Evaluation of Global Affairs Canada’s Sanctions Operations, 2018-2024

Final report

Prepared by the Evaluation Division
Global Affairs Canada
March 2025

Table of contents

• Acronyms and symbols
• Executive summary
• Background
• Evaluation scope and methodology
• Findings: Coherence
• Findings: GAC as a regulator
• Findings: Canada’s sanctions legislation
• Findings: Development and administration of regulations
• Findings: Administration of sanctions
• Findings: Performance measurement
• Conclusions
• Recommendations
• Considerations for Global Affairs Canada
• Annexes

Acronyms and symbols

AEFA

Standing Senate Committee on Foreign Affairs and International Trade

CBSA

Canada Border Services Agency

DCBL

Regulatory Affairs and Litigation Support Unit

DoJ

Department of Justice/GAC Legal Services

FAAE

House of Commons Standing Committee on Foreign Affairs and International Development

FAQ

Frequently asked questions

FINTRAC

Financial Transactions and Reports Analysis Centre of Canada

FTE

Full-time equivalent

GAC

Global Affairs Canada

GBA Plus

Gender-based Analysis Plus

GIC

Governor in Council

GoC

Government of Canada

ISD

Sanctions Bureau

JVCFOA

Justice for Victims of Corrupt Foreign Officials Act

OSFI

Office of the Superintendent of Financial Institutions

OGDs

Other Government Departments

PCO

Privy Council Office

PER

Sanctions Policy and Operations Coordination Division

RCMP

Royal Canadian Mounted Police

REPO

Russian Elites, Proxies, and Oligarchs

SEMA

Special Economic Measures Act

SJCSR

Standing Joint Committee for the Scrutiny of Regulations

TBS

Treasury Board Secretariat

TIP

Transformation Implementation Plan

UNA

United Nations Act

UNSC

United Nations Security Council

Executive summary

Economic sanctions are a unique foreign policy tool implemented through domestic regulations. Canada implement multilateral sanctions as directed by the United Nations Security Council as well as its own autonomous sanctions.

From 2018 to 2024, the sanctions landscape changed dramatically, which was not foreseen at the time that the Sanctions Policy and Operations Coordination Division (PER)* was first created. Prior to the Russian invasion of Ukraine in February 2022, sanctions were mostly applied to countries with which Canada had minimal economic relations. Sanctions have since become a preferred option and the exponential increase in sanctions packages has had an array of consequences for sanctions operations. It has also highlighted the tensions between sanctions as a domestic regulatory program and as a foreign policy tool.

The Sanctions Division has significantly contributed to improvements in GAC’s operational capacity to develop and administer sanctions, in collaboration with the geographic desks, the Department of Justice (DoJ) and other departments and agencies. Although GAC has lacked a regulatory culture, the Sanctions Division has been growing into this regulatory role, further bolstered by its expansion into a Bureau in 2023. Since its creation in 2018, the Sanctions Division has:

• coordinated across GAC, as well as with the DoJ and the central agencies, to manage the exponential increase in sanctions packages
• increased policy coherence regarding the development of sanctions and compliance issues
• developed capacity for policy research and analysis, including circumvention analysis
• expanded and improved coordination with other government departments, such as the Royal Canadian Mounted Police (RCMP) and the Canada Border Services Agency (CBSA)
• expanded outreach activities following the limitations of the COVID-19 pandemic and the Russian invasion of Ukraine
• managed a large increase in permit applications, delisting applications and judicial reviews

The urgency and frequency of new sanctions packages put intense pressure on operations, limited the ability to conduct research to further support listings and other decisions, and created legal risks. GAC has not been able to respond to the steep increase in permit and delisting applications in a timely manner and has not published comprehensive interpretive guidance as required (and as practised by all like-minded allies). This weakens Canada’s sanctions regimes in terms of compliance and enforcement and increases the likelihood of unintended impacts on Canadians, non-Canadians and Canada’s interests abroad.

*In April 2023, the Sanctions Policy and Operations Coordination Division (PER) at GAC became the Sanctions Bureau (PSD). During the internal re-structuring of some branches within GAC in August 2024, the Sanctions Bureau was moved to the International Security and Political Affairs Branch and was subsequently known as the Sanctions Bureau (ISD).

Given that the sanctions team within GAC was known as the Sanctions Division (PER) for most of the period covered in this report, the report continues to use the name that was used up to and including part of 2024: the Sanctions Division.

Background

The global and Canadian sanctions context

The origin of sanctions

The modern concept of economic sanctions originated with the techniques used by World War I Allies to control and interrupt the flow of goods, energy, food and information to enemy powers. The League of Nations, and subsequently the United Nations, adopted sanctions as a peacetime tool to address state-to-state conflict by economically isolating aggressor states from global trade and finance. Sanctions have since evolved to address a broader range of objectives, including counterterrorism (especially after 9/11), human rights and the proliferation of weapons of mass destruction.

The United Nations Security Council (UNSC) has the authority to impose multilateral sanctions measures in the interests of international peace and security. Member states are legally required to implement these measures through domestic legislation. As of December 2023, there were 15 UN sanctions regimes Noin effect.*

*Central African Republic, Democratic Republic of Congo, Guinea-Bissau, Haiti, Iran, Iraq, Lebanon, Libya, Mali, North Korea, Somalia, South Sudan, Sudan and Yemen; as well as the Taliban, Daesh and al-Qaeda under anti-terrorism resolutions.

