Canada Sanctions: Reviewing the review

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Written by: Brad Lehigh, GTM Governance, Canada

On April 6th, 2017, the Canadian House of Commons Standing Committee on Foreign Affairs and International Development tabled a report entitled “A coherent and effective approach to Canada’s sanctions regimes: Sergei Magnitsky and beyond”.

The report was issued as a result of a long-standing requirement to review Canada’s sanctions programs. The report was initiated on June 8th, 2016 and after nearly a year of study, which included hearing from 42 witnesses and reviewing five different comprehensive sanctions reviews from industry experts, the report was issued with 13 recommendations.

In this article, we have taken five of the recommendations and provided some insight into what they could mean for Canadian exporters. The remaining recommendations can be read by accessing the original report.

Recommendation 1:

The Government of Canada should ensure that sanctions imposed using more than one of the United Nations Act, the Special Economic Measures Act or the Export and Import Permits Act are imposed in a complementary and coherent manner, and amended concurrently when necessary.

It can be confusing for the exporter when a country is sanctioned multiple times, or uses multiple sanctions acts as this results in exporters having to sift through multiple regulations in order to understand the prohibitions.

The Canadian government also struggles with maintaining the information on sanctions after their issuance. Zimbabwe sanctions under the Special Economic Measures Act are an example of active and restrictive legislation currently in place that hasn’t been amended in nearly 10 years. Unlike its American counterpart, Canada has not amended the lists associated with this sanction, nor ensured that individuals are still relevant to the sanctions program or de-listed individuals who are now deceased.

It would be a welcome initiative if Canada were to allocate additional resources to ensure its sanctions regimes are kept current to serve their intended purpose.

Recommendation 2:

The Government of Canada should implement the decisions of the United Nations Security Council regarding its mandated sanctions regimes through the timely enactment, amendment, and repeal of regulations under the United Nations Act.

Global Affairs Canada is notoriously slow at repealing UN Act sanctions against countries that have had their sanctions program terminated by the United Nations. Cote d’Ivoire and Cote Liberia are two examples of this, both countries no longer face any UN-mandated sanctions, with Cote D’Ivoire having its sanctions removed in April of 2016 and Cote Liberia seeing its entire sanctions program repealed in May of 2016. The government of Canada just repealed the UN Act sanctions against both of these countries on April 13th, 2017 – approximately a year after the sanctions should have been repealed.

An improvement in the timing of the government updates will help exporters navigate already complex legislation.

Recommendation 4:

The Government of Canada should provide comprehensive, publically available, written guidance to the public and private sectors regarding the interpretation of sanctions regulations in order to maximize compliance.

Global Affairs Canada offers little to no support when it comes to interpreting Canada’s sanctions legislation. This often results in companies taking the cautious and easier method of simply not doing business with sanctioned countries rather than attempting to understand the myriad of legislation. This results in customers located in sanctioned countries seeking goods from alternative sources, while Canadian exporters pay the price.

Increasing the budget and staff to the Economic Law Section within Global Affairs Canada, to provide Canadian exporters an avenue to seek clarity on sanctions programs, would be a welcome undertaking.

Recommendation 5:

The Government of Canada should produce and maintain a comprehensive, public and easily accessible list of all individuals and entities targeted by Canadian sanctions containing all information necessary to assist with the proper identification of those listed.

Another thorn in the side of Canadian sanctions practitioners is the lack of a consolidated list of individuals and/or entities that are currently sanctioned by Canada.

Canadian exporters are recommended to use third-party service providers to conduct restricted party screening on their behalf, as Global Affairs does not have a consolidated list of entities and individuals. Service providers, such as Livingston, have software that screens the many lists; a necessary step when making an export from Canada. To obtain the names of sanctioned individuals and entities without the help of a third-party service provider, exporters have to consult each piece of sanctions legislation and consolidate the results themselves. In addition, UN Act sanctions require exporters to consult the United Nations lists not found on any Canadian government website.

On February 5th, 2016, Global Affairs Canada amended its Special Economic Measures Act against Iran by delisting 349 entities and 44 individuals, and listing two new entities and six new individuals. The amendment made no reference to who was added or deleted, resulting in a large manual effort by many people to determine what changes were actually made.

A consolidated list showing every individual and entity sanctioned under the UN Act, Special Economic Measures Act (SEMA), and Freezing Assets against Corrupt Foreign Officials Act (FACFOA), with their respective listing and delisting dates would ease the burden associated with this issue.

Recommendation 12:

In honour of Sergei Magnitsky, the Government of Canada should amend the Special Economic Measures Act to expand the scope under which sanctions measures can be enacted, including in cases of gross human rights violations.

This particular recommendation is the one getting the most attention from national media. Both the United States and Europe already have Magnitsky sanction legislation in place, while Canada was long expected to do the same, attempts to pass a Magnitsky sanctions bill have been scuttled by the federal government.

Sergei Magnitsky was a Russian lawyer who died while in custody of the Russian state after exposing large scale fraud and human rights violations by Russian officials. Although Magnitsky sanctions were initially created to punish those responsible, it has the ability to evolve into a program that can punish any human rights abusers.

Rather than creating a fifth new sanctions program, which would only add another unneeded layer of complexity, the report suggests amending the Special Economic Measures Act to allow more leeway for government officials to sanction human rights violators individually.

This recommendation should be adopted, and assuming a consolidated list of sanctioned individuals and entities were created in accordance with “Recommendation 5”; it should not be difficult to administrate.

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