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Services, Sensitive Technologies, Luxury Goods, Gold, And Disinformation Sanctions – Plus A Forfeiture Regime: Canada’s Latest Responses To The Russian Invasion Of Ukraine – Export Controls & Trade & Investment Sanctions


Canada has targeted Russia and Belarus with a series of further
economic sanctions. During the G7 Summit in Germany, Prime Minister
Trudeau announced that Canada would introduce sanctions against
state-sponsored disinformation and propaganda agents and entities
that are controlled by senior Russian government officials, and
would ban the import of certain gold goods from Russia. Canada has
also expanded restrictions on the exports of products that could
contribute to Russian and Belarusian domestic military
capabilities, and services that support key manufacturing
industries in Russia. More broadly, Canada has established a
forfeiture regime for property seized from designated persons and
is expected to use the proceeds from property forfeited under the
Russia and Belarus sanctions to support Ukraine.

New Sanctions against Russian and Occupied Ukrainian Defense
Sectors

On June 27, 2022, Canada designated 6 individuals and 46
entities connected to the Russian defense sector1 as
well as 15 Ukrainians (including former senior officials in the
Ukrainian government, their family members, and individuals in
charge of areas of Ukraine that are currently illegally occupied
and controlled by Russian forces or Russian-based proxies) on its
sanction lists.2

Canada also banned the export of certain advanced technologies
that could be used to improve Russia’s domestic defense
manufacturing capabilities.3 This ban supplements the
previous items placed on the Restricted Goods and Technologies List
(see details here).4 It covers quantum computing
equipment and technology; cryogenic freezers; and various types of
manufacturing equipment and technology, including apparatus for
ultrasonic extrusion or certain laser cladding, certain software,
microscopes, and related equipment.5 The prohibitions
came into effect immediately.6 Canadians, as well as
other persons and entities in Canada, can no longer export, supply,
sell, or ship any such goods or technologies – including
intangibles related to the technology, such as technical data,
software, assistance, training, or consulting – to Russia or
any person in Russia, regardless of where the goods or technology
are located.

On June 27, 2022, Canada released a similar set of sanctions
against Belarus, including a ban on the export of quantum
technology, advanced technologies, and goods that could be used to
manufacture weapons in Belarus.7 The sanctions list was
also amended to add 13 Belarusian individuals and 2 entities who
are connected to government and military
activities.8

Disinformation Sanctions

Canada sanctioned 30 individuals and 15 entities from Russia who
are involved in “disinformation” activities, effective on
July 8, 2022.9 Canada initially identified 21
individuals as Russian disinformation agents and 13 entities
involved in disinformation activities on June 24,
2022,10 and added 9 individuals and 2 entities on July
5, 2022.11 This brings a new dimension to Canadian
sanctions by targeting persons that are assisting the Russian
invasion through misleading media and other communications.
However, it is unclear how significant the practical effect of
asset freezes and dealings prohibitions will be, since these
targets may have a less significant international economic
footprint than many other sanctioned persons.

Gold Sanctions

Canada also imposed a new round of economic sanctions against
Russia’s ability to benefit from selling gold products on July
8, 2022. Canada banned the imports of Russian gold products,
including unwrought gold, semi-manufactured gold, gold powder,
monetary gold, and jewelry made of gold.12 In
conjunction with similar bans by the United States, United Kingdom,
and Japan, the stated objective is “shutting the commodity out
of the formal international markets and further isolating Russia
from the international financial system.”13

Luxury Goods Sanctions

Canada banned the import of luxury goods from and the export of
luxury goods to Belarus on June 27, 2022. These restrictions are
similar to luxury goods trade prohibitions against Russia, which
entered into force on May 18, 2022 (see details here). Luxury goods cover a wide range of
products, including alcoholic beverages, tobacco, certain textiles
and sportswear, footwear, luxury clothing and accessories, jewelry,
kitchenware, art, seafood, fish, and non-industrial
diamonds.14

Forfeiture Orders for Property Seized from Sanctioned
Persons

On June 23, 2022, Canada enacted a legal framework for
forfeiture orders related to the property of individuals and
entities included in Canada’s sanctions lists (see details here).15 To date, few countries
have implemented a similar scheme for selling assets of sanctioned
persons; however, discussions at the G7 Summit suggest other
countries are preparing to follow Canada’s path.16
Although this power applies to any individual on Canada’s
sanctions lists, the impetus for introducing this new remedy is to
allow the Canadian Government to assist the Ukrainian people by
selling off seized assets of oligarchs and others that have been
sanctioned for involvement in or support of the invasion of
Ukraine.

The assets of a sanctioned individual can be seized whether they
were acquired legally or illegally, and whether they are owned
directly or indirectly. The amendments expand the definition of
property to allow for seizure and forfeiture of any type of
property. The definition includes money, funds, currency, digital
assets and virtual currency, as well as other assets –
whether real or personal, immovable or movable, tangible or
intangible, and corporeal or incorporeal.