Increased use of autonomous sanctions

Given the ongoing difficulty in reaching UNSC consensus, Canada and other countries have increasingly turned to imposing autonomous sanctions. These are bilateral measures established outside the context of the UN system, but they are often coordinated internationally with like-minded countries, such as Canada, the United States, the United Kingdom, the European Union and Australia. Coordinated autonomous sanctions signal a collective denouncement of a specific circumstance and maximize the impact of these measures. While some see autonomous sanctions as having less legitimacy and effectiveness than multilateral sanctions, individual countries have much more flexibility to use autonomous sanctions. As of December 2023, in addition to the 14 countries and 3 terrorist organizations that were under UNSC sanctions, Canada was implementing autonomous sanctions in relation to 16 countries. Additionally, 80 foreign nationals were sanctioned individually in relation to human rights violations and/or corruption not related to country-based regimes.**

**Autonomous country-based regimes include Belarus, China, Haiti, Iran, Libya, Moldova, Myanmar, North Korea, Nicaragua, Russia, South Sudan, Sri Lanka, Syria, Ukraine, Venezuela and Zimbabwe, for a total of 16 countries. The 80 foreign nationals from 7 countries were sanctioned under the Justice for Victims of Corrupt Foreign Officials Act (JVCFOA).

Types of sanctions measures

Sanctions can encompass a variety of measures and they vary considerably in their implementation. Sanctions have moved away from the comprehensive economic embargoes of the 1990s, in recognition of the severe and unintended humanitarian impacts that these had on countries such as Iraq. This approach has been largely replaced by targeted sanctions, which relate to a designated individual or entity. Sectoral sanctions are also practised, which target an economic sector, particularly those known to generate profits for or provide weapons or related materials to the violating state. In Canada, sanctions measures may include the following:

Figure 1:

Canada’s legislative framework related to sanctions

How sanctions are enacted: Domestic regulations

Canadian sanctions are governed by three pieces of core sanctions legislation are applicable in different situations:

• United Nations Act (UNA) [1985]
  
  Enables Canada to impose UN sanctions in domestic law.
• Special ECONOMIC Measures Act (SEMA) [1992]
  
  Enables autonomous sanctions to be implemented against a foreign state, individuals or entities related to that foreign state. Sanctions can be imposed in response to grave breaches of international peace and security, gross and systematic human rights violations, acts of significant corruption by foreign public officials, or when an international organization to which Canada belongs calls on its members to take economic measures against a foreign state.
• Justice for Victims of Corrupt Foreign Officials Act (JVCFOA) (Sergei Magnitsky Law) [2017]
  
  Enables autonomous sanctions to be imposed against foreign nationals in response to gross violations of internationally-recognized human rights or acts of significant corruption by foreign public officials.

Sanctions are put in place through the creation of regulations under one or more of these Acts. The regulations describe the prohibitions being put in place and list the individuals or entities (“persons”) being sanctioned, if applicable. These regulations can be amended as needed, such as to add or remove sanctioned persons or, to impose new types of prohibitions. They can also be repealed when they are no longer relevant.

For example, Canada’s sanctions regime targeting Iran is as follow:

• UNA - Regulations Implementing the United Nations Resolutions on Iran (2007)
  
  Amended in 2016 as in accordance with UNSC Resolution 2231 to remove some prohibitions in recognition of progress made on the Joint Comprehensive Plan of Action regarding Iran’s nuclear program. Amended in 2023 to create an exception for the delivery of humanitarian assistance, in accordance with UNSC Resolution 2664. Amended in 2023 in accordance with changes made to UNSC Resolution 2231.
• SEMA - Special Economic Measures (Iran) Regulations (2010)
  
  Amended in 2011, 2012 and 2013 to tighten measures. Amended in 2022 and 2023 to include human rights violations, including multiple rounds of sanctions on Iranian persons, and to maintain sanctions related to Iran’s nuclear program following the expiry of UNSC sanctions.

In Canada, the development of regulations is guided by the Cabinet Directive on Regulation, which outlines the requirements that federal regulators must meet. The development of a sanctions package is complex. Approval for new or amended regulations under Canada’s sanctions Acts must be sought through the Governor in Council (GIC) process (see Annex I for a simplified visual summary).

Other Canadian legislation relevant to sanctions: Other legislation provides authorities relevant to sanctions, for example, the Freezing Assets of Corrupt Foreign Officials Act and the Proceeds of Crime (Money Laundering) and Terrorist Financing Act, and may be referred to in this report (see Annex II for a list of other legislative instruments).

Departmental roles in Canada’s sanctions system

Global Affairs Canada’s role as a federal regulator

The Minister of Foreign Affairs is responsible for the administration and enforcement of Canada’s 3 sanctions Acts. As the federal regulator for this regulatory program, GAC develops sanctions and once these sanctions come into force, they have ongoing implications for GAC related to compliance and enforcement:

• Providing information to the Canadian public and private sectors for awareness and compliance purposes
• Processing applications for permits, certificates and delistings
• Responding to inquiries from the public
• Coordinating with other government departments and responding to their inquiries and requests for legal and policy advice

Within GAC, the Sanctions Division (the Sanctions Bureau as of April 2023) is the dedicated, centralized unit for coordinating sanctions policy and operations at GAC. It leads the development and administration/implementation of regulations, research and analysis, stakeholder engagement, and coordination with like-minded allies. It is the focal point for coordinating the GoC’s overall approach to sanctions development, imposition and management with other government departments. Prior to 2018, sanctions administration at GAC was carried out by the Legal Adviser Branch without any dedicated sanctions positions.

In addition to the Sanctions Division, other units within GAC also have key roles, including the geographic desks, legal advisers and the offices of the Deputy Minister and Minister (as discussed below), as well as Regulatory Affairs and Litigation Support (DCBL), Trade and Export Controls (TID) and the Public Affairs Branch (see Annex III).

