As the military action in Ukraine intensifies, Canada continues to impose pressure upon Russia by way of, among other things, economic sanctions.

As described in detail in our client alert of February 28, 2022, Canada published its first two rounds of sanctions applicable to each of Russia and Ukraine on February 24, 2022 and announced a third round of sanctions for Russia on February 25, 2022, which Prime Minister Justin Trudeau indicated would target Russian President Vladimir Putin, his former chief of staff Sergei Ivanov, and Russian Foreign Minister Sergei Lavrov. Canada also announced additional sanctions for Belarus, targeting 57 individuals, for aiding Russia’s invasion of Ukraine.[1]

On March 1, 2022, Canada published two further amendments to the Special Economic Measures (Russia) Regulations (the “Russia Regulations”),[2] and on March 2, 2022, announced its fourth round of sanctions for Russia, focusing on the Russian energy sector.[3]

The amendments for Belarus, announced on February 25, 2022, remain forthcoming.

New Russian sanctions target 18 members of Russia’s Security Council, including President Putin

In an amendment effective February 28, 2022,[4] Canada added an additional 18 individuals to Schedule 1 of the Russia Regulations, to which listed persons the general dealings prohibitions apply. This bring the total number of listed persons in Schedule 1 of the Russia Regulations to 520 — up from 130 (or 300%) before the two February 24, 2022 amendments were published (see our February 28, 2022 client alert for specifics on those amendments).

According to the Canadian government’s website, these individuals are “members of the Security Council of the Russian Federation responsible for these actions, including President Vladimir Putin, Foreign Minister Sergei Lavrov, Minister of Defence Sergei Shoigu, Minister of Justice Konstantin Chuychenko, and Finance Minister Anton Siluanov”.[5]

New debt restrictions have been removed and replaced with broader prohibitions for the Russian Central Bank, National Wealth Fund, and Ministry of Finance

In the amendments published on February 24, 2022, the Canadian government had implemented new prohibitions on Russian sovereign debt, which prohibited persons in Canada and Canadians outside of Canada from transacting in, providing financing for, or otherwise dealing in new debt (irrespective of the time for maturity) issued by any person listed in the newly introduced Schedule 3.1 (comprising the Russian Central Bank, National Wealth Fund, and Ministry of Finance), or in relation to a person listed in Schedule 3.1 or their property or interests or rights in property.[6]

Effective March 1, 2022, this prohibition has now been repealed, as has Schedule 3.1. The three entities previously included in Schedule 3.1 have been moved to Schedule 1.[7] This now precludes persons in Canada and Canadians outside of Canada from engaging in most activities involving these institutions.

This followed the Canadian government’s announcement on February 28, 2022 indicating that: “effective immediately, all Canadian financial institutions are prohibited from engaging in any transaction with the Russian Central Bank”, and indicating further that Canada would be imposing “an asset freeze and a dealings prohibition on Russian sovereign wealth funds”.[8]

This further followed the joint statement issued on February 26, 2022 by G7 members, including Canada, the United States, the European Union, the United Kingdom, France, Germany and Italy, committing to the following actions:

• Committing to ensuring that selected Russian banks are removed from the SWIFT messaging system, to ensure that these banks are disconnected from the international financial system and harm their ability to operate globally;
• Committing to imposing restrictive measures to prevent the Russian Central Bank from deploying its international reserves in ways that undermine the impact of international sanctions;
• Committing to acting against the people and entities who facilitate the war in Ukraine and the harmful activities of the Russian government, including taking measures to “limit the sale of citizenship—so called golden passports—that let wealthy Russians connected to the Russian government become citizens of our countries and gain access to our financial systems”; and
• Committing to launching a transatlantic task force to ensure the effective implementation of our financial sanctions.[9]

Canada has announced and is considering additional sanctions – “everything is on the table”

On March 1, 2022, Minister Chrystia Freeland hinted that additional sanctions are on their way for Russia. In particular, she noted that the Canadian government is “looking carefully at the holdings of all Russian oligarchs and Russian companies inside Canada, we’re reviewing them and everything is on the table”.[10]

These additional sanctions include, but are likely not limited to, the fourth round of Russian sanctions announced on March 2, 2022. According to a press release issued by Global Affairs Canada, “[t]hese new measures impose restrictions on 10 key individuals from 2 important companies in Russia’s energy sector, Rosneft and Gazprom”.

