Sanctions 2020: A practical cross-border insight into sanctions law - First Edition - Stikeman Elliott
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Sanctions 2020:
A practical cross-border
insight into sanctions law
First Edition
By Shawn C.D. Neylan
This article was first published in the ICLG to: Sanctions 2020.
All contents copyright. Reprinted with permission.
Stikeman Elliott LLP / stikeman.comInternational
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Sanctions 2020
A practical cross-border insight into sanctions law
First Edition
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Chapter 11 55
Canada
Canada
Stikeman Elliott LLP Shawn C.D. Neylan
1 Overview 2.3 Is your country a member of a regional body that issues
sanctions? If so: (a) does your country implement those
sanctions? Describe that process; and (b) are there any
1.1 Describe your jurisdiction’s sanctions regime.
significant ways in which your country fails to implement
these regional sanctions?
Canada’s economic sanctions regime is established under the Special
Economic Measures Act (“SEMA”), the United Nations Act (the “UN
Act”) and the Justice for Victims of Corrupt Foreign Officials Act (Sergei Canada does not implement sanctions of any regional bodies.
Magnitsky Law) (the “Magnitsky Law”). Canada also has anti-
terrorism laws under which sanctions may be imposed pursuant to 2.4 Does your jurisdiction maintain any lists of sanctioned
the Criminal Code and a law for the freezing of assets of corrupt individuals and entities? How are individuals and entities: a)
foreign officials, the Freezing Assets of Corrupt Foreign Officials Act
added to those sanctions lists; and b) removed from those
(“FACFOA”).
sanctions lists?
1.2 What are the relevant government agencies that
administer or enforce the sanctions regime?
Canada has lists of sanctioned individuals and entities who are added
or removed from such lists by way of regulation.
The Royal Canadian Mounted Police (“RCMP”), and in some cases
2.5 Is there a mechanism for an individual or entity to
the Canadian Border Services Agency, investigate potential criminal
violations of Canadian economic sanctions laws. Global Affairs challenge its addition to a sanctions list?
Canada, pursuant to authority granted to the Minister of Foreign
Affairs, administers permit applications under SEMA, the UN Act, Yes, but the mechanism varies. Regulations made under SEMA in
the Magnitsky Law and FACFOA. The Minister of Public Safety respect of economic sanctions measures taken in relation to a
may authorise specified activities or transactions that would particular jurisdiction provide for applications to the Minister of
otherwise be prohibited under the Criminal Code. Foreign Affairs. The Magnitsky Law provides for applications to the
Minster of Foreign Affairs. The Criminal Code provides a mechanism
2 Legal Basis/Sanctions Authorities whereby a listed entity may apply to the Minister of Public Safety
and then to a judge if not removed from the list by the Minister.
The UN Act does not provide for delisting as such (because in
2.1 What are the legal or administrative authorities for this case, Canada is implementing sanctions imposed by the United
imposing sanctions? Nations), but it does allow a person whose name is the same as or
similar to the name of a designated person, and who claims not to
be that person, to apply to the Minister of Foreign Affairs for a
Authority to impose sanctions is given to the Governor-in-Council
certificate stating that they are not that designated person.
(the federal executive government) under SEMA, the UN Act, the
In the case of FACFOA, a mechanism is provided allowing
Magnitsky Law, FACFOA and the Criminal Code.
persons to apply to the Minister of Foreign Affairs to be delisted on
the basis that they are not a politically exposed foreign person or (in
2.2 Does your jurisdiction implement United Nations cases of mistaken identity) for a certificate stating that they are not
sanctions? Describe that process. Are there any significant a politically exposed foreign person who is subject to an order.
ways in which your jurisdiction fails to implement United
Nations sanctions? 2.6 How does the public access those lists?
Canada implements UN sanctions under the authority of the UN The lists of designated persons can be found at Government of
Act. The Governor-in-Council is given authority by the UN Act to Canada websites (for SEMA, FACFOA, the Magnitsky Law and
make such orders and regulations as appear to him to be necessary Criminal Code designations) or at the United Nations website (for UN
or expedient for enabling a measure decided by the Security Council Act designations).
of the United Nations, pursuant to Article 41 of the Charter of the
United Nations, to be effectively applied in Canada.