• Geographic desks (various): Country/geographic desks at GAC headquarters, supported by the missions, analyze potential sanctions measures in the context of overall Canadian foreign policy in a given country and consider the desired foreign policy impacts and potential effects on Canadians. If a decision is made to pursue sanctions measures, they identify and research potential targets for sanctions, and draft documents required for sanctions packages. The geographic desks also contribute to the responses to permit, certificate and delisting applications.
• Legal advisors (DoJ, DLSU and J Branch): The DoJ, Departmental Legal Services Unit and the Legal Adviser Branch within GAC provide advice on domestic and international legal matters, respectively, related to sanctions packages, as well as on compliance and enforcement issues, including permit and delisting applications.
• Minister and Deputy Minister’ offices: The Minister of Foreign Affairs has an important policy-setting role: recommending proposed sanctions or their removal to the Governor General and has authority to issue permits, declining delisting applications, seeking seizure orders for frozen assets, applying for the forfeiture of property, and entering into an agreement with foreign governments for the use of proceeds of such properties. [REDACTED]

Canada’s use of sanctions

Figure 2: Canadian sanctions packages entered into force by Act from 2018-19 to 2023-24

A foreign policy tool of increasing use and complexity

Canada’s traditional approach to sanctions as a foreign policy tool of last resort has shifted significantly over the evaluation period, as did the approach of like-minded allies, to become a preferred option that is used early on to address a range of international issues. Canada began implementing sanctions measures much more frequently, with a few regimes having new individuals or entities (persons) listed as often as weekly or monthly. The announcement of new sanctions measures often coincided with international events and key anniversaries.

The overall profile of sanctions has also grown, with scrutiny from both the House of Commons Standing Committee on Foreign Affairs and International Development (FAAE) in 2017 and 2024 and the Standing Senate Committee on Foreign Affairs and International Trade (AEFA) in 2023, as well as critical media stories regarding the unintended impacts of sanctions on Canadians and Canadian companies.

The diversity and complexity of sanctions measures related to the 2022 Russian invasion of Ukraine

The overall increase in sanctions is linked in part to the development of new sanctions measures to respond to ongoing crises in Haiti, Iran, Myanmar and Sri Lanka. However, it is largely attributable to the exponential expansion of sanctions measures in response to the Russian invasion of Ukraine in February 2022. Prior to 2022, most Canadian sanctions related to countries with which Canada had limited economic relationships. In addition to the overall increase in numbers, the sanctions on Russia have been more complex and have had much greater implications in terms of implementation. The Russian invasion of Ukraine resulted in the most comprehensive sanctions ever imposed on a major global economy, including prohibitions affecting a wide range of economic sectors, as well as unprecedented new types of Canadian sanctions measures.

Examples of economic sectors affected

• Finance
• Luxury goods
• Maritime and aviation
• Real estate

New types of sanctions measures

• Diamonds ban
• Oil price cap
• Steel and aluminum ban

Many of Canada’s sanctions measures on Russia, including the oil price cap and the diamonds ban, have also been coordinated with the G7 and other like-minded countries. While international coordination is customary for sanctions imposed pursuant to UN Security Council resolutions, the degree of cooperation with respect to autonomous sanctions imposed on Russia has been unprecedented.

Evaluation scope and methodology

Evaluation objectives and scope

Evaluation background

As the Minister of Foreign Affairs is the minister responsible for Canada’s sanctions regime, including the administration and enforcement of Canada’s sanctions legislation, GAC holds this regulatory role and coordinates a whole-of-government effort:

• 2018 funding and evaluation commitment: Beginning in 2020, GAC received $15.5 million over 4 years (2019-20 to 2022-23), and approximately $4 million per year in annual ongoing funding to support the creation of a dedicated Sanctions Division and related legal capacity. Under this funding, GAC committed to conduct an evaluation of Canada’s sanctions capacity in fiscal year 2023-24 (see Annex V for funding details).
• 2022 funding announcement: In October 2022, the GoC announced $76 million to improve the administration and enforcement of sanctions as well as the governance of the new asset seizure and forfeiture regime. In addition to the funds for the RCMP and Finance Canada, about half was allocated for the creation of a Sanctions Bureau at GAC, to fund 37 new full-time equivalents (FTEs) in the Bureau and to provide additional legal capacity (in addition to existing resources), for a total of approximately 50 FTEs. This new money began to be received at the end of the evaluation period.

Evaluation objectives: The evaluation objectives are as follow: fulfill the 2018 evaluation commitment and provide information to support evidence-based decision-making; contribute to the review required in 2024-25 in relation to the new funding announcement; and assist with learning and program improvement. The sanctions environment in Canada has changed dramatically since 2018. The evaluation was conducted with this new context in mind, with a view to informing the work of the expanded Sanctions Bureau. The evaluation was also conducted with previous and ongoing reviews of Canada’s sanction Acts in mind, specifically the 2017 and 2024 legislative reviews by the FAAE, and the 2023 review by the AEFA (see Annex VI for a review of how the evaluation recommendations align with Committee recommendations).

Evaluation scope: The evaluation scope includes the context of Canada’s sanctions legislation; the development of sanctions regulations by GAC; the regulatory management activities related to compliance, enforcement, and outreach efforts under GAC’s responsibility; and GAC’s coordination of whole-of-government efforts and intradepartmental coordination. Although activities related to both multilateral and autonomous sanctions regulations were included. The primary focus was on autonomous sanctions, given the much larger workload associated with these and the increased frequency with which these have been used.

