Regulations Amending the Special Economic Measures (Russia) Regulations: SOR/2023-191

Canada Gazette, Part II, Volume 157, Number 21

Registration
SOR/2023-191 September 20, 2023

SPECIAL ECONOMIC MEASURES ACT

P.C. 2023-899 September 20, 2023

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 in a serious international crisis;

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

Regulations Amending the Special Economic Measures (Russia) Regulations

Amendments

1 Part 1 of Schedule 1 to the Special Economic Measures (Russia) Regulations footnote 1 is amended by adding the following in numerical order:

2 Part 2 of Schedule 1 to the Regulations is amended by adding the following in numerical order:

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

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 through the Special Economic Measures (Russia) Regulations (the Regulations) under the Special Economic Measures Act (SEMA). 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.

On February 24, 2022, Russian President Putin announced a “special military operation” as Russian forces launched a full-scale invasion of Ukraine from Russian and Belarusian territory. The war has become a grinding war of attrition, which sees little prospect of a quick victory for either side, and both continue to incur heavy losses. The Russian military has committed horrific atrocities against civilians, including in Izium, Bucha, Kharkiv and Mariupol. Experts, including the Organization for Security and Cooperation in Europe (OSCE) Moscow Mechanism fact-finding missions, the Independent International Commission of Inquiry on Ukraine and United Nations (UN) Office of the High Commissioner for Human Rights (OHCHR), have concluded that Russia is committing serious human rights violations, war crimes, possible crimes against humanity, and conflict-related sexual violence. These studies have linked Russian external aggression with systematic repression and human rights abuses domestically. According to Ukraine’s State Emergency Department, 30% of Ukrainian territory (approximately the size of Austria) is mined. President Putin’s military invasion has been paired with significant malicious cyber operations and disinformation campaigns that falsely portray the West as the aggressor; and claim Ukraine is developing chemical, biological, radiological and/or nuclear weapons with North Atlantic Treaty Organization (NATO) support. The deterioration of Russia’s relations with Ukraine has paralleled the worsening of its relations with the United States and the NATO, which has led to heightened tensions.

International response

The coalition of countries supporting Ukraine includes, but is not limited to, G7 and European countries and some of Ukraine’s neighbours. This group is working to support Ukraine across a number of areas, including energy security, nuclear safety, food security, humanitarian assistance, combatting Russian disinformation, sanctions and economic measures, asset seizure and forfeiture, military assistance, accountability, recovery and reconstruction. Canada and G7 countries are engaged in intense diplomacy with the broader international community to encourage support for Ukraine and counter false Russian narratives. Key votes in multilateral forums have effectively isolated Russia, including resolutions in the UN General Assembly condemning Russian aggression against Ukraine (March 2022), deploring the humanitarian consequences of Russian aggression against Ukraine (March 2022), suspending Russian membership in the UN Human Rights Council (April 2022) and condemning Russia’s illegal annexation of Ukrainian territories (October 2022). Many developing countries have refrained from openly criticizing Russia or imposing penalties due to geopolitical considerations, commercial incentives, or simply fear of retaliation, with some also arguing the conflict is less of a priority for their regions. Russia continues to use its position as a permanent member of the UN Security Council (UNSC) to block UNSC action on its war on Ukraine and its corrosive disinformation policies.

Canada’s response

Since February 2022, Canada has committed or delivered over $8.5 billion in assistance to Ukraine. This includes military aid, cyber defence and training to Ukrainian troops in the United Kingdom (U.K.) and Poland under the aegis of Operation UNIFIER. Economic resilience support includes new loan resources, a loan guarantee, and Ukraine Sovereignty Bonds. Canada is helping Ukraine repair its energy infrastructure and has temporarily removed trade tariffs on Ukrainian imports. Canada has also committed development and humanitarian assistance, and is countering disinformation through the G7 Rapid Response Mechanism. Canada is also providing security and stabilization programming, including support for civil rights organizations and human rights defenders. Canada announced two new immigration streams for Ukrainians coming to Canada: the temporary Canada-Ukraine Authorization for Emergency Travel and a special permanent residence stream for family reunification.

Since 2014, in coordination with its allies and partners, Canada has imposed sanctions on more than 2 600 individuals and entities in Russia, Belarus, Ukraine and Moldova who are complicit in the violation of Ukraine’s and Moldova’s sovereignty and territorial integrity. In addition, Canada implemented targeted restrictions against Russia and Belarus in financial, trade (goods and services), energy and transport sectors. Canada is part of the Oil Price Cap Coalition, which limits the provision of maritime services to Russian crude oil and petroleum products above a price set by the coalition. These proposed amendments to the Regulations build upon Canada’s existing sanctions by further impeding Russian dealings with Canada. Canada seeks to align its measures with its partners, including the United States, the United Kingdom, the European Union (EU), Australia, New Zealand, Japan and Ukraine.

Canada is concerned with Russia’s use of disinformation surrounding its invasion of Ukraine. Since February 2022, Canada has sanctioned more than 120 individuals and entities that are complicit in spreading Russian disinformation. They are instrumental to the Russian regime in undermining state sovereignty. They are also responsible for spreading false narratives that serve as pretexts for the Russian regime’s illegal war. Canada has also established a dedicated team to help understand, monitor and detect Russian and other state-sponsored disinformation. Canada dedicates resources to uncovering Russia’s false claims about its invasion of Ukraine and dispelling them with facts.

Conditions for imposing and lifting sanctions

Pursuant to SEMA, the Governor in Council may impose economic and other sanctions against foreign states, entities and individuals when, among other circumstances, a person has participated in gross and systematic human rights violations in Russia.

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 U.K., the EU and Australia have continued to update their sanction regimes against individuals and entities in both Ukraine and Russia.