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© Published and reproduced with kind permission by Global Legal Group Ltd, London56 Canada
2.7 Does your jurisdiction maintain any comprehensive 3 Implementation of Sanctions Laws and
sanctions or embargoes against countries or regions? Regulations
Canada currently has comprehensive or close to comprehensive
sanctions in respect of DPRK (North Korea) and the Crimea 3.1 What parties and transactions are subject to your
Region of Ukraine. jurisdiction’s sanctions laws and regulations? For example,
do sanctions restrictions apply based on the nationality of
2.8 Does your jurisdiction maintain any other sanctions? the parties involved? Or the location where the transactions
take place?
Canada currently (as of the time of writing this chapter) maintains
sanctions in respect of the following jurisdictions: Central African See question 2.12 above. The restrictions in Canada’s economic
Republic; Democratic Republic of the Congo; Eritrea; Iran; Iraq; sanctions laws apply only to persons in Canada and Canadians
Lebanon; Libya; Mali; Myanmar; Nicaragua; North Korea; Russia; outside of Canada. Further, in the event of a prosecution, a criminal
Somalia; South Sudan; Sudan; Syria; Ukraine (linked to Russian viol- court must have subject matter jurisdiction which is determined
ations of Ukraine’s sovereignty and territorial integrity, and under based on whether there is, in the case of the alleged offence, a real
FACFOA); Venezuela; Yemen; Zimbabwe; and Tunisia under and substantial connection to Canada.
FACFOA only.
Canada also maintains anti-terrorism sanctions against persons in
3.2 Are parties required to block or freeze funds or other
other jurisdictions under the Criminal Code and the UN Act.
property that violate sanctions prohibitions?
2.9 What is the process for lifting sanctions?
Yes, in some cases. Prohibitions on dealing with listed persons that
are set out in some sanctions programmes may effectively freeze
Sanctions are lifted by way of regulation made by the Governor-in-
funds. Some sanctions provisions require the reporting to the
Council.
RCMP or, in some cases, the Canadian Security Intelligence Service
of any property of a listed person or any transactions in relation to
2.10 Does your jurisdiction have an export control regime such property.
that is distinct from sanctions?
3.3 Are there licences available that would authorise
Yes. Canada maintains an export control regime under the Export activities otherwise prohibited by sanctions?
and Import Permits Act (“EIPA”). Additional export control measures
also exist in relation to some economic sanctions imposed by
The Minister of Foreign Affairs can issue permits authorising
Canada, including, for example, Iran and Russia.
activities that would otherwise be prohibited by economic sanctions
made pursuant to SEMA, the Magnitsky Law or FACFOA. The
2.11 Does your jurisdiction have blocking statutes or Minister of Public Safety can issue permits in respect of Criminal
other restrictions that prohibit adherence to other Code anti-terrorism designations.
jurisdictions’ sanctions or embargoes? Because Canada is implementing United Nations Security Council
resolutions under the UN Act, the power given to the Minister is to
issue certificates authorising activity where the Security Council did
Yes. In general terms, the 1992 Order issued under the Foreign not intend that the activity be prohibited, or if the Security Council or
Extraterritorial Measures Act prohibits Canadians from complying with the Committee of the Security Council has approved the activity in
the US embargo of Cuba, and requires Canadians to report certain advance or in certain other limited cases primarily involving hardship.
directives and other communications in relation to the US Cuba
embargo received from a person who is in a position to direct or
influence the policies of the Canadian corporation in Canada. 3.4 Are there any sanctions-related reporting requirements?