Evaluation period: The focus of the evaluation was the period from fiscal year 2018-19 and up to and including part of calendar year 2024. This timeframe captures the period in which the Sanctions Division was first created, the very large increase in sanctions measures in response to the February 2022 Russian invasion of Ukraine and the beginnings of the new Bureau.

Evaluation questions

Methodology

The evaluation used a mixed-methods approach, where data was collected from a range of sources to ensure multiple lines of evidence when analyzing data and formulating findings. Findings were triangulated using qualitative and quantitative evidence where available. Six methods were used, as noted below.

Document and literature review

Review of internal and external documents:

• GAC policy, planning, and strategy documents
• GAC briefing notes and memos
• GAC materials on sanctions available to the public
• Evaluations, reports and studies, as relevant
• Relevant documents from other Canadian government departments
• Academic and grey literature

Case study: Special Economic Measures (Russia) Regulations

A case study of the development, administration and implementation of sanctions packages put in place by Canada beginning in February 2022 under the Special Economic Measures (Russia) Regulations in response to the Russian invasion of Ukraine. As this made up the majority of the sanctions packages put in place by Canada in 2022-23 and has had significant implications on Canada’s sanctions system, this case was used to inform and illustrate the evaluation’s findings.

Sanctions Division data review

A review of administrative data, including the number of applications received and processed (such as permits, certificates, delistings and CBSA requests for advice related to the detention of goods at the border), and general mailbox inquiries, was conducted to assess the types of requests and response times. Information related to this data was used to inform the process mapping exercise, as applicable.

Interviews

Semi-structured interviews were conducted with a selection of key actors in the sanctions system:

• GAC staff from various divisions and branches
• Representatives of other government departments (Department of Finance, Treasury Board Secretariat (TBS), the Privy Council Office (PCO), the DoJ, the RCMP, the CBSA, Transport Canada, Public Services and Procurement, the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) and the Office of the Superintendent of Financial Institutions (OSFI))

A comparative study of the structure of sanctions units in the US, the UK, and Australia

This study examined the existing sanctions structures in like-minded allies (the US, the UK, and Australia). The focus of this study was the structure, human resources, and roles and responsibilities of the sanctions units that play broadly similar roles to GAC’s dedicated Sanctions Bureau. This study compared the practices and approaches of the US, the UK, and Australia on selected topics. See Annex VII for additional details.

Process mapping

In order to better understand the system and instruments used to implement Canadian sanctions, a process map approach was used to outline the individual steps within the process (from development to registration and beyond), identify task owners and detail timelines. Discussions were conducted with relevant stakeholders to capture the steps in the process.

Evaluation limitations and mitigation measures

Findings: Coherence

Sanctions as a foreign policy tool and domestic regulatory program

Finding 1: There was inherent tension between the use of sanctions as a foreign policy tool, and the domestic requirements of a regulatory program.

Sanctions are a unique foreign policy tool that restrict the actions of Canadians through domestic regulations. While other diplomatic approaches may be used to pursue foreign policy objectives, sanctions as a legally binding tool requiring the compliance of Canadians can only be put into place through a regulatory process.

The Canadian regulatory process is governed by the Cabinet Directive on Regulation, which sets out the GoC’s expectations and requirements in the development, management, and review of federal regulations. Some elements of the regulatory development process have been difficult or inappropriate to apply to sanctions, due to the inherent nature of sanctions as a foreign policy tool. The review and approval process was also not designed to accommodate the frequent and urgent use of sanctions pursued by GAC since 2022, which, created friction between GAC’s objectives (to implement a sanctions package) and the central agencies’ objectives (to carry out a challenge function and ensure the integrity of the regulatory process). As the pressure to use sanctions frequently and rapidly grew, central agencies have permitted exceptions to some requirements for sanctions regulations. Some examples are noted below.

The One-for-One Rule: Under the Red Tape Reduction Act, if a regulation imposes a new administrative burden on a business, one or more regulations must be amended or repealed to offset that cost against an existing administrative burden. GAC was concerned that this could require the removal of some sanctions in order to create new sanctions, which might jeopardize Canada’s sanctions commitments. However, TBS granted exemptions from the rule in response to urgent international situations like the invasion of Ukraine. TBS also determined that the rule did not generally apply to new listings because there was no incremental change in administrative burden. However, in a case such as the 1^st phase of the Russian indirect diamond ban, the One-for-One Rule did apply.

Consultation and pre-publication: The Cabinet Directive on Regulations requires stakeholder consultation and pre-publication in the Canada Gazette. Sanctions proposals have been exempted from this requirement, on the rationale that forewarning of sanctions measures could result in asset flight and sanctions evasion.

Timelines and level of effort for the GIC process: Canada’s sanctions Acts give authority to the Governor General in Council to make regulations, subject to the TBS challenge function and approval of the Governor General on the advice and consent of TBS. While providing oversight, this process entails a high level of effort which must be applied regardless of the complexity of the measures, from a sectoral ban to listing a single individual. Typical timelines for the review and approval process, including TBS meeting schedules, are not aligned with urgent sanctions proposals.

GAC was exploring whether there were options that could help streamline sanctions which would allow for a more expedited regulatory process and to better align with the requirements of a foreign policy tool.

GAC as a regulator

Growing into a regulatory role

Figure 3: Sanctions Division Overtime Disbursements ($)

Finding 2: The creation of a dedicated sanctions division improved GAC’s capacity as a regulator, but the increase in the use of sanctions exceeded GAC’s ability to manage the operational consequences.

GAC has few regulatory functions compared to some other departments, and a regulatory culture was largely absent when the Sanctions Division was created in 2018. This was less problematic when sanctions were infrequent and usually directed at countries with which Canada had few trading relationships. However, since 2022, GAC has become one of the most active departments in Canada in creating regulations, with a steady rise since 2018 due to various international crises and an exponential increase after February 2022 in response to the Russian invasion of Ukraine.

