Risk Management and Crisis Response Blog

Canada’s new sanctions FAQs offer more questions than answers

Apr 9, 2024 2 MIN READ
Authors
Matthew Kronby

Partner, Competition, Trade and Foreign Investment, Toronto

Chelsea Rubin

Associate, Competition, Trade & Foreign Investment, Toronto

Jacob Mantle

Associate, Competition, Trade and Foreign Investment, Toronto

Jesse Goldman

Partner, Competition, Trade and Foreign Investment, Toronto

Alan Kenigsberg

Partner, Tax, Toronto

Aerial view of Container freight ship in transit

For years, Canada’s business and legal communities have sought more meaningful public guidance from Global Affairs Canada (GAC) on its interpretation of Canada’s sanctions. Demands for this guidance have grown since the major expansion of Canada’s Russia-related sanctions in response to Russia’s 2022 invasion of Ukraine, as we have noted in several prior posts (e.g., our posts illustrating the expansion of scope to the restricted lists of goods and technologies, as well as designated persons).

This past month, GAC, which administers Canada’s economic sanctions quietly updated its “Frequently Asked Questions” (FAQs) page to provide new guidance on Canada’s autonomous economic sanctions, including those related to Russia.

While GAC has produced some guidance over the years, most of it has avoided addressing the many thorny interpretive issues posed by the wording found in the key legal instruments used for imposing sanctions, particularly the Special Economic Measures Act, the Justice for Victims of Corrupt Foreign Officials Act and the regulations under them. These new FAQs do aim to address some of these issues, offering expansive interpretations in several key areas, specifically: the scope of the anti-facilitation provisions; when entities are considered owned or controlled by a sanctioned person; and indirect dealings with sanctioned persons, including the acquisition of goods from a non-sanctioned foreign supplier that uses inputs sourced from a sanctioned entity. However, the guidance, however well intentioned, further complicates compliance efforts for Canadian businesses and those Canadians working in foreign companies, by signaling an expanded risk.

While these interpretations do not have the force of law, because they can be presumed to reflect the positions of Canada’s administrative and enforcement authorities, they change the risk calculations for Canadian businesses with international supply chains and Canadians employed abroad in foreign businesses.

To assist individuals and businesses in navigating these new interpretations, and stay up to date on the impact of this new guidance, Osler published an update on April 1, for those who might have missed the release of these FAQs, to summarize the guidance and what it means for Canadian business.

Please see here to access the update.