mistaken identity

10 (1) A person whose name is the same as or similar to the name of a listed person and who claims not to be that person may apply to the Minister in writing for a certificate stating that they are not that listed person.

Determination by Minister

(2) Within 30 days after receiving the application, the Minister must,

• (a) if it is established that the applicant is not the listed person, issue the certificate; or
• (b) if it is not so established, provide notice to the applicant of his or her determination.

Application Before Publication

11 For the purpose of paragraph 11(2)(a) of the Statutory Instruments Act, these Regulations apply according to their terms before they are published in the Canada Gazette.

Coming into Force

12 These Regulations come into force on the day on which they are registered.

SCHEDULE

(Section 2 and subsections 8(1) and (2))

Persons

• 1 Gustavo Eduardo PORRAS Cortes
• 2 Sonia CASTRO Gonzalez
• 3 Orlando Jose CASTILLO Castillo
• 4 Oscar Salvador MOJICA Obregon
• 5 Rosario María MURILLO Zambrana
• 6 Fidel Antonio MORENO Briones
• 7 Francisco Javier DIAZ Madriz
• 8 Nestor MONCADA Lau
• 9 Laureano Facundo ORTEGA Murillo

REGULATORY IMPACT ANALYSIS STATEMENT

(This statement is not part of the Regulations or the Order.)

Issues

In April 2018, mass public protests in Nicaragua against the national government were brutally suppressed by government forces and government-sponsored civil forces, resulting in gross and systematic human rights violations, including arbitrary detention and extrajudicial killings. Violence continued for weeks following the protests. The Government of Nicaragua resumed a dialogue with the opposition groups in February 2019, with the presence of the Papal Nuncio and an Organization of American States (OAS) Special Representative to Nicaragua and released most political prisoners as agreed to with opposition groups. However, the Government of Nicaragua continues to refuse access to the country to international human rights monitoring bodies such as the Inter-American Commission on Human Rights (IACHR) and Office of the United Nations High Commissioner for Human Rights (OHCHR). Meanwhile, human rights violations continue, and there has been no accountability for past violations.

Background

In April 2018, the Government of Nicaragua began a systematic campaign of repression and state-sponsored violence to crack down on anti-government protests. Under the direction of President Daniel Ortega, the government has committed a range of well-documented human rights violations. The IACHR, OHCHR, Amnesty International and local human rights organizations have reported numerous human rights violations, including state authorities’ violations to the right to life, security, free speech, and free assembly, as well as breaches of due-process safeguards. There are also credible allegations of torture, extrajudicial killings and mistreatment against protestors. In addition, the United Nations Refugee Agency has estimated that some 62 000 Nicaraguans have fled the country to escape the violence.

Today, while there has been some recent progress in terms of dialogue between the Government of Nicaragua and opposition groups and the release of most political detainees, the Government of Nicaragua has not been held accountable for those human rights violations. It continues to allow gross and systematic human rights violations, including by restricting freedom of speech and the right to assemble, while arbitrary detentions continue.

Canada has been strongly engaged in the situation in Nicaragua, both directly with the Government of Nicaragua and in multilateral fora. Despite the recent release of many political prisoners, there is no indication that the Government of Nicaragua is genuinely committed to finding a negotiated solution with opposition groups, nor is it committed to ensuring accountability for those responsible for gross and systematic human rights violations. Appropriate steps to restore democratic rights or to address ongoing human rights violations have also not been taken.

To date, the United States has imposed sanctions on six Nicaraguan individuals in relation to the human rights violations stemming from the April 2018 protests and significant corruption in the country.

Objective

• to put pressure on the Government of Nicaragua to change its behaviour
• to communicate a clear message to the Government of Nicaragua that Canada will not accept that gross and systematic human rights violations continue to take place at the hands of the State with impunity
• to encourage progress with the negotiation process

Description

The Special Economic Measures (Nicaragua) Regulations (the Regulations) lists nine individuals and prohibits persons (individuals and entities) in Canada and Canadians outside Canada from conducting the following activities:

• (a) deal 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) enter into or facilitate any transaction related to 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;
• (c) provide any financial or related services in respect of 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;
• (d) make any goods available, wherever situated, to a listed person or to a person acting on behalf of a listed person; and
• (e) provide any financial or related services to or for the benefit of a listed person.

Consequential to being listed in the Regulations, and pursuant to the application of section 35(1)(d) of the Immigration and Refugee Protection Act, the listed individuals are inadmissible to Canada.

The Special Economic Measures (Nicaragua) Permit Authorization Order (the Order) authorizes the Minister of Foreign Affairs to issue to any individual or person in Canada and any Canadian outside Canada a permit to carry out a specified activity or transaction, or any class of activity or transaction that is otherwise restricted or prohibited pursuant to the Regulations.

Regulatory development

Consultation

Public consultation would not have been appropriate, as publicizing the names of the listed persons targeted by sanctions would have likely resulted in asset flight prior to the coming into force of the Regulations.

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 Regulations and Order do not take effect in a modern treaty area.

Instrument choice

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

Regulatory analysis

Costs and benefits

Application of sanctions will serve to put pressure on the Ortega government to change its behaviour. The sanctions communicate a clear message that Canada will not accept that gross and systematic human rights violations continue to take place in Nicaragua at the hands of the State with impunity. As efforts to date have not convinced President Ortega to accept accountability for human rights violations nor to fully implement agreements stemming from the negotiation process with opposition groups, sanctions send an important message from Canada and encourage progress with the negotiations.

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 persons.

Financial institutions may be required to 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. The names of the listed persons are available online for financial institutions to review and have also been added to the Consolidated List of persons listed under autonomous sanctions regulations in Canada, which helps to facilitate compliance with the Regulations.

Small business lens

The Regulations 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 persons. No significant loss of opportunities for small businesses is expected as a result of the Regulations.

“One-for-One” Rule

The “One-for-One” Rule applies to the Regulations, 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 Regulations is exempted from the “One-for-One” Rule, as the Regulations are made to address a unique and exceptional circumstance.

Regulatory cooperation and alignment

While the Regulations are not related to a work plan or commitment under a formal regulatory cooperation forum, they align with sanctions that have been taken by the United States in relation to Nicaragua.

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 was not required.

Gender-based analysis plus (GBA+)

The new Regulations’ focus is on specific individuals who are members of President Daniel Ortega’s regime, the Government of Nicaragua and/or persons engaged in activities that contribute to human rights violations in Nicaragua, rather than on Nicaragua as a whole. This results in minimizing collateral effects to those dependent on those individuals. Exemptions are included in the Regulations, including, among others, to allow for the delivery of humanitarian assistance to provide some mitigation of the impact of sanctions on vulnerable groups. The Minister of Foreign Affairs can also issue permits pursuant to the Order. As such, these new sanctions are likely to have limited impact on the citizens of Nicaragua.

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 (Nicaragua) 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.

Contact

Sébastien Sigouin
Director
Central America, Cuba and Dominican Republic
Global Affairs Canada
125 Sussex Drive
Ottawa, Ontario
K1A 0G2
Email: sebastien.sigouin@international.gc.ca