Canadian Sanctions Related to Ukraine

Published on March 3, 2022

Canada and Ukraine have enjoyed close bilateral relations since Canada became the first Western nation to recognize Ukraine’s independence on December 2, 1991. On August 1, 2017, the Canada-Ukraine Free Trade Agreement (CUFTA) entered into force, which enhances trade between the two countries. The Trade Commissioner Service provides support and advice to Canadian companies seeking to do business in Ukraine.

Canada has placed sanctions on the Russian-occupied Crimea region of Ukraine and on Ukrainian individuals and entities related to Russia’s illegal occupation and attempted annexation of Crimea and the ongoing Russian occupation in parts of eastern Ukraine. While Canada does not have blanket sanctions in place relating to Ukraine, Canadian companies should be mindful of specific and targeted sanctions in line with the above. More information on these targeted measures is included below.

Prohibitions

Sanctions related to Ukraine were enacted under the Special Economic Measures Act, in order to respond to violations of Ukraine’s constitution, sovereignty and territorial integrity. On March 17, 2014, the Special Economic Measures (Ukraine) Regulations (“the Regulations”) came into force.

Amendments to the Ukraine Regulations were made on March 19, April 12, May 12, June 21, July 11, July 24, August 6, and December 19, 2014; February 17, and June 29, 2015; March 18, and November 28, 2016; March 4, March 15, and June 25, 2019; January 29, 2020; March 29 2021; as well as February 24 2022.

The Regulations impose an asset freeze and dealings prohibition on designated persons, which include both individuals and entities involved in Russia’s illegal occupation and attempted annexation of Crimea and the ongoing Russian occupation in parts of eastern Ukraine. They prohibit persons in Canada and Canadians abroad from:

  • dealing in any property, wherever situated, held by or on behalf of a designated person
  • entering into or facilitating, directly or indirectly, any transaction related to such a dealing
  • providing any financial or related service in respect of such a dealing
  • making goods, wherever situated, available to a designated person
  • providing any financial or related service to or for the benefit of a designated person

The Regulations include the following definitions:

“Crimea region of Ukraine”: the Crimea Region of Ukraine means the Autonomous Republic of Crimea and the city of Sevastopol, and includes their land areas and territorial sea.

“DNR region of Ukraine”: the so-called Donetsk People’s Republic and the territory it controls in the Donetsk oblast of eastern Ukraine.

“LNR region of Ukraine”: the so-called Luhansk People’s Republic and the territory it controls in the Luhansk oblast of eastern Ukraine.

It is also prohibited for any person in Canada and any Canadian outside Canada to:

  • make an investment that involves a dealing in any property located in these regions that is owned, held or controlled by these regions or a person in these regions, or a person acting on behalf of or at the direction of these regions or a person in these regions;
  • provide or acquire financial or other related services with respect to an investment referred to in paragraph (a);
  • import, purchase or acquire goods, wherever situated, from these regions or any person in these regions;
  • export goods destined for these regions or sell, supply or transfer goods, wherever situated, to any person in these regions;
  • provide technical assistance to these regions or any person in these regions;
  • provide financial or other services related to tourism to, or acquire such services from, these regions or any person in these regions; or
  • dock a cruise ship in the Crimea region of Ukraine that is registered or licensed, or for which an identification number has been issued, under any Act of Parliament.

Causing, assisting or promoting prohibited activities is likewise prohibited.

The Regulations provide a review mechanism to remove names from the schedule upon receipt of an application from a designated person.

Exceptions

Exceptions to the above-noted asset freeze and dealings prohibition are available for the following:

  • Payments made by or on behalf of designated persons pursuant to contracts entered into prior to the coming into force of the Regulations, provided that the payments are not made to or for the benefit of a designated person
  • Pension payments to any person in Canada or any Canadian outside Canada
  • Transactions in respect of accounts at financial institutions held by diplomatic missions, provided that the transaction is required in order for the mission to fulfill its diplomatic functions under the Vienna Convention on Diplomatic Relations, or, transactions required in order to maintain the mission premises if the diplomatic mission has been temporarily or permanently recalled
  • Transactions by international organizations with diplomatic status, agencies of the United Nations, the International Red Cross and Red Crescent Movement, or Canadian non-governmental organizations that have entered into a grant or contribution agreement with the Department of Foreign Affairs, Trade and Development
  • Transactions necessary for a Canadian to transfer to a non-designated person any accounts funds or investments of a Canadian held by a designated person on the day on which that person became designated
  • Financial services required in order for a designated person to obtain legal services in Canada with respect to the application of any of the prohibitions in the Regulations
  • Loan repayments made to any person in Canada or any Canadian abroad in respect of loans entered into before the coming into force of the Regulations, enforcement of security in respect of those loans, or payments by guarantors guaranteeing those loans

Permits and Certificates

The Special Economic Measures (Ukraine) Permit Authorization Order, made pursuant to subsection 4(4) of the Special Economic Measures Act, authorizes the Minister of Foreign Affairs to issue to any person in Canada or any Canadian outside Canada a permit to carry out a specified activity or transaction, or any class of activity or transaction, that is restricted or prohibited pursuant to the Regulations. Further information is available on the “Permits and Certificates” page.

