Regulations Amending the Special Economic Measures (Russia) Regulations: SOR/2025-28

Canada Gazette, Part II, Volume 159, Number 5

Registration
SOR/2025-28 February 14, 2025

SPECIAL ECONOMIC MEASURES ACT

P.C. 2025-104 February 14, 2025

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 paragraph 4(1)(a)footnote a and subsections 4(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) Paragraph 2(a) of the Special Economic Measures (Russia) Regulations footnote 1 is replaced by the following:

(2) Paragraph 2(g) of the Regulations is replaced by the following:

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

The Russian transportation industry, including maritime shipping, rail networks and aviation, facilitates the movement of weapons and materials essential to the war effort, making this sector a key facilitator of Russia’s continued aggression against Ukraine.

Background

Situation in Ukraine

On February 24, 2022, Russia initiated a full-scale military invasion of Ukraine, launching attacks on many cities. Since then, Russia has continued to wage a war of aggression and has committed atrocities against Ukrainians. Russia continues to attack civilian targets such as critical infrastructure in Ukraine, resulting in the loss of access to water, electricity and communications, and violate the principles of the United Nations (UN) Charter.

Experts, including from the Organization for Security and Cooperation in Europe Moscow Mechanism fact-finding missions, the Independent International Commission of Inquiry on Ukraine and the United Nations Office of the High Commissioner for Human Rights, have concluded that Russia is committing serious human rights violations, war crimes, possible crimes against humanity and conflict-related sexual violence. The United Nations Human Rights Monitoring Mission in Ukraine has confirmed that, as of January 2025, at least 12 456 civilians have been killed and over 28 382 have been injured since February 24, 2022. Furthermore, 744 medical facilities and 1 614 educational facilities in Ukraine have been damaged or destroyed by Russia’s military since the invasion.

Russian supply networks fuelling the war in Ukraine

In the transportation industry, aviation and air cargo infrastructure are crucial elements of Russia’s logistics system, with the Russian military delivering cruise and ballistic missiles, Unmanned Aerial Vehicles (UAVs) and other materials to strategic aviation bases. Experts have noted the use of civilian cargo aviation to deliver sanctioned goods, including those used in the production of weapons as well as those used to support the war effort more generally.

Sanctions circumvention and the role of third countries

There is growing evidence of Russia’s efforts to evade sanctions and obtain sanctioned goods and technologies through various means, including its use of non-sanctioned third parties and entities in third country jurisdictions. In March 2023, the United States (U.S.) and the European Union (EU) launched the Russian Elites, Proxies, and Oligarchs Task Force (REPO), which published a global advisory outlining typologies of Russian Sanctions Evasion and tactics frequently used by Russia to evade sanctions, including the use of third-country jurisdictions and the falsification of trade information to facilitate the shipment of sensitive goods to Russia. The International Working Group on Russian Sanctions (Yermak-McFaul Sanctions Group) has detailed Russia’s use of intermediaries in third countries who are willing to undermine sanctions imposed by Canada and its allies. These efforts have underscored the importance of targeting persons operating in third countries that facilitate the evasion and circumvention of sanctions in order to further impede Russia’s ability and capacity to wage its war of aggression against Ukraine. A report published in October 2023 by the United Kingdom (U.K.) think tank, the Royal United Services Institute (RUSI), examined the role of third countries in helping Russia evade sanctions imposed by Canada and its international partners. It found that these tactics are most often driven by private actors such as individuals and companies, rather than by state actors.

International response

The coalition of countries supporting Ukraine includes, but is not limited to, the G7, other members of the Five Eyes, European countries and some of Ukraine’s neighbours. This partnership is working to support Ukraine across several areas, including contributing to energy security, nuclear safety, food security, humanitarian assistance, combatting Russian disinformation, imposing sanctions and economic measures, asset seizure and forfeiture, providing military assistance, ensuring accountability, fostering socio-economic recovery and reconstruction. In this context, various working groups have been created to propose and impose additional sanctions, ensure the alignment of measures and the effective application of sanctions.

In its September 2023 Guidance, the “Export Enforcement Five,” which includes Australia, Canada, New Zealand, the U.K. and the U.S., together with international partners including the EU and Japan, agreed to prioritize and increase scrutiny of sanctions circumvention for a number of items that Russia is using in its weapons systems.

