This Legal Update discusses Canadian securities regulators issue statement regarding amended Special Economic Measures (Russia) Regulations, March 14, 2022, published by the Canadian Securities Administrators (CSA) regarding the economic sanctions implemented by the Government of Canada in response to Russia's ongoing military actions in Ukraine.

A current list of sanctions and other actions taken by the Canadian government in connection with the Russian invasion of Ukraine are available on the Government of Canada website: Canadian Sanctions Related to Russia.

The Special Economic Measures Act, S.C. 1992, c. 17 (SEMA) is the principal legislation that Canada uses to impose sanctions on foreign jurisdictions and persons in relation to grave breaches of international peace and security resulting in a serious international crisis. Under SEMA, Canada enacts separate regulations for each targeted jurisdiction.

The Special Economic Measures (Russia) Regulations, SOR/2014-58 (the Regulations) came into force on March 17, 2014, following the Russian occupation and purported annexation of Crimea into the Russian Federation, and have been frequently amended since that time.

For more information, see Legal Update, Canadian Sanctions Related to Russia and Russia Sanctions and Related Considerations Toolkit.

The CSA statement was issued due to recent amendments to the Regulations regarding the economic sanctions implemented by the Government of Canada in response to Russia's ongoing military actions in Ukraine.

The Regulations impose broad categories of sanctions on named Russian nationals and Russian entities. Market participants may be directly affected if they intersect with any of the “designated persons” (listed in Schedule 1, 2 or 3 of the Regulations) and their assets or property. While the sanctions apply beyond the scope of applicable securities laws in Canada, all market participants are potentially impacted, including:

Additionally, other entities, such as banks and accounting firms that facilitate relevant transactions or provide financial or audit services in relation to relevant transactions or designated persons, may be impacted.

All market participants are encouraged to do their due diligence and consider obtaining expert advice to understand, follow and continually monitor their obligations under the Regulations.

The Regulations impose wide-ranging restrictions in a number of areas. It is prohibited for any person in Canada and any Canadian outside Canada to:

Deal in any property, wherever situated, held by or on behalf of a designated person whose name is listed in Schedule 1 of the Regulations.

Enter into or facilitate, directly or indirectly, any transaction related to such a dealing.

Provide any financial or other related services in respect of such a dealing.

Make any goods, wherever situated, available to a designated person listed in Schedule 1.

Provide any financial or related service to, or for the benefit of, a designated person listed in Schedule 1.

In addition, certain entities must determine on a continuing basis whether they are in possession or control of property owned or controlled by or on behalf of a designated person. There are also requirements to report any such situation, or any proposed transaction involving such property, to the Commissioner of the RCMP.

It is important to note that:

Market participants were strongly advised to review the Canadian Sanctions Related to Russia and keep apprised of any ongoing changes.

The CSA indicated that it would continue to monitor the impact of the sanctions on Canadian capital markets and coordinate with domestic and international regulators.