Sanctions on Occupied Ukraine Regions

Summary#

These are final amendments to the Regulations Amending the Special Economic Measures (Ukraine) Regulations (registered September 29, 2022, published October 12, 2022). They add sanctions on a number of people and one entity linked to Russian control of parts of Ukraine and widen what Canadians are forbidden from doing with those occupied areas.

What it does#

• Defines a new term occupied region to mean:
  • the so-called Donetsk People’s Republic and territory it controls in Donetsk oblast;
  • the so-called Luhansk People’s Republic and territory it controls in Luhansk oblast;
  • the part of Kherson oblast that is illegally occupied by the Russian Federation; and
  • the part of Zaporizhzhia oblast that is illegally occupied by the Russian Federation.
• Creates broad new prohibitions on any person in Canada and any Canadian outside Canada, including bans on:
  • investing in property located in an occupied region when that property is owned, held or controlled by a person in that occupied region;
  • providing or acquiring financial or related services tied to those investments;
  • importing, buying or acquiring goods from a person in an occupied region;
  • exporting goods to, or selling/supplying/transferring goods to, a person in an occupied region;
  • providing technical assistance to a person in an occupied region;
  • providing or acquiring tourism-related financial or other services with a person in an occupied region;
  • docking a cruise ship in an occupied region if the ship is registered, licensed or has an identification number under any Act of Parliament (with an emergency exception for necessary dockings).
• Adds 12 individuals (named in the schedule) to the sanctions list and adds the entity Salvation Committee for Peace and Order to the listed entities. Those listed face the regulations’ dealings ban (an effective asset freeze).
• Gives limited transition protections:
  • contracts entered into before these rules came into force are generally not affected;
  • certain existing contracts involving occupied regions are exempt for 30 days after the rules take effect (details in the text).

Who's affected#

• Any person in Canada and any Canadian outside Canada who deals with the specified occupied areas of Ukraine.
• Canadian banks and other financial institutions that must screen for and block transactions involving the newly listed people and entity.
• Businesses that trade with, invest in, or provide services (including tourism or technical services) linked to the occupied parts of Kherson and Zaporizhzhia.
• Cruise operators that might have used ports in those occupied regions.
• The named individuals (the 12 people added to the schedule) and the Salvation Committee for Peace and Order — their dealings with Canadians are prohibited.
• Enforcement agencies, including the Royal Canadian Mounted Police and the Canada Border Services Agency, which carry out compliance and enforcement.

The government’s regulatory note says it is likely these particular listed individuals and the entity have limited links with Canada, so broad disruption to Canadian business is expected to be limited.

Why it matters#

• These amendments tighten Canada’s sanctions related to Russia’s invasion of Ukraine by specifically targeting people and activities tied to the parts of Kherson and Zaporizhzhia that are under Russian control.
• In practice, banks will block or flag transactions, companies may no longer be able to buy from or sell to people in those occupied areas, tourism-related services to those areas become unlawful, and cruise lines should avoid calling at ports there.
• People or companies who knowingly break the rules face criminal penalties: a summary conviction can carry a fine of up to $25,000 or imprisonment for up to one year, and an indictment can carry imprisonment for up to five years.
• The changes are presented as part of Canada’s coordinated response with allies to increase pressure over Russia’s actions in Ukraine.