Regulations Amending the Special Economic Measures (Russia) Regulations: SOR/2022-46
Canada Gazette, Part II, Volume 156, Number 6
SOR/2022-46 March 4, 2022
SPECIAL ECONOMIC MEASURES ACT
P.C. 2022-219 March 4, 2022
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, 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 b, (2) and (3) of the Special Economic Measures Act footnote c, makes the annexed Regulations Amending the Special Economic Measures (Russia) Regulations.
Regulations Amending the Special Economic Measures (Russia) Regulations
1 Section 2.1 of the Special Economic Measures (Russia) Regulations footnote 1 is replaced by the following:
Schedules 2 and 3
2.1 A person whose name is listed in Schedule 2 or 3 is a person 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 owned, held or controlled, directly or indirectly, by a person referred to in any of paragraphs 2(a) to (b) or acting on behalf of or at the direction of a person referred to in any of those paragraphs; or
- (b) a person owned, held or controlled, directly or indirectly, by Russia or acting on behalf of or at the direction of Russia.
2 Part 1 of Schedule 1 to the Regulations is amended by adding the following in numerical order:
- 521 Zeljko RUNJE (born in 1954)
- 522 Didier CASIMIRO (born in 1966)
- 523 Ilgam KUCHUKOV (born in 1970)
- 524 Dina Rinatovna MALIKOVA (born in 1975)
- 525 Valentin Gennadyevich MAMAEV (born in 1976)
- 526 Andrey Aleksandrovich POLYAKOV (born in 1976)
- 527 Khasan Kureyshevich TATRIEV (born in 1963)
- 528 Alexey Borisovich MILLER (born on January 31, 1962)
- 529 Irina Nikolayevna MILYUTINA (born in 1973)
- 530 Oleg Yevgenyevich AKSYUTIN (born on May 5, 1967)
Application Before Publication
3 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
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.)
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 (EU) set off major protests in Kyiv, leading to the fall of his government. In February 2014, Russian forces illegally invaded and occupied the Crimean peninsula of Ukraine. Following an unconstitutional “referendum” on March 16, 2014, Russian President Vladimir 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 this illegal occupation and attempted annexation of Crimea.
In the wake of the annexation, Russian-backed militants quickly seized control of significant portions of the Donetsk and Luhansk regions of eastern Ukraine, declaring the creation of the so-called Donetsk and Luhansk “People’s Republics.” Fraudulent “independence referendums,” initiated by pro-Russian separatists, were held on May 11, 2014, but gained no international recognition. Peace agreements were reached at talks held in Minsk, Belarus, in September 2014 and in February 2015 (the Minsk agreements). Since the illegal occupation and annexation of Crimea, Russia has also continued to sponsor violent pro-Russian separatist groups in the Donetsk and Luhansk regions of Ukraine.
Acting in coordination with the United States (U.S.) and the EU, Canada 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 (Ukraine) Regulations (the Ukraine Regulations) and the Special Economic Measures (Russia) Regulations (the Russia Regulations) were approved on March 17, 2014. Both sets of regulations impose dealings prohibitions (an effective asset freeze) on designated individuals and entities. Any person in Canada and Canadians outside Canada are thereby prohibited from dealing in the property of, entering into transactions with, providing services to, or otherwise making goods available to listed persons. Amendments to both the Russia Regulations and the Ukraine Regulations have been made on 20 separate occasions between 2014 and 2022.
The Special Economic Measures (Ukraine) Permit Authorization Order and the Special Economic Measures (Russia) 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 Ukraine Regulations and the Russia Regulations.
On February 15, 2022, the Russian Duma (equivalent to the Canadian parliament) voted to ask President Putin to recognize the so-called Luhansk and Donetsk People’s Republics in eastern Ukraine, violating the Minsk agreements and Ukraine’s sovereignty. On February 18, 2022, Russia-backed so-called authorities ordered the evacuation of women and children from the region, as well as the conscription of men aged 18 to 55. On February 20, 2022, Russia extended a joint military exercise with Belarus and announced that Russian troops would not leave Belarus. On February 21, 2022, following a meeting of the Russian Security Council, President Putin signed decrees recognizing the “independence” and “sovereignty” of the so-called Luhansk People’s Republic (LNR) and Donetsk People’s Republic (DNR). This step is a blatant violation of Ukraine’s sovereignty and territorial integrity, international law, and the Minsk Agreements that were intended to bring about a peaceful resolution to the conflict in eastern Ukraine. Immediately following this, President Putin ordered Russian forces to perform “peacekeeping functions” in the so-called LNR and DNR regions. He also expressly abandoned the Minsk agreements, declaring them “non-existent.” On February 22, 2022, Russia’s Duma gave President Putin permission to use military force outside the country. Uniformed Russian troops and armoured vehicles then moved into the Donetsk and Luhansk regions for the first time under official orders. On February 24, 2022, President Putin announced a “special military operation” as Russian forces launched a full-scale invasion of Ukraine. The invasion began with targeted strikes on key Ukrainian military infrastructure and the incursion of Russian forces into Ukraine in the north from Russia and Belarus, in the east from Russia and the so-called LNR and DNR, and in the south from Crimea.
This follows a significant build-up of Russian troops (roughly 150 000–190 000), military equipment, and military capabilities in and around Ukraine since the fall of 2021, following months of Russian escalatory behaviour. This aggression directly threatens and imposes significant costs on Ukraine. It is also a blatant violation of the Minsk agreements that were intended to bring about a peaceful resolution to the conflict in the regions of Donetsk and Luhansk. Russia’s relationships with Ukraine, the U.S., and the North Atlantic Treaty Organization (NATO) have also deteriorated, which has led to heightened tensions. Russia is committed to blocking Ukraine’s Euro-Atlantic aspirations, as it perceives this as a threat to its own security.