Subsequent to February 2022, the overall lack of a regulatory culture, in addition to complex and unexpected responsibilities, resulted in a sanctions regulatory program that was not fit for purpose. The dramatic increase in sanctions highlighted the insufficient resources, lack of appropriate systems, and an inadequate understanding of the expectations and requirements of a regulatory program across the department. In particular, the increasing and long-term workload created in relation to compliance (such as permit and delisting applications, and the requirement for guidance and outreach) was not anticipated or adequately staffed.

This entailed a steep learning curve and major coordination efforts among the Sanctions Division, geographic desks and legal, among others, to respond to demands for new sanctions and the resulting compliance activities. By learning through experience, the Sanctions Division has largely clarified sanctions-related roles within the department and steadily developed its understanding of regulatory management. Although it was acutely understaffed (see textbox), it has played a critical role in managing and implementing the increase in sanctions, especially by advising geographic desks and leading consultation and approval processes within GAC and with other government departments.

The expansion of human resources for the new Sanctions Bureau began in 2023 (see Annex V) and will allow GAC to take on regulatory management activities that had been neglected out of necessity. This will allow the Bureau to continue to build regulatory expertise and socialize regulatory expectations and requirements with departmental stakeholders. However, the anticipated human resources will not match those of like-minded allies, especially considering the Sanctions Division’s responsibility for activities that were distributed among multiple entities in some like-minded countries. For example, the Sanctions Division processes permits for trade, transport and financial sanctions, but in the UK, for example, these responsibilities were split among multiple agencies. Consequently, the new Bureau will have to continue to make choices about which regulatory expectations to prioritize.

To help strengthen sanctions capacity, the 2018 Treasury Board submission which funded the creation of the Sanctions Division described the intent to have FTEs supporting open-source research for sanctions designations. While the Sanctions Division has occasionally supported this, it is considered to be the mandate of the geographic desks, who know the country context but do not necessarily have human resource capacity for this specialized, and frequently urgent research. A continued gap in strengthening GAC’s sanctions capacity is surge support for the geographic desks.

Expertise and training within GAC

Finding 3: The new context of sanction use demonstrated the need for more specialized expertise and training within GAC.

The increased volume, speed and complexity of the types of sanctions, the resulting permit and delisting applications, the pressing need for interpretive guidance and the new seizure and forfeiture regime have highlighted the need for regulatory and technical skill sets and sectoral knowledge within the sanctions function at GAC.

Diversification of staff skillsets: Recent sanctions impact a broad range of economic sectors, including financial, sensitive technologies, property, luxury goods exporters, transportation and petroleum. While GAC appropriately leverages sectoral expertise of other departmental colleagues, it has been beneficial to hire staff with this familiarity. Complex permit applications can benefit from technical skills, such as forensic accounting, legal expertise and knowledge of business structures and financial markets, in addition to specialized expertise in sectors such as aerospace and defence, technology or supply chains. Without this background, it has been time-consuming and difficult for GAC staff to assess complex permit applications or to provide technical guidance to other government departments without extensive consultation. These more specialized requirements will be beneficial to consider in hiring staff for the new Bureau.

Training: A shortage of sanctions training opportunities within GAC and for other government departments has been slowly improving, with the Sanctions Division ramping up their training offerings for GAC staff (such as “Sanctions 101”) and external stakeholders. Some of the training topics that stakeholders expressed interest in include general training on sanctions, understanding legislation, specialized research for substantiating listings and drafting sanctions packages. Ongoing training is particularly important given the rotational staff turnover at GAC overall. Other government department stakeholders expressed a desire for more training opportunities to improve their knowledge of sanctions and further assist them in their sanctions-related implementation. Increased training opportunities are seen by stakeholders as key in improving their understanding and in strengthening collaboration on sanctions.

Departmental roles and responsibilities

Finding 4: Misalignments between departmental authority, power, and capacity have contributed to gaps in compliance and enforcement.

GAC’s role in domestic compliance with increasingly complex and broad-reaching sanctions

Sectoral sanctions related to the Russian invasion of Ukraine in 2022 have broadened and diversified the number of economic sectors and economic actors that are required to comply with sanctions measures. As a regulator, GAC has overall responsibility for fostering compliance of all of these sectors. However, there are large gaps in the capacity to undertake compliance activities for a broad range of economic actors. To be done thoroughly, the administrative steps required should be set out for each sector, which requires a good understanding of the sector in question. While compliance promotion can be done in part with other government departments, administrative compliance activities require specific legal authorities, which do not exist under SEMA or the JVCFOA. For example, GAC does not have the authority to do physical inspections or enter premises.

Roles and authorities of departments for enforcement

The 2017, 2023 and 2024 Senate and House Committee reviews highlighted a lack of clarity of departmental roles in sanctions enforcement. An underlying issue is the tension between authority and power for enforcement. SEMA and the JVCFOA designate the Minister of Foreign Affairs as responsible for enforcement of the Acts but do not include clauses that allow GAC to levy administrative or civil penalties for sanctions offences or provide GAC with other civil enforcement powers (as do sanctions regulators in the US and the UK, although located in Treasury, not Foreign Affairs). Sanctions contravention offences are criminal under the Acts and fall under the authorities of the CBSA and the RCMP.

