Significant Expansion of Government Powers Under Canada’s Sanctions Laws

On April 28, 2022, the federal government launched Bill C-19¹, which comprises important adjustments to 2 of Canada’s sanctions legal guidelines: the Special Economic Measures Act (“SEMA”) and the Justice for Victims of Corrupt Foreign Officials Act (Sergei Magnitsky Law). The amendments, if handed, would grant the Minister of Foreign Affairs (the “Minister”) distinctive new powers.

The proposed amendments, that are broadly related between the 2 acts, seem like direct responses to Russia’s invasion of Ukraine and Canada’s dedication, as introduced in a Ministerial Joint Statement, to work with its allies to take steps to “find, restrain, freeze, seize, and, where appropriate, confiscate or forfeit the assets” of individuals who’ve been sanctioned in reference to the invasion. 

As Canada makes use of the SEMA as its major legislation to impose its personal sanctions, this bulletin examines three key adjustments to the SEMA and their implications.

1. Expanded Definition of Property

The amendments would broaden the definition of property, at the moment outlined merely as “real and personal property”, to “any type of property, whether real or personal or immovable or movable, or tangible or intangible or corporeal or incorporeal, and includes money, funds, currency, digital assets and virtual currency”. This new definition will apply each to seizures and forfeitures, as mentioned beneath, in addition to to the present prohibitions associated to dealings in or facilitating transactions in property and the obligations to reveal info to the RCMP or CSIS associated to such property or transactions.

2. New Powers to Seize and Seek the Forfeiture of Property

At current, the SEMA permits the Governor in Council to make an order seizing, freezing, or sequestrating any property that’s “held by or on behalf of” a overseas state, any individual in that overseas state, or a nationwide of that overseas state who doesn’t ordinarily reside in Canada. The proposed amendments make clear the scope of property that may be seized by making use of these powers to property “that is owned – or that is held or controlled, directly or indirectly” by a overseas state, any individual in that state, or a nationwide of that state who doesn’t ordinarily reside in Canada. 

When learn alongside extra new provisions authorizing the Minister to compel any individual to supply info related to creating an order, in addition to new provisions authorizing info assortment by, and sharing between, the Minister and individuals such because the Superintendent of Financial Institutions, this implies the intention to establish and goal property which will have beforehand evaded sanctions legal guidelines.  

Further nonetheless, the proposed amendments would introduce a mechanism for the Minister to hunt the forfeiture of seized property upon utility to a superior court docket, although the amendments don’t specify the standards for use by the Minister to find out when forfeiture will probably be sought. So lengthy as a decide determines, primarily based on the proof offered, that the property is the topic of an order seizing or restraining the property and that it’s owned, held or managed immediately or not directly by the individual referred to in that order, the decide should order the forfeiture. Before making any forfeiture order, the court docket would require discover to be given to, and should hear from, any one that, within the court docket’s opinion, seems to have an curiosity in or proper to the property. 

Once forfeited, the Minister could then dispose of the property and use the proceeds just for:  

(a) the reconstruction of a overseas state adversely affected by a grave breach of worldwide peace and safety; 

(b) the restoration of worldwide peace and safety; and, 

(c) the compensation of victims of a grave breach worldwide peace and safety, gross and systematic human rights violations or acts of important corruption.

The Minister may enter into agreements with the federal government of any overseas state enabling that state to make use of the funds for the needs above.  

3. Ability to Issue General Permits

The SEMA at the moment empowers the Minister to situation permits on utility to people authorizing particular actions or transactions that will in any other case be prohibited. The amendments would allow the Minister to additionally situation basic permits, authorizing any individual in Canada or Canadian overseas to hold out a specified exercise or transaction, or class of exercise or transaction, that’s in any other case prohibited with out the necessity to file such utility. 

This modification will align Canada’s sanctions regime with the USA and the UK, who at the moment authorize their sanctions businesses to situation basic permits. 

Conclusion

If handed later this summer season, as is anticipated, the proposed amendments would mark a major growth in Canada’s sanctions regime and would, based on the Minister, make Canada the primary nation amongst its G7 friends to permit the forfeiture and sale of sanctioned individuals’ property. Given the growing complexity of Canada’s sanctions legal guidelines, the frequency with which new individuals are sanctioned, and the extreme reputational and authorized penalties for violations, Canadian companies ought to carefully monitor the newest developments. 

 

¹ Bill C-19: An Act to implement sure provisions of the finances tabled in Parliament on April 7, 2022 and different measures.

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