Amendments to Russia sanctions regulations

Summary#

These are final amendments to the Special Economic Measures (Russia) Regulations (registered as SOR/2022-31). They took effect on February 28, 2022 and were published in the Canada Gazette on March 16, 2022. The changes expand who is treated as a sanctioned or “designated” person, add some Russian state financial institutions to the lists, and tweak rules about delisting and certain exceptions.

What it does#

• Changes the definition of who counts as a “designated person” so it covers people who are in Russia or are Russian nationals not ordinarily living in Canada whose names appear in Schedule 1, 2 or 3 of the regulations.
• Clarifies that people listed in Schedule 2 or Schedule 3 can be treated as owned or controlled by, or acting on behalf of, other listed targets.
• States that some prohibitions do not apply to activities that happened before a person was added to Schedule 2 or Schedule 3.
• Adds the Bank of Canada to the list of entities mentioned in the regulations (an exception or specific reference in the rules).
• Lets a designated person apply in writing to the Minister to have their name removed from Schedule 1, 2 or 3, and requires the Minister to decide whether to recommend removal.
• Adds three Russian state financial bodies to Part 2 of Schedule 1: the Central Bank of the Russian Federation, the National Wealth Fund of the Russian Federation, and the Ministry of Finance of the Russian Federation.
• Repeals Schedule 3.1.
• States these amendments apply from the day they were registered.

Who's affected#

• People and entities listed in Schedule 1, 2 or 3 of the Special Economic Measures (Russia) Regulations.
• The three Russian state financial bodies newly added: Central Bank of the Russian Federation, National Wealth Fund of the Russian Federation, and Ministry of Finance of the Russian Federation.
• Canadian financial and business interests that deal with those named entities or with people who are Russian nationals not ordinarily resident in Canada.
• The Bank of Canada, which is specifically added into the text of the regulations.
• It is unclear from the text exactly which types of transactions or commercial relations will be affected in every case; the regulations set out lists and rules that determine specific prohibitions.

Why it matters#

• Adding major Russian state financial bodies to the schedules makes it clearer that Canadian sanctions target key parts of Russia’s financial system. That can restrict banking, investment, and financial services between Canada and those entities.
• The change to who counts as a “designated person” widens the scope to include more people connected to those listed entities, which may affect more businesses and individuals.
• Allowing listed people to apply for removal provides a formal way to seek delisting.
• Saying some activities done before a listing don’t apply reduces the chance that past transactions will be retroactively penalized.
• The immediate effect (from February 28, 2022) means these changes were active as soon as they were registered.