Regulations Amending the Special Economic Measures (Russia) Regulations: SOR/2022-64

Canada Gazette, Part II, Volume 156, Number 8

Registration
SOR/2022-64 March 23, 2022

SPECIAL ECONOMIC MEASURES ACT

P.C. 2022-256 March 23, 2022

Whereas the Governor in Council is of the opinion that the actions of the Russian Federation constitute a grave breach of international peace and security that has resulted or is likely to result in a serious international crisis;

Therefore, Her Excellency the Governor General in Council, on the recommendation of the Minister of Foreign Affairs, pursuant to subsections 4(1)footnote a, (1.1)footnote b, (2) and (3) of the Special Economic Measures Act footnote c, makes the annexed Regulations Amending the Special Economic Measures (Russia) Regulations.

Regulations Amending the Special Economic Measures (Russia) Regulations

Amendments

1 (1) Paragraph 3(a) of the Special Economic Measures (Russia) Regulations footnote 1 is replaced by the following:

(2) Paragraph 3(d) of the Regulations is replaced by the following:

2 Part 1 of Schedule 1 to the Regulations is amended by adding the following after item 560:

Application Before Publication

3 For the purpose of paragraph 11(2)(a) of the Statutory Instruments Act, these Regulations apply according to their terms before they are published in the Canada Gazette.

Coming into Force

4 These Regulations come into force on the day on which they are registered.

REGULATORY IMPACT ANALYSIS STATEMENT

(This statement is not part of the Regulations.)

Issues

The Russian Federation continues to violate the sovereignty and territorial integrity of Ukraine.

Background

Following Russia’s illegal occupation and attempted annexation of Crimea in March 2014, the Canadian government, in tandem with partners and allies, enacted sanctions under the Special Economic Measures Act. These sanctions impose dealings prohibitions (an effective asset freeze) on designated individuals and entities in Russia and Ukraine supporting or enabling Russia’s violation of Ukraine’s sovereignty. Any person in Canada and Canadians outside Canada are thereby prohibited from dealing in the property of, entering into transactions with, providing services to, or otherwise making goods available to listed persons.

In late fall of 2021, after months of escalatory behaviour, Russia began massing troops, military equipment and military capabilities on Ukraine’s borders and around Ukraine. The build-up lasted into February 2022, eventually totalling 150 000–190 000 troops. On February 15, 2022, the Russian Duma (equivalent to the Canadian Parliament) voted to ask President Putin to recognize the so-called Luhansk and Donetsk People’s Republics in eastern Ukraine, further violating Ukraine’s sovereignty as well as the Minsk agreements intended to bring about a peaceful resolution to the conflict in eastern Ukraine. On February 18, 2022, Russia-backed so-called authorities ordered the evacuation of women and children from the region, as well as the conscription of men aged 18 to 55. On February 20, 2022, Russia extended a joint military exercise with Belarus and announced that Russian troops would not leave Belarus. On February 21, 2022, following a meeting of the Russian Security Council, President Putin signed decrees recognizing the “independence” and “sovereignty” of the so-called Luhansk People’s Republic (LNR) and Donetsk People’s Republic (DNR). Immediately following this, President Putin ordered Russian forces to perform “peacekeeping functions” in the so-called LNR and DNR regions. He also expressly abandoned the Minsk agreements, declaring them “non-existent.” On February 22, 2022, Russia’s Duma and Federation Council granted President Putin permission to use military force outside the country. Uniformed Russian troops and armoured vehicles then moved into the Donetsk and Luhansk regions for the first time under official orders. On February 24, 2022, President Putin announced a “special military operation” as Russian forces launched a full-scale invasion of Ukraine. The invasion began with targeted strikes on key Ukrainian military infrastructure and the incursion of Russian forces into Ukraine in the north from Russia and Belarus, in the east from Russia and the so-called LNR and DNR regions, and in the south from Crimea.

The deterioration in Russia’s relations with Ukraine has paralleled the worsening in its relations with the United States (U.S.) and the North Atlantic Treaty Organization (NATO), which has led to heightened tensions.

International response

Since the beginning of the current crisis, Canada and the international community have been calling on Russia to de-escalate, pursue diplomatic channels, and demonstrate transparency in military activities. Diplomatic negotiations have been taking place along several tracks, including via (1) United States–Russia bilateral talks (e.g. the Strategic Stability Dialogue); (2) NATO; (3) the Organization for Security and Cooperation in Europe (OSCE); and (4) the Normandy Four format (Ukraine, Russia, Germany, France) for the implementation of the Minsk agreements.

G7 Foreign Affairs ministers released a statement on February 21, 2022, condemning Russian recognition of the so-called LNR and DNR regions and stating that they were preparing to step up restrictive measures to respond to Russia’s actions, while reaffirming their unwavering commitment to Ukraine’s sovereignty and territorial integrity. G7 Foreign Affairs ministers also reconfirmed their support for the full implementation of the Minsk agreements as a means to end the conflict in eastern Ukraine. This follows a similar statement made in December 2021, and another by NATO Foreign Affairs ministers in January 2022.

Canada’s financial and military contributions

Between January 2014 and January 2021, Canada has provided Ukraine with more than $890 million in multifaceted assistance to support Ukraine’s security, prosperity, and reform objectives. Canada is currently considering a number of potential response options to further support Ukraine and respond to Russian aggression, in close coordination with Canada’s allies and partners.

On January 27, 2022, Canada announced the extension and expansion of Operation UNIFIER, Canada’s non-combat military training and capacity-building mission to Ukraine. In addition, Canada has announced over $145 million in humanitarian assistance for Ukraine and an additional $35 million in development funding. This assistance is in addition to the sovereign loan of up to $620 million offered to Ukraine since January 21, 2022, to support its economic resilience and governance reform efforts.

