Regulations Amending the Justice for Victims of Corrupt Foreign Officials Regulations: SOR/2023-179
Canada Gazette, Part II, Volume 157, Number 17
SOR/2023-179 August 4, 2023
JUSTICE FOR VICTIMS OF CORRUPT FOREIGN OFFICIALS ACT (SERGEI MAGNITSKY LAW)
P.C. 2023-792 August 4, 2023
Whereas the Governor in Council is of the opinion that one or more of the circumstances described in subsection 4(2) of the Justice for Victims of Corrupt Foreign Officials Act (Sergei Magnitsky Law) footnote a have occurred;
Therefore, Her Excellency the Governor General in Council, on the recommendation of the Minister of Foreign Affairs, pursuant to paragraph 4(1)(a) of the Justice for Victims of Corrupt Foreign Officials Act (Sergei Magnitsky Law) footnote a, makes the annexed Regulations Amending the Justice for Victims of Corrupt Foreign Officials Regulations.
Regulations Amending the Justice for Victims of Corrupt Foreign Officials Regulations
1 Section 2 of the Justice for Victims of Corrupt Foreign Officials Regulations footnote 1 is replaced by the following:
2 It is prohibited for any person in Canada or any Canadian outside Canada to engage in any activity set out in paragraphs 4(3)(a) to (e) of the Justice for Victims of Corrupt Foreign Officials Act (Sergei Magnitsky Law) if the activity involves an individual whose name is listed in the schedule.
2 The schedule to the Regulations is amended by adding the following in numerical order:
- 71 Riad Toufic SALAMEH (born on July 17, 1950)
- 72 Raja SALAMEH (born in 1961)
- 73 Marianne Hoayek (born in 1980)
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.)
Influential individuals in Lebanon’s financial sector have been responsible for, or complicit in, acts of corruption, including the misappropriation of private or public assets for personal gain and the transfer of the proceeds of corruption to foreign States. Corruption of this kind lies at the root of the collapse of Lebanon’s financial system in 2019 and the subsequent economic and political crisis which continues to be felt throughout the country today.
Canada is committed to promoting good governance, combating corruption and standing up for human rights internationally. To this end, Parliament passed the Justice for Victims of Corrupt Foreign Officials Act (Sergei Magnitsky Law) [JVCFOA] on October 18, 2017, which allows the Government to make orders and regulations imposing sanctions on foreign nationals who are responsible for, or complicit in, gross violations of internationally recognized human rights or acts of significant corruption.
To date, there have been 70 individuals listed under the Justice for Victims of Corrupt Foreign Officials Regulations (JVCFOR). Canada will continue using this tool, among other diplomatic means, to combat the impunity of those responsible for committing gross violations of human rights and acts of significant corruption regardless of where they take place.
Canada remains concerned about the economic and political crisis facing Lebanon. The collapse of the country’s financial system in 2019, resulting from monetary policy failures and corruption, lay at the root of these challenges, causing a significant increase in poverty levels and hardship among the general population in Lebanon.
Riad Salameh’s position as Governor of the Lebanese Central Bank since 1993 afforded him unique access and ability to derive personal gain from opaque banking transactions, which he reportedly used to siphon public funds to himself and associates, channelling it abroad through investments and real estate transactions in Europe. Given his central role in shaping the modern Lebanese financial system, these acts of significant corruption serve as an egregious example of the malpractice which led to the 2019 financial sector collapse. The assistance reportedly provided by his brother Raja Salameh and associate Marianne Hoayek has been crucial to enabling these corrupt activities, which they have all personally benefited from. The serious nature of these corrupt acts has prompted Lebanese and European judicial authorities to pursue legal investigations targeting the Salameh brothers and their associates, and the extensive wealth they have developed through corruption.
Beyond the US$330 million in funds reportedly stolen from the Lebanese public, the corrupt acts of Salameh and his associates have also seriously damaged the credibility of Lebanon’s financial institutions. Domestic and international efforts to hold corrupt officials to account and to encourage necessary economic and financial sector reform is a necessary first step toward restoring this credibility and charting a way forward from the present crisis.
The main objectives of the Regulations are
- to signal Canada’s condemnation of all individuals responsible for, or complicit in, acts of significant corruption, including the misappropriation of private or public assets for personal gain and the transfer of the proceeds of corruption to foreign States; and
- to seek an end to impunity by encouraging action to combat corruption and pursuit of necessary reforms to increase transparency in the banking sector.