Objective

  1. Impose further macroeconomic costs on Russia for its aggression and attack on Ukraine;
  2. Impose costs on those involved in human rights abuses linked to the transfer of Ukrainian children to Russia;
  3. Expose Russian war propagandists and the Kremlin’s aggressive policy influencers who have developed revisionist disinformation-based ideology to justify Russian aggression; and
  4. Increase pressure on Russia to cease its reckless actions in Ukraine that have specifically increased the risk of a nuclear incident, particularly at the Zaporizhzhia Nuclear Power Plant;
  5. Undermine Russia’s ability to conduct its military aggression against Ukraine; and
  6. Align Canada’s measures with those taken by international partners.

Description

The proposed amendments to the Regulations would add 42 individuals and 21 entities to Schedule 1 of the Regulations, who are subject to a broad dealings ban. They include (1) individuals and entities involved in or associated with the Kremlin-backed illegal and forcible mass transfer of minors, including orphans and those left without parental care, from the Russian-occupied territories of Ukraine to Russia; (2) Russian disinformation actors who pose as media pundits, “journalists” and “researchers” and the various arms-length and state-owned institutions that host and support them; and (3) nuclear sector entities that contribute to Russia’s revenues and support Russia’s reckless nuclear behaviour in Ukraine.

Regulatory development

Consultation

Global Affairs Canada engages regularly with relevant stakeholders including civil society organizations, cultural communities and other like-minded governments, regarding Canada’s approach to sanctions implementation. Global Affairs research also draws from analysis from pro-democracy movements inside and outside of Russia.

With respect to the amendments targeting individuals and entities, public consultation would not be appropriate, given the risk of asset flight and 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 individuals and entities have less impact on Canadian businesses than traditional broad-based economic sanctions, and have limited impact on the citizens of the country of the listed individuals and entities. It is likely that the newly listed individuals and entities 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 and entities to their existing monitoring systems, which may result in a minor compliance cost.

The amendments could 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

Likewise, the amendments could 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 and entities. No significant loss of opportunities for small businesses is expected as a result of the amendments.

One-for-one rule

The permitting process for businesses meets the definition of “administrative burden” in the Red Tape Reduction Act and would need to be calculated and offset within 24 months. However, the amendments address an emergency circumstance and are therefore exempt from the requirement to offset administrative burden and regulatory titles under the one-for-one rule.

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 Canada’s allies.

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 SEMA can nevertheless have an unintended impact on certain vulnerable groups and individuals. Rather than affecting Russia as a whole, these targeted sanctions impact individuals 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 seek to impose a direct economic cost on Russia and signal Canada’s strong condemnation of Russia’s violation of Ukraine’s sovereignty and territorial integrity. This includes Ukraine’s sovereignty over and ability to uphold the human rights of Ukrainian children. The amendments target individuals and entities that are working with Russia’s Presidential Commissioner for Children’s Rights, Maria Lvova-Belova, who is currently listed by Canada under Schedule 1 (No. 929) and wanted by the International Criminal Court for war crimes related to her involvement in illegal child abductions from Ukraine. Abducting Ukrainian children is an integral part of Russia’s military activities in Ukraine. Through illegal transfers, adoptions, passportization and radicalization through youth movements, the government of Russia and Russian leaders are training and indoctrinating a generation of Ukrainian children against their Ukrainian identity and citizenship, thereby violating the sovereignty and territorial integrity of the state of Ukraine. These amendments target and seek to degrade the ability of Russian military and civilian authorities to cooperate in these activities. Canada’s partners have also recently used their sanctions to target Russia’s child abductions (for example the United States in May, the European Union in June and the United Kingdom in July 2023). These amendments keep Canada aligned with the efforts of our partners on this issue.

The amendments also seek to expose Russian disinformation and propaganda actors and impose costs on them. Disinformation and propaganda operations are an integral part of Russia’s ongoing violation of Ukrainian sovereignty and territorial integrity, and Canada will continue to combat this. Together, the individuals and entities foster a network of disinformation and propagandists that masquerade as media pundits, journalists and researchers. They act as a source of expertise for Russian and non-Russian audiences in democratic countries, abusing the values of pluralism and free speech to whitewash Russian lies and conduct information warfare in support of Russia’s violation of Ukraine’s sovereignty and territorial integrity. The amendments also close gaps between Canada’s sanctions regime and those of our allies and partners.

The amendments also target parts of Russia’s nuclear industry that provide revenues to the state budget while Russia is pursuing reckless nuclear rhetoric and policy vis-à-vis the Zaporizhzhia Nuclear Power Plant, which is located in southeastern Ukraine and is the largest nuclear power plant in Europe. It is currently illegally occupied by Russian forces, which have acted recklessly by placing mines near the plant, shelling near the plant, and subjugating the plant workers to forced labour. The occupation is run by civil authorities from ROSATOM, Russia’s expansive state-owned nuclear company, which continues to pursue profits in Russia and internationally. These amendments seek to apply more pressure on Russia in this sector, maintain alignment with our international partners and respond to Ukrainian concerns.

Implementation, compliance and enforcement, and service standards

The amendments come into force on the day on which they are registered.

The names of the listed individuals and entities 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 Regulations.

Under the SEMA, both Royal Canadian Mounted Police (RCMP) and Canada Border Services Agency (CBSA) officers have the power to enforce sanctions violations through their authorities as defined under the Customs Act, the Excise Act or the Excise Act, 2001, and sections 487 to 490, 491.l and 491.2 of the Criminal Code.

Canada’s sanctions regulations are enforced by the RCMP and the CBSA. In accordance with section 8 of the SEMA, every person who knowingly contravenes or fails to comply with the 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