Ban on Russian petroleum and 32 entities

Summary#

These are the final regulations titled Regulations Amending the Special Economic Measures (Russia) Regulations: SOR/2022-52. They add 32 Russian entities to Canada’s sanctions lists and ban the import of certain petroleum products from Russia. The regulations came into force on March 10, 2022 and were published in the Canada Gazette on March 30, 2022.

What it does#

• Adds 32 new entities to Schedule 1 of the Special Economic Measures (Russia) Regulations, bringing those entities under Canada’s broad dealings ban. Examples include Rosoboronexport JSC, Russian Helicopters JSC, Sukhoi Civil Aircraft, and United Engine Corporation.
• Clarifies that people listed in Schedules 2 and 3 include entities owned or controlled by, or acting on behalf of, listed persons or by Russia itself.
• Prohibits any person in Canada and any Canadian outside Canada from importing, purchasing or acquiring the petroleum goods listed in a new Schedule 5. The banned goods are:
  • crude petroleum (HS 2709);
  • other petroleum oils and preparations containing 70% or more petroleum oils (HS 2710);
  • petroleum gases and other gaseous hydrocarbons (HS 2711).
• Carves out an exception for contracts for those goods that were entered into before the amendments came into force.
• Explains enforcement and penalties: under the Special Economic Measures Act, someone who knowingly breaks the regulations may face a fine of up to $25,000 or imprisonment for up to one year on summary conviction, or imprisonment for up to five years on indictment. Enforcement agencies named include the Royal Canadian Mounted Police and the Canada Border Services Agency.

Who's affected#

• The 32 newly listed Russian companies and organizations named in the regulations.
• Canadian businesses that import petroleum products from Russia, or that do business with the newly listed entities.
• Banks and other financial institutions in Canada, which must update compliance systems to screen for the newly listed names.
• Any Canadian or person in Canada seeking a permit to carry out activities otherwise prohibited by the regulations.
• It is unclear exactly which Canadian firms will be affected — the government expects the direct impact on Canada to be limited because Canada is a net oil producer and imports most crude from the United States.

Why it matters#

• These measures are designed to increase economic pressure on Russia by targeting defence- and energy-related entities and by cutting revenue from certain petroleum exports.
• The import ban on the listed petroleum goods makes it illegal for Canadians to acquire those products from Russia, unless covered by a pre-existing contract. That matters for any company that was buying Russian oil or fuel.
• Financial institutions and businesses need to check and update compliance checks to avoid penalties.
• The government frames these steps as aligning Canada with allied actions and as part of a coordinated response to Russia’s actions in Ukraine.