Canada’s response

Canada unequivocally condemns Russia’s illegal and egregious actions against Ukraine. Following Russia’s illegal occupation and attempted annexation of Crimea in March 2014, the Government of Canada, in tandem with like-minded countries, enacted sanctions through the regulations under the Special Economic Measures Act (SEMA). These sanctions impose dealings prohibitions (an effective asset freeze) on listed individuals and entities supporting or enabling Russia’s violation of Ukraine’s sovereignty. Any person in Canada and Canadians outside Canada are prohibited from dealing in the property of, entering into transactions with, providing services to, or otherwise making goods available to persons listed under schedules 1, 2 or 3 of the Special Economic Measures (Russia) Regulations (the Regulations).

In total, Canada has committed over $19.5 billion in financial, military, humanitarian, development, security, stabilization and immigration assistance in response to Russia’s full-scale invasion on February 24, 2022. Canada remains committed to supporting Ukraine’s stability, security and sovereignty, as it resists Russia’s war of aggression.

Since 2014, in coordination with its partners, Canada has imposed sanctions on over 3 000 individuals and entities in Russia, Belarus, Ukraine and Moldova, linked to their support of the illegal invasion of Ukraine. In addition, Canada has implemented targeted restrictions against Russia and Belarus in financial, trade (goods and services), energy and transport sectors. Canada is part of the Oil Price Cap Coalition, the G7 diamond import ban and ongoing efforts to use the proceeds from Russian sovereign assets to help Ukraine.

Canada is also working with international partners to identify and impose measures to counter Russia’s efforts to evade and circumvent sanctions. In June 2024, Canada’s Financial Transactions and Reports Analysis text-center (FINTRAC) published a special bulletin on financial activity associated with suspected sanctions evasion, which details the use of intermediary jurisdictions, opaque corporate structures and proxies and enablers as means used to evade sanctions. Canada has implemented a series of targeted measures aimed at constraining Russia’s logistics and transportation sector, recognizing its critical role in sustaining Russia’s war in Ukraine. Canada has sanctioned transportation companies, notably air cargo companies, limiting their access to global financial markets and critical foreign components. Working alongside international partner governments, Canada has also reinforced efforts to prevent the circumvention of these measures, particularly through third country intermediaries. By tightening restrictions on Russia’s logistics and transportation networks, Canada has sought to degrade Russia’s ability to sustain its military operations, increase operational costs, and weaken its broader war economy.

Objective

Description

The amendments add two entities to Schedule 1, Part 2 of the Regulations that are subsidiaries or affiliates of listed entities. These two entities, along with their already listed parent and affiliated entities, have assisted the Russian government in evading sanctions by transporting sanctioned goods between Russian cities and into the country from third countries intent on undermining existing sanctions.

Any person in Canada or Canadians outside Canada are thereby prohibited from dealing in the property of, entering into transactions with, providing services to, transferring property to, or otherwise making goods available to these listed entities — unless explicitly authorized by a permit, granted on an exceptional basis, or an exception in the Regulations. Under the Regulations, listed persons may apply to the Minister of Foreign Affairs to have their name removed from the Schedule. The Minister must decide whether there are reasonable grounds to make a recommendation to the Governor in Council for removal.

Amendments to the listing criteria

The criteria for listing persons under the Regulations are being amended to clarify that sanctionable conduct is not subject to time limitations and to align the Regulations on this point with other regulations under the SEMA. Specifically, the listing criterion that applies to conduct that supports the war (i.e. paragraph 2(a)) is being amended to clarify that it is sufficient for a person to have engaged in sanctionable conduct at any point to be listed. The listing criterion that applies to senior officials of listed entities (i.e. paragraph 2(g)) is also being amended to clarify that former senior officials of listed entities can be sanctioned and further that the criterion also applies to senior officials of entities listed for conduct that supports the war or for participating in human rights violations can also be listed.

Regulatory development

Consultation

Global Affairs Canada regularly engages with relevant stakeholders, including civil society organizations, cultural communities and other like-minded governments, regarding Canada’s approach to sanctions implementation.