When must reports be filed and what information must be
2.12 Does your jurisdiction impose any prohibitions or reported?
threaten any sanctions consequences for transactions that
do not have a connection to that jurisdiction (sometimes In general, Canadian economic sanctions regulations require certain
kinds of entities, including Canadian financial institutions, to deter-
referred to as “secondary sanctions”)?
mine on a continuing basis whether they are in possession or control
of property owned, held or controlled by or on behalf of a listed
In general, the restrictions in Canada’s economic sanctions laws person and to disclose without delay to a specified government
apply only to persons in Canada and Canadians outside of Canada. entity:
Such persons may be restricted from certain activity outside of (a) the existence of property in their possession or control that they
Canada, including possibly, in some cases, facilitating certain trans- have reason to believe is owned, held or controlled by or on
actions by persons not subject to Canadian jurisdiction. behalf of a listed person; and
Canada does not have a history of imposing sanctions on persons (b) any information about a transaction or proposed transaction in
who are not subject to Canadian jurisdiction for acting contrary to respect of property referred to in paragraph (a).
Canada’s economic sanctions regime. All other persons in Canada and Canadians outside of Canada do
not in general have the duty to determine, but are in most cases
subject to the reporting obligation.
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Stikeman Elliott LLP 57
3.5 How does the government convey its compliance 4.4 What are the maximum financial penalties applicable to
expectations? Are certain entities required to maintain individuals and legal entities convicted of criminal sanctions
compliance programmes? What are the elements of a violations?
compliance programme required (or recommended) by the
competent regulator(s)? The maximum fine that can be imposed varies depending on the
statute and whether the prosecutor proceeds by indictment or an
There is some limited guidance offered by Global Affairs Canada information. In some cases, no maximum fine is specified, which
regarding economic sanctions at this link: https://www.inter- allows the court to determine the amount of the fine without statu-
national.gc.ca/world-monde/international_relations-relations_intern tory restriction. In addition to fines, individuals may also be
ationales/sanctions/faq.aspx?lang=eng. sentenced to imprisonment.
Compliance with Canadian economic sanctions laws is becoming
increasingly important as economic sanctions compliance is receiving 4.5 Are there other potential consequences?
heightened scrutiny in the context of M&A transactions and financ-
ings. Banks in particular have become extremely cautious, and many Imprisonment can be ordered for individuals. The maximum term of
businesses have determined to strengthen their economic sanctions imprisonment if the Crown proceeds by way of indictment is five
compliance activities. years for persons convicted under SEMA and the Magnitsky Law, and
10 years for persons convicted under the UN Act. If the Crown
4 Enforcement proceeds by way of information, the maximum term of imprisonment
is one year in each of SEMA, the Magnitsky Law and the UN Act.
Criminal Enforcement
Civil Enforcement
4.1 Are there criminal penalties for violating economics
sanctions laws and/or regulations? 4.6 Are there civil penalties for violating economics
sanctions laws and/or regulations?
Yes. Terms of imprisonment and fines may be imposed.
Canada does not have civil enforcement mechanisms for economic
4.2 Which government authorities are responsible for sanctions violations. Contraventions of the various elements of
investigating and prosecuting criminal economic sanctions Canada’s economic sanctions regime are criminal offences.
offences?
4.7 Which government authorities are responsible for
The RCMP has investigative authority over potential violations of investigating and enforcing civil economic sanctions
Canadian economic sanctions laws. If the RCMP concludes that violations?
charges are merited, they may lay charges and will refer the matter
to the Public Prosecution Service of Canada (“PPSC”). The PPSC This is not applicable in Canada.
is led by the Director of Public Prosecutions (the “DPP”). The
DPP is responsible for initiating and conducting prosecutions on
behalf of the federal Crown (Her Majesty the Queen), in whose 4.8 Is there both corporate and personal liability?
name criminal prosecutions are brought. The DPP delegates this
power and function to federal prosecutors who are appointed or This is not applicable in Canada.
retained for this purpose, and act as the DPP’s agents when making
a decision to prosecute. 4.9 What are the maximum financial penalties applicable to
The decision to prosecute is made on the basis of considering the
individuals and legal entities found to have violated economic
following two questions, both of which must be determined in the
affirmative: sanctions?
