Regulations Amending the Special Economic Measures (Russia) Regulations: SOR/2023-33

Canada Gazette, Part II, Volume 157, Number 6

Registration
SOR/2023-33 February 23, 2023

SPECIAL ECONOMIC MEASURES ACT

P.C. 2023-177 February 22, 2023

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 a serious international crisis;

Therefore, Her Excellency the Governor General in Council, on the recommendation of the Minister of Foreign Affairs, makes the annexed Regulations Amending the Special Economic Measures (Russia) Regulations under subsections 4(1)footnote a, (1.1)footnote b, (2)footnote c and (3) of the Special Economic Measures Act footnote d.

Regulations Amending the Special Economic Measures (Russia) Regulations

Amendments

1 (1) Item 1074 of Part 1 of Schedule 1 to the Special Economic Measures (Russia) Regulations footnote 1 is replaced by the following:

(2) Part 1 of Schedule 1 to the Regulations is amended by adding the following in numerical order:

2 Part 2 of Schedule 1 to the Regulations is amended by adding the following in numerical order:

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.)

Issues

In Russia, parliamentarians and officials, their family members, the oligarchs, and the businesses that fund them continue to do the bidding of President Putin. They vote and act in support of Russia’s ongoing violation of Ukraine’s sovereignty and territorial integrity, deliberately undermining international peace and security.

Background

Following Russia’s illegal occupation and attempted annexation of Crimea in March 2014, the Canadian government, in tandem with partners and allies, enacted sanctions through the Special Economic Measures (Russia) Regulations (the Regulations) under the Special Economic Measures Act (SEMA). The Regulations impose dealings prohibitions (an effective asset freeze) on designated individuals and entities in Russia and Ukraine supporting or enabling Russia’s violation of Ukraine’s sovereignty. 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.

On February 24, 2022, Russian President Putin announced a “special military operation” as Russian forces launched a full-scale invasion of Ukraine from Russian and Belarusian territory. The invasion has become a grinding war of attrition that sees little prospect of a quick victory for either side, and both continue to incur heavy losses. The Russian military has committed horrific atrocities against civilians, including in Izium, Bucha, Kharkiv and Mariupol. Experts, including the Organization for Security and Cooperation in Europe’s (OSCE) Moscow Mechanism fact-finding missions, the Independent International Commission of Inquiry on Ukraine, and the United Nations (UN) Office of the High Commissioner for Human Rights (OHCHR), have concluded that Russia is committing serious human rights violations, war crimes, possible crimes against humanity, and conflict-related sexual violence. These studies have linked Russian external aggression with systematic repression and human rights abuses domestically. According to Ukraine’s State Emergency Department, 30% of Ukrainian territory (approximately the size of Austria) is mined. President Putin’s military invasion has been paired with significant malicious cyber operations and disinformation campaigns that falsely portray the West as the aggressor and claim Ukraine is developing chemical, biological, radiological and/or nuclear weapons with support from the North Atlantic Treaty Organization (NATO). The deterioration of Russia’s relations with Ukraine has paralleled the worsening of its relations with the United States (U.S.) and NATO, which has led to heightened tensions.

International response

The coalition of countries supporting Ukraine includes, but is not limited to, G7 and European countries and some of Ukraine’s neighbours. This group is working to support Ukraine across a number of areas, including energy security, nuclear safety, food security, humanitarian assistance, combatting Russian disinformation, sanctions and economic measures, asset seizure and forfeiture, military assistance, accountability, recovery and reconstruction. Canada and G7 countries are engaged in intense diplomacy with the broader international community to encourage support for Ukraine and counter false Russian narratives. Key votes in multilateral forums have effectively isolated Russia, including resolutions in the UN General Assembly condemning Russian aggression against Ukraine (March 2022), deploring the humanitarian consequences of Russian aggression against Ukraine (March 2022), suspending Russian membership in the UN Human Rights Council (April 2022) and condemning Russia’s illegal annexation of Ukrainian territories (October 2022). Many developing countries have refrained from openly criticizing Russia or imposing penalties due to geopolitical considerations, commercial incentives, or simply fear of retaliation, with some also arguing the conflict is less of a priority for their regions. Russia continues to use its position as a permanent member of the UN Security Council (UNSC) to block UNSC action on its war on Ukraine and its corrosive disinformation policies.

Canada’s response

Since February 2022, Canada has committed over $5 billion in assistance to Ukraine. This includes military aid, cyber defence and training to Ukrainian troops in the United Kingdom (U.K.) and Poland under the aegis of Operation UNIFIER. Economic resilience support includes new loan resources, a loan guarantee, and Ukraine Sovereignty Bonds. Canada is helping Ukraine repair its energy infrastructure and has temporarily removed trade tariffs on Ukrainian imports. Canada has also committed development and humanitarian assistance, and is countering disinformation through the G7 Rapid Response Mechanism. Canada is also providing security and stabilization programming, including support for civil rights organizations and human rights defenders. Canada announced two new immigration streams for Ukrainians coming to Canada: the temporary Canada-Ukraine Authorization for Emergency Travel and a special permanent residence stream for family reunification.

