On March 22, International Affairs Canada (GAC) quietly up to date its Frequently Asked Questions page about Canadian sanctions. The commerce bar has usually advocated for extra steerage from GAC on Canadian sanctions legal guidelines over the past two years, particularly on ambiguous provisions such because the deemed possession provision, which might result in completely different or unsure interpretations. This lack of steerage exposes Canadian corporations to threat and overcompliance, and is placing when in comparison with the rather more sturdy steerage offered by the Workplace of International Property Management in the USA and Workplace of Monetary Sanctions Implementation in the UK.
The replace provides 4 new sections to the FAQ steerage that debate:
- what occurs when an individual is designated, and comprises broad details about what restrictions are imposed on sanctioned individuals.
- when a prohibition takes impact. Eventualities described on this part make clear that an organization that entered right into a contract with a sanctioned entity previous to that entity being sanctioned might settle for items from the sanctioned entity that have been paid for previous to the sanctions being imposed, however might not pay for items delivered previous to the sanctions being imposed the place cost is due after the sanctions take impact.
- dealings with subsidiaries of designated corporations. In 2023, the Canadian authorities applied a broad and unclear “deemed possession” rule. Within the new FAQs, GAC has indicated a non-designated entity’s property is owned or managed by a delegated particular person the place the sanctioned entity “is understood to train appreciable affect over its strategic decision-making” whatever the sanctioned entity’s authorized management over the non-designated entity.
- coping with entities or third events that themselves take care of designated individuals. This part clarifies that dealings with third events of any nationality or positioned in any jurisdiction that facilitate a transaction with a delegated particular person is prohibited, no matter whether or not the third celebration itself is topic to Canadian sanctions.
The up to date FAQs aren’t regulation, however they’re indicative of GAC’s interpretation of sanctions. Whereas the up to date FAQs present restricted perception, they largely affirm GAC’s broad interpretation of the provisions. Most notably, GAC has taken the place that the facilitation offence provisions cowl dealings with non-Canadian third events which might be themselves coping with designated entities. That stated, key ambiguities and questions stay, together with on the deemed possession provisions. With out additional steerage, a conservative method to the sanctions provisions is prudent.
