Canada issues third round of sanctions against Russia, and new sanctions expected soon for Belarus
As military action in Ukraine intensifies, Canada continues to exert pressure on Russia through, among other things, economic sanctions.
As detailed in our February 28, 2022 Client Alert, Canada released its first two rounds of sanctions applicable to Russia and Ukraine on February 24, 2022 and announced a third round of sanctions for Russia on February 25. 2022, which Prime Minister Justin Trudeau has indicated he will target Russian President Vladimir Putin, his former chief of staff Sergei Ivanov and Russian Foreign Minister Sergei Lavrov. Canada also announced additional sanctions for Belarus, targeting 57 people, for helping Russia invade Ukraine.
On March 1, 2022, Canada published two further amendments to the Special Economic Measures (Russia) Regulations (the “Russian regulations”). The amendments for Belarus are yet to come.
New Russian sanctions target 18 Russian Security Council members, including President Putin
In an amendment effective February 28, 2022, Canada has added 18 additional persons to Schedule 1 of the Russia Regulations, to whom the general prohibitions on transactions apply. This brings the total number of persons listed in Schedule 1 of the Russian regulations to 520 — instead of 130 (or 300%) before the publication of the two modifications of February 24, 2022 (see our customer alert of February 28, 2022 for more details on these modifications).
According to the Canadian government’s website, these individuals are “members of the Security Council of the Russian Federation responsible for these actions, including President Vladimir Putin, Foreign Minister Sergei Lavrov, Defense Minister Sergei Shoigu, Minister of Justice Konstantin Chuychenko and Minister of Finance”. Anton Siluanov”.
New debt restrictions have been removed and replaced with broader bans for Russia’s Central Bank, National Wealth Fund and Ministry of Finance
In amendments released on February 24, 2022, the Canadian government had put in place new prohibitions on Russian sovereign debt, which prohibited persons in Canada and Canadians abroad from transacting, providing financing or otherwise to negotiate new debts (regardless of the maturity date) issued by any person listed on the new Schedule 3.1 (including the Central Bank of Russia, the National Wealth Fund and the Ministry of Finance), or in connection with a person listed in Schedule 3.1 or their property or interests or rights in property.
Effective March 1, 2022, this prohibition is now repealed, as is Schedule 3.1. The three entities previously included in Appendix 3.1 have been moved to Appendix 1. This now prevents people in Canada and Canadians abroad from participating in most activities involving these institutions.
This followed the Canadian government’s announcement on February 28, 2022 stating that: “effective immediately, all Canadian financial institutions are prohibited from engaging in any transaction with the Central Bank of Russia”, and further stating that Canada would impose “an asset freeze and a trading ban on Russian sovereign wealth funds.”
This follows the joint statement issued on February 26, 2022 by G7 members, including Canada, the United States, the European Union, the United Kingdom, France, Germany and Italy, s’ committing to take the following measures:
- Pledge to ensure that some Russian banks are removed from the SWIFT messaging systemto ensure that these banks become disconnected from the international financial system and undermine their ability to operate globally;
- Pledge to impose restrictive measures to prevent the Russian Central Bank from deploying its international reserves in a way that undermines the impact of international sanctions;
- Commit to action against people and entities who facilitate the war in Ukraine and the harmful activities of the Russian government, including taking steps to “limit the sale of citizenship – the so-called golden passports – that allow wealthy Russians connected to the Russian government to become citizens of our countries and access our financial systems”; and
- Commit to launch a transatlantic task force ensure the effective implementation of our financial sanctions.
Canada considers additional sanctions – ‘everything is on the table’
On March 1, 2022, Minister Chrystia Freeland hinted that additional sanctions were on the way for Russia. In particular, she noted that the Canadian government is “carefully reviewing the assets of all Russian oligarchs and Russian businesses in Canada, we are reviewing them and everything is on the table.”
Economic sanctions aren’t the only thing in Canada’s toolbox to deter Russian aggression against Ukraine
Here are other recent responses from the Canadian government:
- Refer the situation in Ukraine to the International Criminal Court to investigate alleged war crimes and crimes against humanity committed by Russian forces;
- Banning Russian-owned and registered vessels from Canadian ports and waters, and banning Russian aircraft from Canadian airspace; and
- Ban Russian imports of crude oil (although Prime Minister Trudeau acknowledged that Canada has imported very little crude oil in recent years, he said this measure “sends a strong message”).
The situation remains very fluid – continue to monitor changes
It remains crucial for companies doing business in Russia, Ukraine or Belarus to closely monitor changes to sanctions legislation around the world, including in Canada. We will monitor and continue to report changes as the situation evolves.
For additional information and a detailed overview of the first steps Canada is taking to respond to this international crisis, please see our Client Alert of February 28, 2022 titled Canada Joins International Counterparts in Responding to “Fundamental Challenge to world order” of Russia through economic sanctions.