The Canadian authorities will be provided with enhanced
enforcement powers to seize property that is subject to asset
freezes and dealings prohibitions, including the sharing of
information and compelled disclosure. The Minister is now expressly
permitted to collect and share information with several other
government entities, including the Canadian Security Intelligence
Service, the Royal Canadian Mounted Police (RCMP, Canada’s
national police force), and the Canada Border Services Agency
(which administers Canada’s import/export/customs/immigration
laws, among other powers). The RCMP will assist the Minister in
matters related to the seizure and restraint of property that is
the subject of sanctions and subsequent forfeiture orders.

Sanctions on Services Provided to Russian Manufacturing
Industries

On July 9, 2022, Canada announced its intention to impose a new
round of sanctions that expands existing measures involving
services supplied to Russia’s oil, gas and chemical sectors
(see details here) to include the industrial manufacturing
sector. These measures prohibit Canadian businesses (anyone in
Canada, as well as Canadian individuals and entities outside
Canada) from providing a wide range of services that could
contribute to the production of goods in these four key sectors of
the Russian economy. At this time, such sanctions do not apply to
these four sectors in Belarus.

The new measures will apply to land and pipeline transport, the
manufacturing of metals and of transport, computer, electronic and
electrical equipment, as well as of machinery.17
Currently, 28 categories of services are prohibited from being
supplied to Russia or any person in Russia in the oil, gas and
chemical sectors, including construction, retail sales, repair,
accounting, engineering, computer, advertising, management
consulting, research and development, and technical and scientific
services.18 The targeting of Russia’s industrial
manufacturing sector reflects the Canadian Government’s view
that it is a fourth key pillar of the Russian economy.

Unlike many of Canada’s sanction announcements, Canadian
businesses will have 60 days to discontinue contracts with targeted
industries and services once these measures are in
effect.19 For further discussion of contract issues
arising from the imposition of sanctions, see details here.

To date, Canada has imposed sanctions on 1,088 individuals and
entities in Russia, 466 in Ukraine, and 90 in Belarus, as well as a
wide range of import, export and other trade restrictions. For more
information on the previously imposed sanctions, see our prior
bulletins: February 25, 2022, March 4, 2022, March 29, 2022, June 1, 2022, and June 13, 2022, or contact any member of
McMillan’s international trade law team.

Footnotes

1. Government of Canada, “Canadian Sanctions Related to Russia
(June 27, 2022).

2. Government of Canada, “
Sanctions – Russian invasion of Ukraine
” (July 7,
2022).

3. Regulations Amending the Special Economic
Measures (Russia) Regulations
(SOR/2022-165)
, amending
SOR/2014-58.

4. Government of Canada, “Restricted Goods and Technologies List
(May 10, 2022).

5. Regulations Amending the Special Economic Measures
(Russia) Regulations
(SOR/2022-165).

6. Regulations Amending the Special Economic Measures
(Russia) Regulations
(SOR/2022-165).

7. Government of Canada, “Canadian Sanctions Related to Belarus
(June 27, 2022).

8. Regulations Amending the Special Economic Measures
(Belarus) Regulations (SOR/2022-167)
, amending
SOR/2020-214.

9. Government of Canada, “
Sanctions – Russian invasion of Ukraine
” (July 7,
2022).

10. Government of Canada, “Regulations Amending the Special Economic Measures
(Russia) Regulations
” (June 24, 2022).

11. Government of Canada, “Regulations Amending the Special Economic Measures
(Russia) Regulations
” (July 5, 2022).

12. Government of Canada, “Regulations Amending the Special Economic Measures
(Russia) Regulations
” (July 5, 2022).

13. Prime Minister of Canada, “Prime Minister announces additional sanctions in
support of Ukraine
” (June 27, 2022).

14. Special Economic Measures (Russia) Regulations,
SOR/2014-58,
Schedule 6
.

15. Bill C-19, An Act to implement certain provisions of the
budget tabled in Parliament on April 7, 2022 and other
measures
[Budget Implementation Act, 2022, No. 1]
(Bill C-19 received royal assent on June 23, 2022, but the date of
coming into force is not yet published); also see Government of
Canada, “Legislation to grow Canadian economy and make life
more affordable receives Royal Assent
” (June 23,
2022).

16. Reuters, “G7 mulling Russian asset seizures to help rebuild
Ukraine, German finance minister says
” (May 20,
2022).

17. Government of Canada, “Minister Joly announces Canada’s intent to
further sanction key Russian economic sectors
” (July 9,
2022).

18. Government of Canada, “Regulations Amending the Special Economic Measures
(Russia) Regulations
” (June 6, 2022).

19. Government of Canada, “Minister Joly announces Canada’s intent to
further sanction key Russian economic sectors
” (July 9,
2022).

The foregoing provides only an overview and does not
constitute legal advice. Readers are cautioned against making any
decisions based on this material alone. Rather, specific legal
advice should be obtained.

© McMillan LLP 2021



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