The evaluation did not assess partner enforcement activities. However, it has been challenging to develop a shared understanding of enforcement roles. Under the Customs Act, the CBSA has the power to apply civil enforcement actions related to import-export violations of sanctions, but reported that they had rarely forwarded cases to the RCMP and/or the CBSA Criminal Investigations Division (CID), which have a shared responsibility for investigating potential criminal sanctions violations. In addition to investigating contraventions, the RCMP has also been named in individual regulations for accepting disclosures about a listed person’s property. However, since being listed does not indicate a crime, it is not clear that receiving this information is best aligned with the RCMP’s mandate. In addition, this practice has not given GAC a line of sight on the extent to which financial institutions may or may not be making disclosures (Bill C-59 may change this, see textbox). Internationally, some regulators located within Treasury (the US and the UK) accept these disclosures directly.

The 2022 amendments to SEMA contributed to enforcement efforts. Previously, SEMA did not provide the authority to compel information from external stakeholders (such as private companies). A 2022 amendment enabled this, as well as enabling 12 departments to collect and disclose information to each other related to administration or enforcement of the Act.

The Sanctions Division’s role in policy coherence

Finding 5: The creation of a dedicated sanctions unit at GAC improved policy coherence in terms of the development and implementation of sanctions measures.

One of the intended results of the creation of the Sanctions Division was to improve policy coherence.

The Sanctions Division has strengthened the policy function of sanctions by providing a centralized sanctions-related policy actor with an overview of all sanctions regimes. Other policy actors within GAC include the geographic desks, who formally recommend sanctions, and the Minister of Foreign Affairs, who has an important role in the use of this foreign policy tool.

The Sanctions Division has helped bring increased consistency to the development and implementation of sanctions by relaying expectations, informal standards and previous practices on issues, such as the granting of permits and circumstances when sanctions may or may not be considered. This helps ensure a common approach across the geographic desks and geographic regimes.

The Sanctions Division’s policy role also extends to coordinating with other government departments, helping ensure greater consistency of implementation where other departments are involved, and feeding into consultations with other departments on developments that affect the sanctions landscape. The Sanctions Division also works with like-minded allies to align policy positions, where possible, when there are common foreign policy objectives.

Finding 6: Opportunities remain for developing more formalized policies to guide internal decision making and to proactively address overarching policy issues.

The Sanctions Division has had a primarily operational focus and policy efforts, while beneficial, have been largely informal and reactive. While some work has been done in terms of written or formalized policies to guide the geographic desks and other government departments, there are opportunities to build on and refine this much further. Although this additional work was being considered, it was not possible to carry out an expanded policy role or vision due to understaffing. With the establishment in 2023 of a Policy Division within the new Sanctions Bureau, this capacity is expected to increase.

Some stakeholders identified a gap in addressing overarching policy issues on the use of sanctions compared to other foreign policy tools, longer-term structural tasks that would inform policy, such as a legislative review, and having a clearer articulation of Canada’s approach to sanctions.

A similar conclusion was also reached by the 2021 Sanctions Review of the United States regime conducted by the United States Treasury, which recommended that a structured policy framework linking sanctions to a clear policy objective be developed in order to inform its recommendations on the use of sanctions (see textbox).

Canada’s sanctions legislation

Relevance and coherence of the governing Acts

*Sergei Magnitsky was a Russian tax accountant who accused Russian officials of stealing $230 million in tax rebates and was subsequently arrested, jailed and died in a Russian detention facility in November 2009, allegedly beaten by police.

Finding 7: The UNA and SEMA are foundational in implementing Canada’s UNSC sanctions obligations and autonomous sanctions, respectively. SEMA has proven to be a more applicable tool for targeting human rights violations and corruption compared to the JVCFOA.

The UNA and SEMA have been used since 1985 and 1992, respectively, and are Canada’s key legislation to implement UNSC resolutions (the UNA) and autonomous sanctions (SEMA). In 2017, the Justice for Victims of Corrupt Foreign Officials Act (JVCFOA) was added as a new legislation allowing autonomous sanctions targeting gross violations of human rights. At the same time, SEMA was amended to include violations of human rights and corruption. Since the introduction of the JVCFOA, GAC has continued to rely largely on SEMA to create autonomous sanctions. Although the JVCFOA has been used in such notable cases as the extrajudicial killing of Saudi Arabian journalist Jamal Khashoggi, the sanctioning of individuals in Lebanon’s financial sector implicated in acts of corruption, and the sanctioning of individuals from Russia, Iran and Myanmar for their role in human rights violations, GAC has been publicly criticized for using the JVCFOA on only 6 occasions, listing a total of 80 individuals.

Given the 2017 amendments to SEMA, GAC found that SEMA is a more frequently applicable tool to use for human rights violations and corruption triggers. The JVCFOA applies to only a narrow set of circumstances; cannot be applied to entities, only to individuals; it only imposes a dealings prohibition on listed individuals; it does not provide for the use of exceptions; and it can be more difficult to meet the evidentiary threshold for very specific circumstances with open-source information. SEMA often addresses the most common circumstances in which Canada would be likely to use sanctions, has broader applicability and can be used for “Magnitsky-style” sanctions. Even with the limited use of the JVCFOA, Canada has been able to sanction human rights offenders through SEMA and has been one of the most frequent global implementers of sanctions addressing human rights abuses and corruption. The Sanctions Division has also been active in promoting human rights and corruption sanctions with like-minded allies, such as by sharing best practices and lessons.

Finding 8: Inconsistencies in the language and content of Canada’s sanctions Acts and associated regulations have led to operational challenges.

The inconsistencies in language and content have resulted from drafting sanctions regulations within extremely short timelines. [REDACTED] The Sanctions Division has tracked issues for consideration in such a review.

Relevance and coherence of the governing Acts

Original source: REPO Implementation: High-Level Process Map, 2023; adapted for Canadian context.