In coordination with its allies and partners, Canada has imposed sanctions on more than 1 600 individuals and entities in Russia, Belarus and Ukraine who are complicit in the violation of Ukraine’s sovereignty and territorial integrity. In addition, Canada implemented targeted restrictions against Russia and Belarus in financial, trade (goods and services), energy and transport sectors. Canada is also part of the Oil Price Cap Coalition, which limits the provision of maritime services to Russian crude oil and petroleum products above a price set by the coalition. The amendments to the Regulations build upon Canada’s existing sanctions by further impeding Russian dealings with Canada. Canada is taking these measures in coordination with partners, including the U.S., the U.K., the European Union (EU), Australia, New Zealand, Japan and Ukraine.

Conditions for imposing and lifting sanctions

Pursuant to SEMA, the Governor in Council may impose economic and other sanctions against foreign states, entities and individuals when, among other circumstances, a person has participated in gross and systematic human rights violations in Russia.

The duration of sanctions by Canada and like-minded partners has been explicitly linked to the peaceful resolution of the conflict and the respect for Ukraine’s sovereignty and territorial integrity within its internationally recognized borders, including Crimea, as well as Ukraine’s territorial sea. The U.S., the U.K., the EU and Australia have continued to update their sanction regimes against individuals and entities in both Ukraine and Russia.

Objective

Description

The amendments to the Regulations add 122 individuals and thirteen 13 entities to Schedule 1 of the Regulations, thereby subjecting them to a broad dealings ban. The newly listed individuals include members of the lower house of Russia’s parliament who have voted in favour of legislation related to the invasion and annexation of Ukrainian territory. Other individuals are senior officials including Russian deputy prime ministers, ministers and others in the Office of the President of Russia and the Russian military. Family members of previously sanctioned individuals are also included. The newly listed entities include decision-making and implementing institutions involved in Russia’s ongoing violation of Ukraine’s sovereignty and territorial integrity, including both houses of the Russian Parliament, United Russia Party, the political party of President Putin, the Federal Security Service of the Russian Federation (FSB), the successor to the Soviet KGB, and the Russian entity created to operate Ukraine’s Zaporizhzhia Nuclear Power Plant, which Russia controls illegally.

The amendments also revise the name of a previously listed individual.

Regulatory development

Consultation

Global Affairs Canada engages regularly with relevant stakeholders, including civil society organizations, cultural communities and other like-minded governments, regarding Canada’s approach to sanctions implementation. Global Affairs Canada research also draws from analysis from pro-democracy movements inside and outside of Russia.

With respect to the amendments targeting individuals and entities, public consultation would not be appropriate, given the risk of asset flight and the urgency to impose these measures in response to the ongoing breach of international peace and security in Ukraine.

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.

Instrument choice

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

Regulatory analysis

Benefits and costs

Sanctions targeting specific individuals and entities have less impact on Canadian businesses than traditional broad-based economic sanctions, and have limited impact on the citizens of the country of the listed individuals and entities. It is likely that the newly listed individuals and entities 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 and entities to their existing monitoring systems, which may result in a minor compliance cost.

The amendments could 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

Likewise, the amendments could create additional 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.

One-for-one rule

The permitting process for businesses meets the definition of “administrative burden” in the Red Tape Reduction Act and would need to be calculated and offset within 24 months. However, the amendments address an emergency circumstance and are therefore exempt from the requirement to offset administrative burden and regulatory titles under the one-for-one rule.

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 Canada’s allies.

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 and entities in foreign states, sanctions under SEMA 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 and entities.

Rationale

The amendments seek to impose a direct economic cost on Russia and signal Canada’s strong condemnation of Russia’s violation of Ukraine’s sovereignty and territorial integrity. They target individuals and entities that provide legislative, administrative, financial and other forms of support to Russia’s ongoing violation of Ukrainian sovereignty and territorial integrity. As the conflict enters its second year, the amendments further align Canada’s efforts with those of our international partners, demonstrating our solidarity by exposing individuals and entities engaged in activities that undermine international peace and security.

Implementation, compliance and enforcement, and service standards

The amendments come into force on the day on which they are registered.

The names of the listed individuals and entities 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 Regulations.

Canada’s sanctions regulations are enforced by the Royal Canadian Mounted Police and the Canada Border Services Agency (CBSA). In accordance with section 8 of SEMA, 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 of not more than five years.

The CBSA has enforcement authorities under SEMA and the Customs Act, and will play a role in the enforcement of these sanctions.

Contact

Andrew Turner
Director
Eastern Europe and Eurasia Relations Division
Global Affairs Canada
125 Sussex Drive
Ottawa, Ontario
K1A 0G2
Telephone: 343‑203‑3603
Email: Andrew.Turner@international.gc.ca