On September 29, 2020, the Canadian Government announced the imposition of sanctions on various officials of the government of Belarus (the "Belarus Sanctions") effective immediately. The Belarus Sanctions are Canada's response to the Belarus government's violent and sustained crack-down on opposition leaders and civilians protesting the results of Belarus' fraudulent presidential election on August 9, 2020.
Those doing business abroad, especially involving Belarus or the surrounding region, should be carefully reviewing the new measures to ensure that their business activities remain in full compliance. In particular, these list-based measures targeting individuals and the property they own or control are another reminder of the importance of identifying and screening those who own or control, directly or indirectly, your customers, suppliers, service providers, and other counterparties and business partners.
New Prohibitions and Reporting and Monitoring Obligations
The Belarus Sanctions, which are established under the authority of Canada's Special Economic Measures Act, target eleven high-ranking Belarussian civil and military figures alleged to be involved in gross and systemic human rights violations following the failed election. These include the purported winner of the election, Aleksandr Lukashenko, as well as his son and National Security Advisor, Viktor Lukashenko.
The individuals listed in the Schedule to the Belarus Sanctions, including both Lukashenkos, are subject to an asset freeze which prohibits Canadians and persons in Canada from dealing in property owned, held or controlled by those individuals, facilitating any such dealings, providing financial and related services to them, as well as making any goods available to them.
In addition, a wide array of financial institutions that operate in Canada (including Canadian financial institutions, provincially regulated financial service providers, and non-resident securities businesses operating under exemptions in Canada) are required to engage in ongoing monitoring or screening to determine if they are in possession or control of any property owned, held or controlled by or on behalf of any listed person.
All such financial service providers, as well as any Canadians and persons in Canada, are also required to immediately disclose any property within their possession or control that may be owned or controlled by a listed person, and any information about a transaction relating to such property, to either the Commissioner of the RCMP or the Director of CSIS.
Canada has historically been wary of dealings with Belarus, a country widely considered to be Europe's last dictatorship. Belarus was previously subject to broad export and technology transfer prohibitions by being listed on Canada's Area Control List established under the Export and Import Permits Act from 2006 to 2017. These prohibitions had the effect of essentially barring almost all exports and technology transfers from Canada to Belarus and were among the most restrictive trade measures imposed against Belarus by any country in the world. The Canadian Government removed Belarus from the Area Control List in 2017 in an attempt to foster diplomatic re-engagement.
Canada coordinated the implementation of these new sanctions with the United Kingdom, which made a parallel announcement the same day. The move represents an attempt at harmonized action between the two countries to limit the Belarussian leadership's access to financial markets and any assets it may have in affected jurisdictions. The United Kingdom's actions constitute the second application of measures under its new Global Human Rights Sanctions Regime.
Arguably, Canada and the United Kingdom's international coordination has been to some degree weakened by the European Union's refusal to join in implementing companion sanction measures. This is because the European Union is hamstrung by the need for consensus to implement sanctions measures. Cyprus has indicated it will veto any proposed measures against Belarus until similar sanctions are imposed against Turkey. That being said, the Baltic states of Lithuania, Latvia and Estonia imposed sanctions against Aleksandr Lukashenko and 29 other Belarussian officials last month. Other individual EU members may also move to impose sanctions in the absence of EU-wide action.
Although the United States already maintains limited sanctions against Belarus and has done so since 2006, including list-based measures against both Aleksandr and Victor Lukashenko as well as other individuals and entities, it was expected to have also coordinated additional new listings with Canada and the United Kingdom. At the time of this publication, it had not.
Notably, there are differences between the Canadian and UK lists of sanctioned persons - Canada listed eleven individuals while the United Kingdom listed only eight and there is one name on the UK list that does not appear on the Canadian one. If and when the United States issues new list-based sanctions, there will likely be differences in its list as well. These differences substantially increase compliance risk for multinational entities with operations in the United Kingdom, the United States, and Canada. Vigilance will be required to ensure that compliance programs are calibrated properly to reflect any potential divergence across sanctions regimes.
Companies should be revising their sanctions policies and procedures to reflect these new measures. The listed names should be added to their screening protocols for purposes of conducting due diligence on their counterparties and the persons that own or control them. Activities in or around Belarus should be carefully scrutinized to ensure full compliance with these new measures.
Given that this situation is an evolving one, we expect that further sanctions may be imposed at a future date if the political situation in Belarus is not resolved, particularly as a number of countries, such as France, move to recognize opposition leader Svetlana Tikhanovskaya as the legitimate head of state of Belarus.
One indicator of this is Canada's decision to implement the sanctions as a distinct regulation under the Special Economic Measures Act, rather than adding these individuals to the list established under the Justice for Victims of Corrupt Foreign Officials Act (Sergei Magnitsky Law) as has been done with targeted persons in Saudi Arabia, Russia, Venezuela, Myanmar, and South Sudan. The flexibility allowed under the Special Economic Measures Act regulation grants wide discretion to sanction Belarussian officials, their family members, associates, and entities they own, hold or control. It also allows for expanding the sanctions to include broader measures against Belarus or certain sectors of its economy, including bans or restrictions on imports and exports, the acquisition or provision of financial services, technology transfers, and making investments.
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