Canada also recently announced that it will send weapons such as rocket launchers, hand grenades, anti-armour weapons, and ammunition to support Ukraine. These contributions are in addition to more than $57 million in military equipment that Canada has provided Ukraine from 2015 to 2021. Canada will also extend its commitment to Operation REASSURANCE, the Canadian Armed Forces’ contribution to NATO assurance and deterrence measures in Central and Eastern Europe. Canada is deploying an additional 460 troops to the approximately 800 currently deployed.

Conditions for lifting sanctions

The duration of sanctions by Canada and like-minded partners has been explicitly linked to the peaceful resolution of the conflict, and the respect for Ukraine’s sovereignty and territorial integrity, within its internationally recognized borders, including Crimea, as well as Ukraine’s territorial sea. The U.S., the United Kingdom, the European Union (EU) and Australia have continued to update their sanction regimes against individuals and entities in both Ukraine and Russia.

Objectives

  1. Impose further costs on Russia for its unprovoked and unjustifiable invasion of Ukraine;
  2. Maintain the alignment of Canada’s actions with those taken by international partners to underscore continued unity with Canada’s allies and partners in responding to Russia’s ongoing actions in Ukraine.

Description

The Regulations Amending the Special Economic Measures (Russia) Regulations (the amendments) add 160 new individuals to Schedule 1 of the Special Economic Measures (Russia) Regulations, thereby subjecting them to a broad dealings ban. These individuals are members of Russia’s Federation Council.

Regulatory development

Consultation

Global Affairs Canada engages regularly with relevant stakeholders, including civil society organizations and cultural communities and other like-minded governments regarding Canada’s approach to sanctions implementation.

With respect to the amendment of sanctions lists, public consultation would not be appropriate, given the urgency to impose these measures in response to the ongoing breach of international peace and security in Ukraine.

Modern treaty obligations and Indigenous engagement and consultation

An initial assessment of the geographical scope of the amendments was conducted and did not identify any modern treaty obligations, as the amendments do not take effect in a modern treaty area.

Instrument choice

Regulations are the sole method to enact sanctions in Canada. No other instrument could be considered.

Regulatory analysis

Benefits and costs

Sanctions targeting specific persons have less impact on Canadian businesses than traditional broad-based economic sanctions, and the amendments will have limited impact on the citizens of the country of the listed persons. It is likely that the newly listed individuals have limited linkages with Canada, and therefore do not have business dealings that are significant to the Canadian economy.

Canadian banks and financial institutions are required to comply with sanctions. They will do so by adding the newly listed individuals to their existing monitoring systems, which may result in a minor compliance cost.

The amendments will create additional costs for businesses seeking permits that would authorize them to carry out specified activities or transactions that are otherwise prohibited.

Small business lens

The amendments potentially create additional costs for small businesses seeking permits that would authorize them to carry out specified activities or transactions that are otherwise prohibited. However, costs will likely be low as it is unlikely that Canadian small businesses have or will have dealings with the newly listed individuals. No significant loss of opportunities for small businesses is expected as a result of the amendments.

One-for-one rule

As there are no administrative costs associated with these regulatory amendments, the one-for-one rule does not apply.

Regulatory cooperation and alignment

While the amendments are not related to a work plan or commitment under a formal regulatory cooperation forum, they align with actions taken by like-minded partners, such as the EU.

Strategic environmental assessment

The amendments are unlikely to result in important environmental effects. In accordance with the Cabinet Directive on the Environmental Assessment of Policy, Plan and Program Proposals, a preliminary scan concluded that a strategic environmental assessment is not required.

Gender-based analysis plus (GBA+)

The subject of economic sanctions has previously been assessed for effects on gender and diversity. Although intended to facilitate a change in behaviour through economic pressure on individuals and entities in foreign states, sanctions under the Special Economic Measures Act can nevertheless have an unintended impact on certain vulnerable groups and individuals. Rather than affecting Russia as a whole, these targeted sanctions impact individuals and entities believed to be engaged in activities that directly or indirectly support, provide funding for or contribute to a violation of the sovereignty or territorial integrity of Ukraine. Therefore, these sanctions are unlikely to have a significant impact on vulnerable groups as compared to traditional broad-based economic sanctions directed toward a state, and limit the collateral effects to those dependent on those targeted individuals and entities.

Rationale

The amendments are in direct response to the Russian invasion of Ukraine that began on February 24, 2022, which continues Russia’s blatant violation of Ukraine’s territorial integrity and sovereignty under international law. In coordination with actions being taken by Canada’s allies, the amendments seek to impose a direct economic cost on Russia and signal Canada’s strong condemnation of Russia’s latest violations of Ukraine’s territorial integrity and sovereignty.

Implementation, compliance and enforcement, and service standards

The names of the listed individuals will be available online for financial institutions to review and will be added to the Consolidated Canadian Autonomous Sanctions List. This will help to facilitate compliance with the amendments.

Canada’s sanctions regulations are enforced by the Royal Canadian Mounted Police and the Canada Border Services Agency. In accordance with section 8 of the Special Economic Measures Act, every person who knowingly contravenes or fails to comply with the Special Economic Measures (Russia) Regulations is liable, upon summary conviction, to a fine of not more than $25,000 or to imprisonment for a term of not more than one year, or to both; or, upon conviction on indictment, to imprisonment for a term of not more than five years.

Contact

Andrew Turner
Director
Eastern Europe and Eurasia Relations Division
Global Affairs Canada
125 Sussex Drive
Ottawa, Ontario
K1A 0G2
Telephone: 343‑203‑3603
Email: Andrew.Turner@international.gc.ca