The Regulations Amending the Justice for Victims of Corrupt Foreign Officials Regulations (the amendments) add three individuals who, in the opinion of the Governor in Council, are responsible for or complicit in ordering acts of corruption, to the schedule of the JVCFOR.
These three individuals are responsible for, or complicit in embezzling US$330 million worth of public funds from the Lebanese Central Bank and laundering these funds through European bank accounts and real estate transactions.
Pursuant to subsection 4(3) of the JVCFOA, it is prohibited for persons in Canada and Canadians outside Canada to deal in the property, wherever situated, of the listed foreign nationals and to enter into or facilitate a financial transaction related to such property. In addition, it is prohibited to provide or acquire financial or other related services to, or for the benefit of, or on the direction or order of, the listed foreign nationals. Finally, it is also prohibited to make property available to these foreign nationals or to a person acting on their behalf.
The foreign nationals listed in the Schedule to the JVCFOR are also inadmissible to Canada, pursuant to paragraph 35(1)(e) of the Immigration and Refugee Protection Act.
The Justice for Victims of Corrupt Foreign Officials Permit Authorization Order, which came into force on November 2, 2017, authorizes the Minister of Foreign Affairs to issue to any person in Canada, and Canadian outside of 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 JVCFOR, and issue a general permit to any person to carry out a class of activity or transaction that is otherwise prohibited pursuant to the JVCFOR.
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 initiative 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.
Canada has three separate pieces of legislation authorizing the imposition of sanctions, which have variable applicability to situations of concern to Canada. The Special Economic Measures Act (SEMA) and the JVCFOA are Canada’s autonomous sanctions legislation tools, and the United Nations Act (UN Act) serves to implement multilateral sanctions regimes decided by the United Nations Security Council. To enact sanctions under either of these laws, new regulations or regulatory amendments must be approved by the Governor in Council.
The JVCFOA entered into force in 2017 and provides for the sanctioning of foreign nationals for gross violations of internationally recognized human rights or acts of significant corruption. Following a rigorous assessment and due diligence process, it was determined that the JVCFOA would be the most appropriate vehicle for sanctioning the listed individuals, as it best aligns with the objectives listed above.
Benefits and costs
Sanctions targeting specific persons have less impact on Canadian businesses than traditional broad-based sanctions, and will have limited impact on the citizens of the countries of the listed persons. It is likely that the individuals listed have limited linkages with Canada, and therefore do not have significant business dealings that are significant to the Canadian economy.
Canadian banks and financial institutions are required to comply with the sanctions. They will do so by adding the new prohibitions to their existing monitoring systems, which may result in a minor compliance cost.
The amendments will create additional compliance costs for 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 significant dealings with the newly listed persons.
Small business lens
While possible, it is unlikely the amendments would create additional costs for small businesses seeking permits that would authorize them to carry out specified activities or transactions that are otherwise prohibited. Listing an individual in the JVCFOR simply adds them to an existing list and an existing compliance process. As such, no significant loss of opportunities for small businesses is expected as a result of the amendments.
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 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 intended to be brought forward 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 sanctions has previously been assessed for effects on gender and diversity. Although intended to facilitate change to protect and advance human rights, and combat foreign corruption, through economic measures on individuals in foreign states, sanctions under the JVCFOA can nevertheless have an unintended indirect impact on certain vulnerable groups and individuals. That being said, these targeted sanctions impact individuals responsible for, or complicit in, acts of significant corruption, rather than on target countries as a whole. Therefore, sanctions under the JVCFOA are unlikely to have a significant direct impact on vulnerable groups as compared to traditional broad-based sanctions directed towards a state, and limited collateral effects to those dependent on those targeted individuals.
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 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 JVCFOR.
Canada’s sanctions regulations are enforced by the Royal Canadian Mounted Police. In accordance with section 11 of the JVCFOA, every person who knowingly contravenes or fails to comply with the JVCFOR 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 Canada Border Services Agency also has enforcement authorities under the JVCFOA and the Customs Act and will play a role in the enforcement of these sanctions.
Sanctions Policy and Operations Division
Global Affairs Canada
125 Sussex Drive
Telephone: 343‑203‑3975 / 1‑833‑352‑0769