Finding 9: The creation of Canada’s new asset seizure and forfeiture regime was a significant policy shift that remains largely untested [REDACTED].

Canada was the first and, until recently, the only G7 country to follow through on a G7 commitment to establish a regime for the seizure and forfeiture of assets of sanctioned individuals. Through the 2022 Budget Implementation Act (Bill C-19), Canada amended SEMA and the JVCFOA to provide the government with authorities for the seizure and forfeiture of property related to sanctioned individuals and entities to be used to compensate victims, to generate proceeds to fund the recovery or reconstruction efforts of affected states, and to restore international peace and security.

From a policy lens, the amendments allowing the seizure, forfeiture and potential redistribution of assets represented a fundamental shift in Canada’s sanctions regime. Previously, sanctions represented a temporary measure to bring about behaviour change. The establishment of the seizure and forfeiture regime introduced the notion that sanctions could become punitive and irreversible in nature by permanently seizing property and removing ownership. This regime is also particularly complex, involving both federal and provincial jurisdictions, and multiple government departments. As of December 2023, the new forfeiture authorities were being pursued in only 2 cases: (1) US $26 million from Granite Capital Holdings Ltd, believed to be owned, held or controlled by a sanctioned Russian oligarch, and (2) An Antonov An-124 cargo aircraft, grounded at Toronto Pearson Airport, owned by a sanctioned Russian airline.

As the regime is still largely untested, it is not yet clear the extent to which it could increase the risk of retaliatory measures against Canada (such as consequences for Canadian individuals/companies with commercial activities abroad) or affect bilateral relations.

[REDACTED]

Given its legal and practical complexity, it is not yet clear whether the asset seizure and forfeiture regime can achieve its objectives.

Development and administration of regulations

Timelines for developing sanctions packages

Figure 4: No. of employees doing sanctions-related work (sanctions packages, permits, delisting requests, etc.) within geographic desks (full or part time)

*These figures, from 2022, are approximate and do fluctuate.

Finding 10: The compressed timelines for developing sanctions packages often constrained the ability to conduct research to support listings and other decisions, and to maintain standard regulatory practices.

The GIC regulatory process involves several steps and takes between 6 months to a year or more, including stakeholder engagement and consultations, assessment of legal risks, consideration of the impacts on stakeholders and assessment of opportunities for cooperation with other jurisdictions. In exceptional circumstances, the GIC may grant an exemption for an expedited process, which was frequently done for sanctions regulations. With these exceptions, the regulatory process was typically condensed to a matter of weeks, and, on some occasions, to as little as a few days.

Constrained timelines to research, consult and analyze within GAC

GAC completes regulatory packages, with the relevant geographic desk as the main document drafter. The urgent timelines involved did not always allow the geographic desks to conduct more thorough research for sanctioning individuals beyond meeting the legal thresholds. GAC also did not always have the time to fully research, consult and understand the possible consequences of the more complex sectoral sanctions, which were not always readily identifiable. In many instances, this requires considerable staff time to resolve. Some significant bans impacted Canadian companies in unforeseen ways, such as the challenges in importing key fertilizer components needed for Canadian agriculture, which attracted negative media coverage.

Constrained central agency function

While the service standard for review of a regulatory proposal is 10 business days, TBS usually reviewed GAC’s proposals in less than 48 hours. TBS and PCO supported late submission by GAC sometimes days before a Treasury Board meeting, although submission timelines for GIC proposals were 17 business days. Late submission meant less time for TBS officials to develop, review and approve the briefing materials provided to Treasury Board Ministers. In situations where it was not possible for a proposal to be considered at a meeting, TBS and PCO made use of alternative approval pathways for sanctions proposals in 2022 and early 2023, which required additional effort. Subsequently, the expectation was that GAC would follow Treasury Board meeting schedules, unless justification could be provided as to why a package was truly urgent and should merit expedited consideration.

Coordinating with like-minded allies

A final factor in compressed timelines was Canada’s positive intent of coordinating sanctions with like-minded allies. While this was beneficial, it placed pressure on GAC to quickly carry out research to substantiate designated individuals and move through the regulatory process to, ideally, list individuals at the same time as like-minded allies. This was particularly challenging as both the US and the UK have administrative mechanisms for listings that, do not require amendments to regulations.

Considering gender and vulnerable populations

Finding 11: GAC used targeted sanctions to limit impacts on vulnerable groups and applied sanctions in response to gender-based violence. However, analyses of potential differential impacts of sanctions on vulnerable groups has been limited.

Impact of sanctions on vulnerable groups

Most of Canada’s autonomous sanctions have targeted individuals or entities, which is thought to reduce the potential for significant direct impacts on vulnerable groups compared to more traditional, broad-based economic sanctions. Some regulations also include exceptions to mitigate impacts on vulnerable groups, such as for humanitarian-related activities. Still, non-governmental organizations have pointed out the ongoing limitations faced by organizations that provide life-saving assistance to sanctioned countries, such as the Democratic People’s Republic of Korea (DPRK).

More recent measures under the Russia Regulations that target broader sectors, such as oil and gas or steel and aluminum, could increase the potential for differential impacts. The Gender-based Analysis Plus (GBA Plus) contained in these sanction packages tends to focus more broadly on the overall impact of sanctions and would benefit from deeper analysis on the economic impact of wider bans on vulnerable groups.

In addition to severe time constraints in the development of sanctions packages, very limited resources have been applied to GBA Plus analyses. A review of the GBA Plus in sanctions packages since 2018 shows that departmental GBA Plus experts were consulted in May 2018. Since that time, the same findings from this consultation were applied to the broader effects of sanctions on vulnerable populations without being revised by an expert so they could be adapted to changing local and international contexts, mostly due to a lack of capacity and the challenge of assessing how those impacts have evolved. Without specialized expertise for consultation, the geographic desks have been tasked with completing the GBA Plus using personal knowledge of the targeted country, which may vary.

