In recent years, Canada has significantly expanded its multilateral and unilateral trade control measures. Broader scope and increased enforcement in the areas of economic sanctions, export and technology transfer controls, and defence trade controls have raised the stakes for Canadians engaged in cross-border activities. Enforcement and reputational risk is higher than ever and it is critical for any Canadian company doing business abroad to ensure it has internal controls in place to mitigate the growing risk exposure.
During 2014, developments in Russia, the Ukraine and Middle East brought into focus the sanctions risk exposure of Canadian companies regardless of where they do business. In addition, new developments in export and technology transfer controls as well as defence trade controls highlight the importance of keeping apprised of these evolving rules. The following summarizes the most significant of these developments and what they mean for trade control enforcement and compliance in 2015.
Russia and Ukraine
Without a doubt, Russia's invasion of Ukraine was the big sanctions story of 2014. Canada has been particularly vociferous in its opposition to the Putin regime, being among the first of any country to threaten sanctions over Russian interference in the Ukraine even before the departure of former President Viktor Yanukovych.
Beginning in March and continuing throughout 2014, Canada implemented broad listed-based sanctions in response to Russian aggression towards Ukraine and the annexation of the Crimea region. Under the Special Economic Measures (Russia) Regulations (the "Russia Regulations"), persons in Canada and Canadians outside Canada are prohibited from engaging in a broad range of dealings with listed Russian individuals and entities, generally referred to as "Designated Persons" under Canadian sanctions law. The Special Economic Measures (Ukraine) Regulations applies similar restrictions in respect of listed Designated Persons in Ukraine. The Freezing Assets of Corrupt Foreign Officials (Ukraine) Regulations prohibits dealings involving listed persons associated with the former Yanukovych regime. Currently, Canada has listed more individuals and entities than either the United States or the European Union under their respective Russia/Ukraine sanctions.
Under the Russia Regulations, Canada also now prohibits providing financing for or dealing in new debt of longer than 30 or 90 days' maturity (depending on the entity) in relation to certain listed entities, their property or any interests or rights in their property. Dealing in new securities, including shares or any other ownership interest in relation to certain listed entities, their property or any interests or rights in their property is also prohibited.
On December 19, 2014, Canada implemented restrictions on the supply of certain goods and technology to Russian oil exploration and production activities. Persons in Canada and Canadian outside Canada are now prohibited from exporting, selling, supplying or shipping any listed goods, wherever situated, to Russia or to any person in Russia for use in offshore oil exploration or production at a depth greater than 500 metres, oil exploration or production in the Arctic, or shale oil exploration or production. The new measures also prohibit the provision to Russia or to any person in Russia of any financial, technical or other services related to such prohibited goods.
Although no new measures have been imposed by Canada against Iran since a comprehensive trade embargo was put in place on May 29, 2013, Canada has made it clear that it will continue to enforce its sanctions measures aggressively even as the United States and other members of the P5 +1 seek to negotiate...