FEDERAL REG

SOR/2016-304: Regulations Amending the Special Economic Measures (Ukraine) Regulations

REGISTRATION OF FEDERAL REGULATION - VIA OIC DATABASE, PRIOR TO PART II OF THE GAZETTE

Registered
November 28, 2016


REGULATORY IMPACT ANALYSIS STATEMENT (This statement is not part of the Regulations.) Issues The Russian Federation continues to violate the sovereignty and territorial integrity of Ukraine, through different actions, including illegal elections to the Russian State Duma in occupied Crimea. By sanctioning these 15 individuals, 9 of whom are so-called representatives of the self-recognized governm... (Click for more)


Published on November 28, 2016

Bill Summary

SOR/2016-304: Regulations Amending the Special Economic Measures (Ukraine) Regulations

REGULATORY IMPACT ANALYSIS STATEMENT (This statement is not part of the Regulations.) Issues The Russian Federation continues to violate the sovereignty and territorial integrity of Ukraine, through different actions, including illegal elections to the Russian State Duma in occupied Crimea. By sanctioning these 15 individuals, 9 of whom are so-called representatives of the self-recognized government of Crimea and 6 of whom were illegally elected to the Russian State Duma, the Government of Canada reinforces its non-recognition of Russia’s illegal annexation of Crimea. Background Acting in coordination with the United States (U.S.) and the European Union (EU), the Governor in Council has found that the situation in Ukraine constitutes a grave breach of international peace and security that has resulted, or is likely to result in a serious international crisis. As a result, the Special Economic Measures (Ukraine) Regulations (the Ukraine Regulations) were approved on March 17, 2014. Further amendments to the Ukraine Regulations were made on March 19, 2014, April 12, 2014, May 12, 2014, June 21, 2014, July 11, 2014, July 24, 2014, August 6, 2014, December 19, 2014, and February 17, 2015, June 29, 2015, and March 18, 2016. Canada and fellow G-7 partners reiterated their condemnation of Russia’s illegal annexation of the Crimean peninsula and reaffirmed their policy of non-recognition of Crimea at the G-7 Leaders Summit, in Ise-Shima, Japan, in May 2016. They also indicated that the duration of sanctions should be clearly linked to Russia’s complete implementation of the Minsk agreements and respect for Ukraine’s sovereignty, and that sanctions could be rolled back only when Russia met these commitments. Leaders affirmed readiness to take further restrictive measures in order to increase the cost on Russia if required, and called on Russia to both stop transborder support for separatist forces and ensure that separatists meet their Minsk commitments in full. Since Canada’s last amendments to the Ukraine Regulations on March 18, 2016, Russia has continued to play a destabilizing role in Ukraine but denies that it bears responsibility for the conflict. This stance has serious consequences for the implementation of a number of Minsk commitments aimed at ensuring the security and sovereignty of Ukraine, as does Russia’s continued support to separatists operating in Ukraine’s Donetsk and Luhansk regions. In particular, Russia has failed to make any significant progress on disarming illegal groups, relinquishing control over the Ukrainian side of the border, and withdrawing armed formations, equipment and mercenaries. On September 18, 2016, Russia organized illegal elections to the Russian State Duma in occupied Crimea and six individuals were selected to represent the occupied region in the lower house of Russia’s legislature. The duration of sanctions by Canada and our like-minded partners has been explicitly linked to the complete implementation of the Minsk agreements by all parties. The EU has recently prolonged its economic sanctions against Russia until January 31, 2017, and its Crimea-related restrictions until June 30, 2017. In September 2016, the EU renewed its sanctions against Russian and Ukrainian individuals and entities until January 31, 2017. Recent actions were also taken by the U.S. in their September 1 announcement of a package of measures designed to maintain the efficacy of existing sanctions. The U.S. actions reflect a continued effort to counter attempts to circumvent sanctions and to align measures with international allies. The EU and the U.S. also sanctioned an additional six individuals from Crimea on November 9 and 14, respectively, following their illegal election to the Russian State Duma on September 18, 2016. The security situation in eastern Ukraine remains tense. After a summer that saw some of the heaviest fighting in nearly a year, a renewed ceasefire came into effect on September 1, 2016, but failed to stop the violence. Ukraine and Russia subsequently agreed to abide by a new truce on September 14, 2016. The Organization for Security and Cooperation in Europe (OSCE) Special Monitoring Mission to Ukraine (SMM) has recorded lower levels of ceasefire violations, but notes incidents of sporadic violence that underline the continued fragility of the situation. The SMM has also noted concerns over live-fire exercises, shelling in separatist-controlled areas by multiple launch rocket systems, as well as a mounting number of tragic incidents involving mines and unexploded ordinance along the line of contact. Russian-backed separatist insurgents frequently deny OSCE SMM observers access to areas under their control. Work within the “Normandy Four” Format (France, Germany, Russia and Ukraine) and the Trilateral Contact Group (OSCE, Russia and Ukraine) continues. However, the question of the sequencing of Minsk commitments continues to impede progress. “Normandy Four” leaders met in Berlin on October 19 for the first time in over