Economic sanctions are not the only thing in Canada’s toolbox for deterring Russian aggression towards Ukraine

Other recent responses by the Canadian government include:

• Referring the situation in Ukraine to the International Criminal Court to probe alleged war crimes and crimes against humanity committed by Russian forces;[11]
• Banning Russian-owned and registered ships from Canadian ports and waters, and banning Russian aircraft from Canadian airspace;[12] and
• Banning Russian imports of crude oil (although Prime Minister Trudeau recognized that Canada has imported very little amounts of crude oil in recent years, he indicated that this measure “sends a powerful message”).[13]

The situation remains very fluid – keep watching for changes

It remains crucial for companies with business activities in Russia, Ukraine or Belarus to keep a close eye on amendments to sanctions legislation around the globe, including in Canada. We will be monitoring and will continue to report on changes as the situation evolves.

For additional background and a detailed overview of Canada’s initial steps in responding to this international crisis, please refer to our February 28, 2022 client alert titled Canada joins international counterparts in responding to Russia’s “fundamental challenge to the world order” with economic sanctions.

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[1] The recorded announcement is available on Global News: see Eric Stober, “Canada to place sanctions on Putin for Russian invasion of Ukraine” (February 25, 2022): https://globalnews.ca/news/8646887/canada-vladimir-putin-sanctions-russia-ukraine-invasion/.

[2] SOR/2014-58.

[3] Global Affairs Canada, “Canada imposes additional economic measures on Russian energy sector” (March 2, 2022.

[4] Regulations Amending the Special Economic Measures (Russia) Regulations, SOR/2022-0032.

[5] Global Affairs Canada, “Canadian Sanctions Related to Russia” (Updated March 1, 2022): https://www.international.gc.ca/world-monde/international_relations-relations_internationales/sanctions/russia-russie.aspx?lang=eng. 

[6] Regulations Amending the Special Economic Measures (Russia) Regulations, SOR/2022-0027.

[7] Regulations Amending the Special Economic Measures (Russia) Regulations, SOR/2022-0031.

[8] Department of Finance, “Canada and G7 partners prohibit Russian Central Bank transactions” (February 28, 2022), online: https://www.canada.ca/en/department-finance/news/2022/02/canada-and-g7-partners-prohibit-russian-central-bank-transactions.html.

[9] Prime Minister of Canada, Justin Trudeau, “Joint Statement on further restrictive economic measures” (February 26, 2022): https://pm.gc.ca/en/news/statements/2022/02/26/joint-statement-further-restrictive-economic-measures.

[10] Sarah Turnbull, “Freeland says Putin's become an international pariah, further sanctions coming” (March 1, 2022), online: https://www.ctvnews.ca/politics/freeland-says-putin-s-become-an-international-pariah-further-sanctions-coming-1.5801193.

[11] Global Affairs Canada, “Canada to refer the situation in Ukraine to International Criminal Court” (March 1, 2022): https://www.canada.ca/en/global-affairs/news/2022/03/canada-to-refer-the-situation-in-ukraine-to-international-criminal-court.html.

[12] Transport Canada, “Government of Canada prohibits Russian ships and fishing vessels from entering Canadian ports and internal waters” (March 1, 2022): https://www.canada.ca/en/transport-canada/news/2022/03/government-of-canada-prohibits-russian-ships-and-fishing-vessels-from-entering-canadian-ports-and-internal-waters.html; Transport Canada, “Government of Canada prohibits Russian aircraft to enter Canadian airspace” (February 27, 2022): https://www.canada.ca/en/transport-canada/news/2022/02/government-of-canada-prohibits-russian-aircraft-to-enter-canadian-airspace.html.

[13] Kim Mackrael, “In Symbolic Move, Canada Bans Russian Oil Imports” (February 28, 2022, Wall Street Journal): https://www.wsj.com/livecoverage/russia-ukraine-latest-news-2022-02-28/card/in-symbolic-move-canada-bans-russian-oil-imports-9rZUk6fmTPxRoBgSEIai.