1. Is there is a reasonable prospect of conviction based on
evidence that is likely to be available at trial? This is not applicable in Canada.
2. Would a prosecution best serve the public interest?
Appeals are available from convictions that are imposed following 4.10 Are there other potential consequences?
a trial. There have been very few prosecutions and no known
appeals from convictions.
This is not applicable in Canada.
4.3 Is there both corporate and personal liability?
4.11 Describe the civil enforcement process, including the
assessment of penalties. Are all resolutions by the
Yes. Organisations can be found guilty of an offence if a
representative of the organisation, who plays an important role in competent authorities public?
the establishment of its policies or is responsible for managing an
important aspect of the organisation’s activities, and, acting within This is not applicable in Canada.
the scope of his or her authority, is a party to the offence or directs
the work of other representatives of the organisation so that they 4.12 Describe the appeal process. Have companies
do the act specified in the offence, or, knowing that a representative
challenged penalty assessments in judicial proceedings?
of the organisation is or is about to be a party to the offence, does
not take all reasonable measures to stop them from doing so.
This is not applicable in Canada.
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© Published and reproduced with kind permission by Global Legal Group Ltd, London58 Canada
4.13 Are criminal and civil enforcement only at the measures in pursuit of humanitarian goals in the future under the
Magnitsky Law. If situations worsen in respect of relations with
national level? Is there parallel state or local enforcement?
Russia, Iran and Venezuela, further economic sanctions could be
imposed by Canada. It is notable that to date, Canada has not
Criminal prosecutions in Canada take place in the criminal court imposed economic sanctions in relation to China, notwithstanding
system which is for the most part conducted in the Provincial or potential humanitarian concerns and a relationship with China that
Superior Courts of individual provinces or territories. is currently under severe strain, due in part to the detention of a
Huawei employee on an extradition warrant in relation to alleged
4.14 What is the statute of limitations for economic criminal activity in the United States related to US sanctions on Iran,
sanctions violations? and possible related detentions of Canadians in China and
disruptions of Canadian trade in China. While continued
forbearance by Canada is likely, this is not certain, particularly
There is no statute of limitations for economic sanctions violations. because Canada will have a new federal government after an election
in October 2019 which may take a different stance towards China.
5 General
5.2 Please provide information for how to obtain relevant
5.1 If not outlined above, what additional economic economic sanctions laws, regulations, administrative actions,
sanctions-related measures are proposed or under and guidance from the Internet. Are the materials publicly
consideration? available in English?
None are known at this time. However, Canada’s economic All sanctions materials are available at Government of Canada
sanctions programmes continually evolve as Canada’s foreign policy websites in English. A good place to start is at this link: https://
stance evolves in relation to developments in other jurisdictions. It international.gc.ca/world-monde/international_relations-relations_
is reasonable to expect that Canada will likely enact more sanctions internationales/sanctions/index.aspx?lang=eng.
Shawn C.D. Neylan is a partner who counsels and represents businesses with respect to governmental filings, internal investigations and
compliance issues and programmes with respect to Canadian federal regulatory laws, including economic sanctions under the Special Economic
Measures Act, the United Nations Act, the Justice for Victims of Corrupt Foreign Officials Act (Sergei Magnitsky Law), national security and
economic and cultural review processes under the Investment Canada Act, anti-terrorism and AML under the Criminal Code, export control under
the Export and Import Permits Act, merger control, competitor collaboration and unilateral conduct matters under the Competition Act and anti-
corruption under the Corruption of Foreign Public Officials Act and the Criminal Code.
Shawn is a member of the steering groups of the Export Controls and Economic Sanctions, International Anti-Corruption and National Security
Committees of the Section of International Law of the American Bar Association.
Shawn has written and spoken on numerous economic sanctions, national security, competition law and investment review issues.
Stikeman Elliott LLP Tel: +1 416 869 5545
5300 Commerce Court West, 199 Bay Street Email: sneylan@stikeman.com
Toronto, Ontario, M5L 1B9 URL: www.stikeman.com
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