a year and agreed to draw up a preliminary roadmap for implementing the Minsk agreements by the end of November 2016. The cost of the conflict in human terms is high. The United Nations (UN) has recorded at least 32 071 casualties (Ukrainian armed forces, civilians and members of the armed groups) in the armed conflict area of eastern Ukraine from mid-April 2014 to mid-September 2016, including at least 9 640 killed and 22 431 injured. As of April 25, 2016, the Ministry of Social Policy of Ukraine had registered 1 780 245 internally displaced persons throughout Ukraine. Actual numbers are widely judged to be much higher. Objectives The Regulations Amending the Special Economic Measures (Ukraine) Regulations (the Regulations) add 15 individuals to the schedule of the Special Economic Measures (Ukraine) Regulations. Paragraph (2)(e) of the Special Economic Measures (Ukraine) Regulations provides for the listing of the names of any person that participates in activities that violate the sovereignty or territorial integrity of Ukraine to the schedule. These 15 individuals meet paragraph (2)(e) because they contribute to the violation of the sovereignty and territorial integrity of Ukraine by illegally serving in the self-recognized government of Crimea or by illegally representing the self-recognized government of Crimea in the Russian Duma. These measures align with actions taken by the EU on November 9, 2016, and by the U.S. on September 1 and November 14, 2016, to strengthen trans-Atlantic unity in responding to Russia’s actions in Ukraine, maintain pressure on Russia to fully implement its Minsk commitments, and demonstrate our commitment to a policy of non-recognition of Russia’s illegal annexation of Crimea. Description The Regulations add 15 individuals to the list of persons in the schedule of the Special Economic Measures (Ukraine) Regulations. As a result of this addition, any person in Canada and any Canadian outside Canada is prohibited from dealing in any property, wherever situated, held by or on behalf of a person whose name is listed in the schedule; entering into or facilitating, directly or indirectly, any transaction related to such a dealing; providing any financial or related service in respect of such a dealing; making goods, wherever situated, available to a person listed in the schedule; and providing any financial or related service to or for the benefit of a person listed in the schedule. Exceptions to the above-noted prohibitions are available for the following: payments made by or on behalf of any such persons pursuant to contracts entered into prior to the coming into force of the Regulations, provided that the payments are not made to or for the benefit of any such person; pension payments to any person in Canada or any Canadian outside Canada; transactions in respect of accounts at financial institutions held by diplomatic missions, provided that the transaction is required in order for the mission to fulfill its diplomatic functions under the Vienna Convention on Diplomatic Relations, or transactions required in order to maintain the mission premises if the diplomatic mission has been temporarily or permanently recalled; transactions by international organizations with diplomatic status, agencies of the United Nations, the International Red Cross and Red Crescent Movement, or Canadian non-governmental organizations that have entered into a grant or contribution agreement with Global Affairs Canada; transactions necessary for a Canadian to transfer to a person any accounts, funds or investments of a Canadian held by a person listed in the schedule on the day on which their name was listed; financial services required in order for a designated person to obtain legal services in Canada with respect to the application of any of the prohibitions in the Regulations; and loan repayments made to any person in Canada or any Canadian abroad in respect of loans entered into before the coming into force of the Regulations, enforcement of security in respect of those loans, or payments by guarantors guaranteeing those loans. “One-for-One” Rule The “One-for-One” Rule applies to these Regulations, as there are minimal administrative costs to business, because of the reporting requirement. However, the administrative burden associated with these Regulations is carved out from the “One-for-One” Rule as they address unique, exceptional circumstances. Small business lens The small business lens does not apply to these Regulations, as there are no costs (or insignificant costs) on small business and small businesses would not be disproportionately affected. Consultation Global Affairs Canada drafted the Regulations in consultation with the Department of Justice Canada. Rationale The measures contained in the Regulations demonstrate Canada’s concern about the continuing violation of Ukraine’s sovereignty and territorial integrity. Implementation, enforcement and service standards Canada’s sanctions regulations are enforced by the Royal Canadian Mounted Police and the Canada Border Services Agency. In accordance with section 8 of the Special Economic Measures Act (SEMA), every person who willfully contravenes the Ukraine Regulations under SEMA is liable upon summary conviction to a fine of not more than $25,000 or to imprisonment for a term of not more than one year or to both, or upon conviction on indictment, to imprisonment for a term of not more than five years. Contact Kevin Rex Director Eastern Europe and Eurasia Division Global Affairs Canada 125 Sussex Drive Ottawa, Ontario K1A 0G2 Telephone: 343-203-3603 Fax: 613-995-1277 Email: [email protected] Footnote a S.C. 1992, c. 17 Footnote 1 SOR/2014-60

This Bill does not amend any statutes.

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