Russia Sanctions Expanded: New Listings and Debt Ban

Summary#

The final rule titled Regulations Amending the Special Economic Measures (Russia) Regulations tightens Canada’s sanctions on Russia. It came into force on February 24, 2022 and adds 351 individuals and 4 entities to Canada’s Russia sanctions lists, and creates a new list called Schedule 3.1.

What it does#

• Adds 351 named individuals to Schedule 1 of the Special Economic Measures (Russia) Regulations, which generally blocks dealings with them.
• Adds new entities to the lists:
  • Adds VEB and Promsvyazbank PJSC to Schedule 1.
  • Creates Schedule 3.1 and lists the Central Bank of the Russian Federation, the National Wealth Fund of the Russian Federation, and the Ministry of Finance of the Russian Federation on it.
• Bans Canadians in Canada and Canadians outside Canada from transacting in or providing financing for new debt (for example, bonds, loans, treasury bills and similar instruments) issued by or related to entities listed in Schedule 3.1.
• Expands the definitions used to decide who can be listed (for example, associates, family members, and entities owned or acting on behalf of listed persons or Russia).
• Keeps the rule that transactions done before a person or entity was listed are not covered by the new prohibitions.
• Confirms a process for listed persons to apply to be removed from the lists.

Who's affected#

• Canadians in Canada and Canadians living abroad who might deal with the newly listed people or entities.
• Canadian banks and financial institutions, which must screen for the new names and block prohibited transactions.
• Businesses or individuals seeking permits from Global Affairs Canada to carry out otherwise prohibited transactions (they may face added costs or limits).
• The 351 listed individuals and the 4 listed entities (mostly Russian-linked or Russian nationals not ordinarily resident in Canada).
• Enforcement agencies such as the Royal Canadian Mounted Police and the Canada Border Services Agency, which enforce the sanctions.

Why it matters#

• The rule tightens Canada’s financial choke-hold on targeted Russian individuals and institutions. In practical terms, those listed will generally be blocked from using Canadian financial services or receiving Canadian business or investments.
• The specific ban on new debt issued by major Russian financial institutions (the Central Bank of the Russian Federation, the National Wealth Fund of the Russian Federation, and the Ministry of Finance of the Russian Federation) prevents Canadians from buying or financing new Russian sovereign or government-related borrowing.
• The change aligns Canada with similar measures from allies and signals a coordinated international response to Russia’s actions in Ukraine.
• Non-compliance carries penalties: a fine of up to $25,000, imprisonment of up to one year on summary conviction, or up to five years on indictment.