Ukraine

Overview

Ukrainian President Viktor Yanukovych abandoned plans to sign an agreement with the European Union (“the EU”) in November 2013, instead announcing that Ukraine would strengthen ties with Russia and the Commonwealth of Independent States. In response, more than half a million Ukrainians took to the streets to protest. The December 2013 announcement of a deal with Russia including $15 billion in loans and gas subsidies generated a fresh wave of protests, which were suppressed by the Ukrainian government. Activists were beaten, kidnapped and tortured. On February 22, the Ukrainian parliament voted to impeach President Yanukovych. That same night, he fled to Russia.

Since February 27, 2014, Ukrainian provincial-level officials in Crimea, with Russian backing, have taken a series of measures that violate both the Ukrainian constitution and, because of Russian involvement, international law. Heavily armed Russian soldiers have taken control of the Ukrainian province of Crimea, surrounding or seizing direct control of Crimea’s airports, government buildings, provincial legislature and military installations. They have also severed telephone lines within Crimea, set up roadblocks on Crimean roads, and built trenches to sever the Crimean peninsula from the Ukrainian mainland.

With the Crimean provincial legislature under Russian military control, the legislature’s Speaker Volodymyr Konstantynov, announced that legislators had passed a vote of non-confidence in the provincial government of Crimea, and had appointed Serhiy Aksyonov as the new prime minister of Crimea. Aksyonov declared himself in charge of all military, police, air forces, navy and border guards in Crimea, and also announced that a referendum on whether Crimea should separate from Ukraine was being moved forward two months, from May 25, 2014 to March 30, 2014.

The acting president of Ukraine, Oleksandr Turchynov, has decreed that the appointment of Aksyonov as the head of the Crimean government was unconstitutional, and a Ukrainian court has since ordered the arrest of Aksyonov and Konstantynov for "actions aimed at the violent overthrow, change of constitutional order, or the seizure of state power."

On March 5, 2014, the Freezing Assets of Corrupt Foreign Officials (Ukraine) Regulations took effect to freeze the assets of 18 designated persons.

On March 6, the Crimean Parliament adopted a resolution announcing its unanimous decision to become part of Russia, and moving forward the date of the referendum by another two weeks to March 16, 2014. The Ukrainian Ministry of Justice has declared the referendum illegal, and noted that, according to the Ukrainian constitution, only national referendums are permitted.

On March 17, 2014, the Special Economic Measures (Ukraine) Regulations (“the SEMA Regulations”) came into force in order to respond to the gravity of the situation in Ukraine. The SEMA Regulations were amended on March 19 2014, April 12 2014, May 12 2014 and June 21, 2014 to include the names of additional designated persons.

On July 11, 2014, these Regulations were amended to include additional names.

On July 24, 2014, these Regulations were amended to include additional names.

Sanctions

The SEMA Regulations include a list of names of persons for which the Governor in Council considers there are reasonable grounds to believe that they are engaged in activities that directly or indirectly facilitate, support, provide funding for, or contribute to the deployment of Russian armed forces to Crimea or to the seizing of control of Ukrainian government and military entities inside Crimea. The SEMA Regulations provide a review mechanism to remove names from the schedule upon receipt of an application from a designated person.

The SEMA Regulations impose an asset freeze on designated persons. They prohibit persons in Canada and Canadians abroad from:

  • dealing in any property held by or on behalf of a designated person, or facilitating or providing financial or other related services in respect of such a dealing;
  • making any goods available to a designated person; and
  • providing any financial or related services to or for the benefit of a designated person.

Causing, assisting or promoting prohibited activities is likewise prohibited. Some exemptions exist, including for the following:

  • payments made by or on behalf of designated persons pursuant to contracts entered to before their designation, provided the payment is not for their benefit;
  • pension payments to any person in Canada or Canadian abroad;
  • certain transactions in respect of diplomatic missions;
  • transactions to UN agencies, the International Red Cross and Red Crescent Movement, and Canadian NGOs in certain circumstances;
  • transactions necessary for a Canadian to transfer to a non-designated person any accounts, funds or investments held by a designated person when that person became a designated person;
  • financial services required in order for a designated person to obtain certain legal services in Canada; and
  • payments to any person in Canada or any Canadian abroad in respect of loans entered into prior to March 17, 2014.

The Special Economic Measures (Ukraine) Permit Authorization Order, made pursuant to subsection 4(4) of the Special Economic Measures Act (SEMA), authorizes the Minister of Foreign Affairs to issue to any person in Canada or any Canadian outside Canada a permit to carry out a specified activity or transaction, or any class of activity or transaction, that is restricted or prohibited pursuant to the Ukraine SEMA Regulations.

FACFOA Prohibitions

The Freezing Assets of Corrupt Foreign Officials Act (FACFOA) permits the Government to freeze the assets or restrain property of politically exposed foreign persons at the written request of a foreign state, where the Governor in Council has determined that the foreign state is in a state of turmoil or political uncertainty, and where the making of an order or regulation is in the interest of international relations.

On March 5, 2014, the Governor in Council made the Freezing Assets of Corrupt Foreign Officials (Ukraine) Regulations (the "FACFOA Regulations"), pursuant to the FACFOA. These regulations give effect to written requests from Ukraine, which has recently experienced political upheaval, to freeze assets of their former leaders and senior officials or their associates and family members suspected of having misappropriated state funds, or obtained property inappropriately as a result of their office or family, business or personal connections.

Given Canada's support for accountability, rule of law and a transition to democracy in Ukraine, the FACFOA Regulations ensure that misappropriated assets held by officials of the former government can be seized so that politically exposed foreign persons may be held accountable.

The FACFOA Regulations create a freeze of the assets of the politically exposed foreign person listed in the Regulations by prohibiting the following activities by anyone in Canada or any Canadian outside Canada:

  • dealing, directly or indirectly, in any property, wherever situated, of a listed politically exposed foreign person;
  • entering into or facilitating, directly or indirectly, any financial transaction related to a dealing referred to in point (1);
  • providing financial services or other related services in respect of any property of a listed politically exposed foreign person.

The official list of persons whose assets are subject to freezing under the FACFOA Regulations is found in the link to the regulations below.

Selected Documents

Regulations and Orders made under the Special Economic Measures Act:

Announcements related to the Regulations made under the Special Economic Measures Act:

Regulations made under the Freezing Assets of Corrupt Foreign Officials Act:

Links

If you have any questions with respect to the Special Economic Measures (Ukraine) Regulations, please email sanctions@international.gc.ca. For questions with respect to the Freezing Assets of Corrupt Foreign Officials (Ukraine) Regulations, please email freeze-gel@international.gc.ca.