Aviation Insurance Ban and Russia Sanctions

Summary#

The government changed the Special Economic Measures (Russia) Regulations to tighten sanctions after Russia’s invasion of Ukraine. The rules, registered and effective April 5, 2022, add 9 people to the sanctions list and ban certain aviation and aerospace insurance linked to Russia.

What it does#

• Adds a definition of technology to the Regulations.
• Prohibits anyone in Canada, and Canadians abroad, from providing insurance or reinsurance for goods in Chapter 88 of the Harmonized System (mainly aircraft and related products) or for technology for those goods.
• Allows existing aviation insurance and reinsurance to continue only until 30 days after the rules came into force.
• Broadens the ban on helping sanctions targets: it is forbidden to knowingly do anything that causes, facilitates or assists activities already prohibited under the Regulations.
• Adds these 9 individuals to Part 1 of Schedule 1, making most dealings with them illegal:
  • Vladimir Olegovich POTANIN
  • Viktor Felixovich VEKSELBERG
  • Kirill Nikolayevich SHAMALOV
  • Igor Olegovich KOSTYUKOV
  • Dmitry Alexandrovich PUMPYANSKY
  • Galina Evgenyevna PUMPYANSKAYA
  • Vadim Nikolaevich MOSHKOVICH
  • Leonid Viktorovich MIKHELSON
  • Alexander Semenovich VINOKUROV
• Penalties for knowingly breaking the sanctions can include a fine of up to $25,000 or imprisonment up to 1 year (summary conviction), and up to 5 years if convicted on indictment.

Who's affected#

• Canadian insurers and reinsurers that provide aviation or aerospace coverage.
• Airlines, aircraft lessors, and other aviation businesses that deal with Russian owners or operators.
• Canadian banks and financial institutions that must screen clients and block or report prohibited dealings.
• The nine named individuals and people or companies that do business with them.
• Other Canadians who knowingly help or facilitate transactions that the Regulations now prohibit.

Why it matters#

• The ban makes it harder for Russian airlines and aerospace firms to get international insurance and reinsurance. That can limit their ability to operate, lease, or finance aircraft.
• It aligns Canada with allies (EU, U.K., etc.) so Canada won’t be a loophole for aviation insurance that other countries have blocked.
• For most Canadians, effects should be limited because Canadian insurers are not major players in global aviation reinsurance. But businesses in aviation, finance, and insurance will need to check and update compliance systems.
• The measures also freeze dealings with the listed individuals, as part of Canada’s wider response to Russia’s actions in Ukraine.