With respect to the amendments adding entities to schedules, public consultation would not be appropriate. Publicizing the names of the persons to be targeted for listing could potentially result 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 Regulations 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

The incremental cost to the Government of Canada to administer and enforce these additional prohibitions is minimal.

Sanctions targeting specific individuals and entities also 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. Based on an initial assessment of available open-source information, it is believed that the entities listed have no linkages with Canada and, therefore, do not have significant business dealings that are relevant to the Canadian economy. It is therefore anticipated that there will be no significant impacts on Canadians and Canadian businesses as a result of these amendments.

Canadian banks and financial institutions are required to comply with sanctions. They will do so by adding the newly listed entities to their existing monitoring systems, which may result in a minor compliance cost.

Small business lens

Analysis under the small business lens concludes that the amendments do not impose any new compliance or administrative burden on small businesses in Canada. The amendments prohibit Canadian businesses from dealing with, providing services to, or otherwise making goods available to listed persons, but do not create obligations related to them. Additionally, Canadian businesses may seek permits under the Regulations which are granted on an exceptional basis allowing policy space for exemptions. However, Global Affairs Canada does not anticipate any applications resulting from listing these entities. Canadian small businesses are also subject to the duty to disclose under the Regulations, which would represent a direct compliance requirement. However, as the newly listed entities have no known legitimate linkages with Canada, Global Affairs Canada does not anticipate any disclosures resulting from the amendments.

One-for-one rule

The one-for-one rule does not apply, as there is no incremental change in administrative burden on businesses. The permitting process for businesses meets the definition of “administrative burden” in the Red Tape Reduction Act. However, while permits may be granted under the Regulations, on an exceptional basis, given these entities have no known business ties to the Canadian economy, and the minimal level of trade with Russia, Global Affairs Canada does not anticipate any permit applications with respect to the amendments.

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 partners and like-minded partners. Sanctions are most effective when they are applied in a coordinated manner, and Canada is working to harmonize efforts internally, and with partners, to facilitate a unified front on sanctions.

Canada’s international partners continue to update their sanctions regimes against individuals and entities in Russia and enforce far-reaching financial, trade and investment prohibitions on Russia. Countries and jurisdictions that have sanctioned individuals and entities related to Russia’s gross and systematic violations of human rights include Australia, the European Union, Japan, New Zealand, Switzerland, the United Kingdom and the United States.

Recent discussions among like-minded governments have reflected the need to target Russian sanctions circumvention and war efforts through targeting of logistics, oil and gas sectors, and third country support for Russia. These amendments align with these objectives.

Effects on the environment

The amendments are unlikely to result in important environmental effects. In accordance with the Cabinet Directive on Strategic Environmental and Economic Assessment (SEEA Directive), a preliminary scan concluded that a strategic environmental and economic assessment is not required.

Gender-based analysis plus

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 the SEMA can nevertheless have an unintended impact on certain vulnerable groups and individuals. Rather than affecting Russia as a whole, these targeted sanctions impact entities 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. In so far as sanctions limit Russia’s ability to wage war, women, children and vulnerable groups are likely to benefit from these measures.

Implementation, compliance and enforcement, and service standards

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

The names of listed persons 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.

The Trade Commissioner Service at Global Affairs Canada, abroad and in Canada, continues to assist clients in understanding Canadian sanctions regulations, and notably the impact of the regulations on any activities in which Canadians may be engaged. Global Affairs Canada is also increasing outreach efforts across Canada — including to engage with businesses, universities, and provincial/territorial governments — to enhance national awareness of and compliance with Canadian sanctions.

Under the SEMA, both Royal Canadian Mounted Police and Canada Border Services Agency officers have the power to enforce sanctions violations through their authorities, as defined under the Customs Act, the Excise Act or the Excise Act, 2001, and sections 487 to 490, 491.1 and 491.2 of the Criminal Code.

In accordance with section 8 of the 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.

Contact

Global Affairs Canada
Sanctions Bureau
125 Sussex Drive
Ottawa, Ontario
K1A 0G2
Telephone (toll-free): 1‑833‑352‑0769
Telephone (local): 343‑203‑3975
Fax: 613‑995‑9085
Email: sanctions@international.gc.ca