Russian Sanctions – A Moving Target

By | July 21, 2014

Canada’s sanctions against Russia and Ukraine are a moving target and are expanded on an ongoing basis, particularly in light of the evolving situation in that part of the world. This note adds to comments I made previously on this Blog.

I anticipate that Canada will tighten the Russian sanctions in light of the downing of the Malaysian aircraft last week.

 As an ongoing compliance issue, Canadian companies should consider maintaining a Google alert and keep the Department of Foreign Affairs, International Trade and Development (DFATD) sanctions web-site under constant monitoring (

 The Department issues e-press advisories when additional names are added to the sanctions list and companies can subscribe to these.

 As in the case of Iran, the Russian (and Ukrainian) sanctions apply broadly. The Russian sanctions state that, 

    3. It is prohibited for any person in Canada and any Canadian outside Canada to

  • (a) deal in any property, wherever situated, held by or on behalf of a designated person;
  • (b) enter into or facilitate, directly or indirectly, any transaction related to a dealing referred to in paragraph (a);
  • (c) provide any financial or other related service in respect of a dealing referred to in paragraph (a);
  • (d) make any goods, wherever situated, available to a designated person; or
  • (e) provide any financial or related service to or for the benefit of a designated person.

 Note the words “any” and “directly or indirectly”. Pretty wide in scope. This makes it is critical for Canadian corporations to undertake all reasonable diligence to not contravene these prohibitions.

 Another matter that requires care are the US sanctions against Russia. These are enforced by the Office of Foreign Assets Control (OFAC), part of the US Treasury Department.

 On 16 July 2014, the Obama administration expanded these significantly, enlarging the so-called sectoral sanctions and, for example, adding Rosneft and Novatek, major Russian energy companies, to the prohibited list. While directed to capital-raising transactions of these entities – debt and equity – these sanctions may be expanded to prevent commercial dealings by persons in the US with these Russian companies.

In addition these prohibited capital transactions, there is a series of Executive Orders by the President that prohibits virtually all commercial dealings in the US with other Russian companies listed in those Orders. This applies to any entity organized under US laws, including branches of Canadian entities operating in the US.

All of this requires careful attention to compliance for any Canadian company potentially involved in Russian dealings. It is expected that these prohibitions will be expanded further in light of the deteriorating situation in that part of the world..