Canada Sanctions the Russians

By | April 2, 2014

As widely known, Canada has applied sanctions against Russia as a result of that country’s aggressive actions in Crimea. The Canadian  sanctions flow from a law called the Special Economic Measures Act, which gives broad authority to the federal cabinet to apply sanctions where it is of the opinion that,

“. . . a grave breach of international peace and security has occurred that has resulted or is likely to result in a serious international crisis.”

The new sanctions don’t apply across the board to dealings with Russia or Russian companies. Rather, as a means of pressuring President Putin, they target only those high-profile persons – individuals and entities – specifically designated in the regulations. The sanctions prohibit Canadian individuals and companies anywhere in the world from:

  • dealing in any property held by or on behalf of a Russian designated person, or facilitating or providing financial or other related services in respect of such a dealing;
  • making any goods available to such designated person; and
  • providing any financial or related services to or for the benefit of such designated person.

Causing, assisting or promoting the above prohibited activities is likewise an offense under the Russian sanctions.

The sanctions are a bit of a moving target. The government can add names to the list of designated persons as they deem necessary, as they did on March 21st by adding Aktsionerny Bank Russian Federation (also known as Bank Rossiya) to the list. So care must be taken to monitor changes to the sanctions list.

It will also be important to take special care not to be caught unwittingly by these measures. Of particular note is the prohibition against dealing with or assisting in the provision of all kinds financial “or related services” “to or for the benefit of” a designated person. Commercial activities “for the benefit of” a designated person could be interpreted broadly.

According to media reports, many business dealings are being affected by the potentially wide sweep of these measures.  Financial dealings are on hold. Expectations are that this crisis will persist. There is no doubt Canada-Russia business is going to suffer.