Sanctions: New Bans on Crimea, Donetsk, Luhansk

Summary#

The government amended the Special Economic Measures (Ukraine) Regulations through SOR/2022-28. The changes, registered on February 24, 2022 and published in the Canada Gazette on March 16, 2022, add new prohibitions on trade, investment and certain services involving Crimea and the breakaway Donetsk and Luhansk areas of eastern Ukraine.

What it does#

• Adds definitions for the DNR region of Ukraine (Donetsk) and LNR region of Ukraine (Luhansk), and for “technical assistance.”
• Prohibits people in Canada and Canadians abroad from:
  • making investments that deal with property in those regions;
  • providing or acquiring financial or other services related to such investments;
  • importing, buying or acquiring goods from those regions, or exporting/selling/transferring goods to those regions;
  • providing technical assistance to persons or authorities in those regions;
  • providing or acquiring tourism-related services to or from those regions.
• Adds a specific ban on docking cruise ships in the Crimea region if the ship is registered under a Canadian Parliament act (with an exception for emergency forced docking).
• Makes it illegal to knowingly help, facilitate or assist in any activity that the regulations prohibit.
• Contracts entered into before the regulations came into force are not covered by the new prohibitions.
• Notes that permits can be issued under the existing Special Economic Measures (Ukraine) Permit Authorization Order to allow otherwise prohibited activities in specific cases.

Who's affected#

• Individuals and businesses in Canada and Canadians abroad who trade with, invest in, or provide services to Crimea, the Donetsk or Luhansk regions.
• Banks and other financial institutions that must update compliance and monitoring systems to screen for these prohibitions.
• Importers, exporters, tourism operators and cruise lines that might have planned activity involving these regions.
• People or companies with contracts signed before February 24, 2022 (those contracts are not subject to the new bans).
• It is likely that many ordinary Canadian businesses will not be affected if they have no ties to the listed regions or persons.

Why it matters#

• These amendments extend Canada’s sanctions tools to directly block economic links with the parts of eastern Ukraine controlled by Russia-backed authorities. That limits trade, investment and technical cooperation there.
• The measure signals coordinated action with allies and is a response to Russia’s recognition of the so-called Donetsk and Luhansk “People’s Republics” and related troop movements.
• Canadian banks and businesses may face minor compliance costs and some companies may need permits to continue planned activity.
• Enforcement is criminal: anyone who knowingly breaks the rules can face fines or jail — up to $25,000, one year on summary conviction, or up to five years on indictment. The Royal Canadian Mounted Police and the Canada Border Services Agency are identified as enforcement bodies.