Since the beginning of the current crisis, Canada and the international community have been calling on Russia to de-escalate, pursue diplomatic channels, and demonstrate transparency in military activities. Diplomatic negotiations have been taking place along several tracks, including via (1) United States–Russia bilateral talks (e.g. the Strategic Stability Dialogue); (2) NATO; (3) the Organization for Security and Cooperation in Europe (OSCE); and (4) the Normandy Four format (Ukraine, Russia, Germany, France) for the implementation of the Minsk agreements.
On February 21, 2022, G7 Foreign Affairs ministers released a statement condemning Russian recognition of the so-called LNR and DNR regions and stating that they were preparing to step up restrictive measures responding to Russia’s actions, while reaffirming their unwavering commitment to Ukraine’s sovereignty and territorial integrity. G7 Foreign Affairs ministers also reconfirmed their support for the full implementation of the Minsk agreements to end the conflict in eastern Ukraine. This follows a similar statement made in December 2021, and one by NATO Foreign Affairs ministers in January 2022.
Since 2014, Canada has provided Ukraine with more than $890 million in multifaceted assistance to support Ukraine’s security, prosperity, and reform objectives. Canada is currently considering a number of potential response options to support Ukraine and respond to Russian aggression, in close coordination with Canada’s allies and partners.
On January 27, 2022, Canada announced the extension and expansion of Operation UNIFIER, Canada’s non-combat military training and capacity-building mission to Ukraine. As part of the Operation UNIFIER extension, Canada also announced enhanced diplomatic resources for Global Affairs Canada headquarters and the Canadian embassy in Kyiv to support a resilient and democratic Ukraine. In addition, Canada announced a further $50 million in international assistance for Ukraine, including $35 million in development and $15 million in humanitarian funding. This assistance is in addition to the sovereign loan of up to $120 million offered to Ukraine on January 21, 2022, to support its economic resilience and governance reform efforts.
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, and the respect for Ukraine’s sovereignty and territorial integrity, within its internationally recognized borders, which includes Crimea, as well as Ukraine’s territorial sea. The U.S., the United Kingdom, Australia, and the EU have continued to update their sanction regimes against individuals and entities in both Ukraine and Russia.
- Impose further costs on Russia for its unprovoked and unjustifiable invasion of Ukraine;
- Align Canada’s actions with those taken by international partners to underscore continued unity with Canada’s allies and partners in responding to Russia’s actions in Ukraine; and
- Retain the possibility of additional sanctions in the event of further Russian aggression as a deterrent measure.
The Regulations Amending the Special Economic Measures (Russia) Regulations (the amendments) add 10 new individuals to Schedule 1 of the Russia Regulations, thereby subjecting them to a broad dealings ban.
Global Affairs Canada engages regularly with relevant stakeholders, including civil society organizations and cultural communities and other like-minded governments regarding Canada’s approach to sanctions implementation.
With respect to the amendments, 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 amendments.
Modern treaty obligations and Indigenous engagement and consultation
An initial assessment of the geographical scope of the amendments was conducted and did not identify any modern treaty obligations, as the amendments do 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
Sanctions targeting specific persons have less impact on Canadian businesses than traditional broad-based economic sanctions, and the amendments will have limited impact on the citizens of the country of the listed persons. It is likely that the newly listed individuals have limited linkages with Canada, and therefore do not have business dealings that are significant to the Canadian economy.
Canadian banks and financial institutions are required to comply with sanctions. They will do so by adding the newly listed individuals to their existing monitoring systems, which may result in a minor compliance cost.
The amendments will create additional costs for businesses seeking permits that would authorize them to carry out specified activities or transactions that are otherwise prohibited.
Small business lens
The amendments potentially create additional compliance 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 small businesses have or will have dealings with the newly listed individuals and entities. No significant loss of opportunities for small businesses is expected as a result of the amendments.
As there are no administrative costs associated with these regulatory amendments, the one-for-one rule does not apply.
Regulatory cooperation and alignment
While the amendments are not related to a work plan or commitment under a formal regulatory cooperation forum, they align with actions taken by like-minded partners.
Strategic environmental assessment
The amendments are unlikely to result in important environmental effects. 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+)
The subject of economic sanctions has previously been assessed for effects on gender and diversity. Although intended to facilitate a change in behaviour through economic pressure on individuals in foreign states, sanctions under the Special Economic Measures Act can nevertheless have an unintended impact on certain vulnerable groups and individuals. Rather than affecting Russia as a whole, these targeted sanctions impact individuals believed to be engaged in activities that directly or indirectly support, provide funding for or contribute to a violation of the sovereignty or territorial integrity of Ukraine. Therefore, these sanctions are unlikely to have a significant impact on vulnerable groups as compared to traditional broad-based economic sanctions directed toward a state, and limit the collateral effects to those dependent on those targeted individuals.
The amendments are in direct response to the Russian invasion of Ukraine that began on February 24, 2022, and that continues Russia’s blatant violation of Ukraine’s territorial integrity and sovereignty under international law. In coordination with actions being taken by Canada’s allies, the amendments seek to impose a direct economic cost on Russia and signal Canada’s strong condemnation of Russia’s latest violations of Ukraine’s territorial integrity and sovereignty.
Implementation, compliance and enforcement, and service standards
The names of the listed individuals will be available online for financial institutions to review and will be added to the Consolidated Canadian Autonomous Sanctions List. This will help to facilitate compliance with the amendments.
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 knowingly contravenes or fails to comply with the Special Economic Measures (Russia) 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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