FACFOA Prohibitions

The Freezing Assets of Corrupt Foreign Officials (Ukraine) Regulations (the "FACFOA Regulations") create a freeze on the assets of the politically exposed foreign person listed in the Regulations by prohibiting the following activities by anyone in Canada or any Canadian outside Canada:

  • dealing, directly or indirectly, in any property, wherever situated, of a listed politically exposed foreign person
  • entering into or facilitating, directly or indirectly, any financial transaction related to a dealing referred to in point (1)
  • providing financial services or other related services in respect of any property of a listed politically exposed foreign person

The official list of persons whose assets are subject to freezing under the Freezing Assets of Corrupt Foreign Officials Act Regulations is found in the link to the regulations below.

Background

In November 2013, the refusal of then-Ukrainian President Viktor Yanukovych to sign a landmark association agreement with the European Union set off major protests in Kyiv, leading to the fall of the Yanukovych government.

In March 2014, Russian forces occupied the Crimean peninsula of Ukraine. Following the unconstitutional “referendum” on March 16, 2014, President Putin signed a treaty purporting to incorporate Crimea into the Russian Federation on March 18, 2014. Canada, along with the international community, continues to condemn Russia’s illegal occupation and attempted annexation of Crimea.

In the wake of the illegal occupation and attempted annexation of Crimea, Russian-backed militants quickly gained control of significant portions of the Donetsk and Luhansk regions of eastern Ukraine, declaring the creation of the ‘Donetsk People’s Republic’ and the ‘Luhansk People’s Republic’. Fraudulent so-called “independence referendums”, initiated by pro-Russian separatists, were held on May 11, 2014, but gained no international recognition. In the months following, violence increased as Russian-backed insurgents clashed with Ukrainian government forces.

Peace agreements were reached in talks held in Minsk, Belarus, in September 2014 and in February 2015. The February ‘Package of Measures’ contains 13 commitments, including: an immediate and complete ceasefire in the Donetsk and Luhansk regions; the full withdrawal of heavy weaponry by both sides; full exchange of prisoners; a dialogue on the modalities for conducting local elections in Donetsk and Luhansk regions, under Ukrainian legislation; amnesty for the separatists; constitutional reform, including decentralization and special status of ‘certain areas’ of the Donetsk and Luhansk regions; and the regaining by Ukraine of control of its border with Russia, amongst other measures.

Despite ongoing diplomatic efforts to seek a resolution to the conflict, the situation in eastern Ukraine remains tense, with continuous ceasefire violations, and frequent shelling along the line of contact. Canada has been a consistent supporter of the Minsk peace process and believes that it represents the only feasible path to a durable and peaceful solution to the conflict in Ukraine. Canada continues to call on both parties, in particular Russia, to fully implement their commitments and obligations under the Minsk agreements.

Russia’s direct military involvement in Ukraine and clear violation of Ukraine’s sovereignty and territorial integrity continue to be a grave concern of the international community.

Recent developments

Russia has continued to play a destabilizing role in Ukraine, while denying that it is even a party to the conflict in the east, thus leading to a deadlock in the peace negotiations. Since fall 2021, a significant build-up of troops (est. 150,000-190,000), military equipment, and military capabilities in and around Ukraine has been accompanied by other Russian escalatory behaviour, including hybrid campaign techniques targeting Ukraine. This is in addition to approximately 50,000 Belarusian troops that have been mobilized in recent weeks. This aggression directly threatens and imposes significant further costs on Ukraine, and is also a blatant violation of the Minsk Agreements for a peaceful resolution to the conflict in eastern Ukraine.

Diplomatic engagement had been very active in early 2022, including negotiations along several tracks, including via: (1) U.S.-Russia bilateral talks (e.g., the U.S.-Russia Strategic Stability Dialogue); (2) NATO; (3) the OSCE; and, (4) the Normandy Four format (Ukraine, Russia, Germany, France) for the implementation of the Minsk Agreements.

On February 21, 2022, Russia signed a decree recognizing the “independence” and “sovereignty” of the so-called Luhansk People’s Republic (LNR) and Donetsk People’s Republic (DNR) regions. Immediately following the recognition of the so-called LNR and DNR, President Putin ordered Russian forces to perform peacekeeping functions in the regions. On February 22, Russia’s Duma gave President Putin permission to use military force outside the country. Uniformed Russian troops and armoured vehicles have begun moving into the territories for the first time, where only covert forces had earlier been. On February 18, 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.

These actions are a continuation and acceleration of the violent steps taken by Russia since early 2014 to undermine Ukrainian security and sovereignty, and have rendered the Minsk Agreements moot.

G7 Foreign Ministers released a statement on February 21, 2022, condemning Russian recognition of the so-called LNR and DNR regions and stated that they were preparing to step-up restrictive measures responding to Russia’s actions, while reaffirming their unwavering commitment to Ukraine’s sovereignty and territorial integrity. G7 Foreign Ministers also reconfirmed their support for the full implementation of the Minsk Agreements, to end the conflict in eastern Ukraine. This follows a similar statement made in December 2021, and one by NATO Foreign Ministers in January 2022. In those two meetings, the G7 and NATO Foreign Ministers had also reaffirmed their readiness to take actions that would have massive consequences and severe cost to Russia in the Event of any further military aggression against Ukraine.

In light of these events, on February 24, 2022, Canada further amended the Special Economic Measures (Ukraine) Regulations to amend text under Section 4.1. Canada is also adding four (4) individuals to Schedule 1 of the Regulations.

This information was published by The Government of Canada. To read the original article go to: https://www.international.gc.ca/world-monde/international_relations-relations_internationales/sanctions/ukraine.aspx?lang=eng