While GBA Plus has yet to be a focus of the new Bureau’s Research and Analysis unit, they will be supporting research and data analytics for a better understanding of the impact and effectiveness of sanctions, which should contribute to assessing the impact on vulnerable populations. GBA Plus will be considered in the new seizure and forfeiture regime, particularly in the redistribution of assets to compensate victims of human rights abuses.

Sanctions related to gender-based violence

In Iran, China and Haiti, Canada has used sanctions to support victims of gender-based violence and to target perpetrators of human rights violations against vulnerable groups, in coordination with like-minded allies. In other instances, gender equality has been considered in GAC-funded research projects to improve responsiveness in programming and to advance advocacy efforts.

Development and administration of sanctions

Coordinating with other government departments

Finding 12: Although the extent of the Sanctions Division’s coordination with other government departments varied depending on the nature of the sanctions, working-level relationships allowed for effective coordination.

The development of sanctions packages

Coordination with other government departments was integral to sanctions development and implementation. For the development of sanctions packages, the Sanctions Division engaged with TBS, PCO and the DoJ, in consultation with other government departments as needed, depending on the nature of new listings and measures, and the economic sectors implicated. Consultations were conducted to consider the potential impacts of sanctions on Canadians compared to their contributions to foreign policy objectives. As the increasing number, diversity and complexity of sanctions packages limited the extent to which consistent, systematic coordination could be conducted, coordination occurred on an as-needed basis. However, the level of consultation with other government departments was generally appropriate, with the caveat that the short timelines in which sanctions were developed often expedited the consultation processes. The graph below shows the stages at which other government departments were involved in developing sanctions packages.

Figure 5:

The implementation of sanctions regulations

Once sanctions entered into force, the Sanctions Division played a key role in coordinating with the other government departments required in order to implement the sanctions. Implementation primarily revolved around sanctions enforcement and the consideration of permits, which were inherently ad hoc in nature. This included working with the CBSA to enforce import and export prohibitions; with the IRCC and the CBSA to enforce travel bans; with the RCMP on investigations; and with the Canadian Coast Guard, Transport Canada, Natural Resources Canada, and Agriculture and Agri-Food Canada on sectoral sanctions. Overall, while human resource constraints sometimes delayed the Sanctions Division’s responses, other government departments commended the Sanctions Division’s coordination efforts and the hard work and dedication of the Sanctions Division staff.

Administration of sanctions

Information management

Finding 13: [REDACTED]

The Sanctions Division currently receives applications for permits, certificates and delistings via the sanctions mailbox and handles attached documents manually. [REDACTED]

Managing permit applications

[REDACTED]

Finding 14: Following the significant increase in sanctions regulations in 2022, the existing system for processing permit applications did not allow GAC to respond in a timely manner.

The Minister of Foreign Affairs may grant permits (under SEMA and the JVCFOA) or certificates (under the UNA)* to persons in Canada or Canadians outside Canada on an exceptional basis. The permit process is in place to ensure that exemptions can be granted to mitigate against any potentially unintended consequences of the sanctions and to allow activities that are in Canada’s national interest. There are typically two types of applications: the release of frozen transactions and applications to undertake activities that are prohibited under Canadian sanctions regulations.

Receiving permit applications

The Sanctions Division received a much higher volume of permit applications after sanctions were imposed in response to the Russian invasion of Ukraine in 2022, as a large majority related to financial transactions with ties to Russia. This was difficult to manage using existing processes, given that applications were received by email and processed manually by a small operations team that also had other responsibilities. While GAC’s website provided guidance for submitting permit applications, it was not extensive and there was no standardized application form, which often resulted in incomplete applications. Applicant response times to follow-up questions from the Sanctions Division varied, in some cases contributing to delays in processing permit applications.

Responding to permit applications

Processing permit applications was a complex process involving teams both within and outside the department. Every application was unique and the Sanctions Division relied on sometimes extensive intradepartmental and interdepartmental consultations for legal, policy and technical expertise. Human resource constraints and the case-by-case nature of applications challenged GAC’s ability to respond in a timely manner or establish a service standard (which is required by the Cabinet Directive on Regulation for high-volume regulatory transactions). Since the final approval of permits was not within its authority, the Sanctions Division could not predict or control the length of time taken to respond to applications overall. Once the Sanctions Division processed the applications and developed an Action Memo that was informed by relevant consultations, they were sent to the Minister for approval. Many outstanding permit applications were awaiting a response for hundreds of days. [REDACTED]

*Permits and certificates are hereinafter referred to as permits.

Managing permit applications

Finding 15: The Sanctions Division made efforts to improve the efficiency of permit processing, but the high volume of permit applications outpaced these improvements.

The Sanctions Division made efforts to streamline the permit approval process, including by developing standard operating procedures and finding efficiencies where possible. In 2023, it began developing a standardized permit application form in order to enhance guidance and minimize the need for clarification emails from applicants. However, the main constraint to efficiency, which is that the forms were submitted by email and processed manually by a small team, remained.

In the long term, the Sanctions Division plans to develop a case management system to automate parts of the process, though efforts were not yet under way due to departmental resource constraints. Consideration for the system could be drawn from other permit systems used within and outside Canada, such as the NEXCOL portal that GAC uses to process export permit applications (see Annex VIII for best practices of the NEXCOL system) and the sanctions permit portals used by the US and Australia.

The Sanctions Division also worked to improve efficiency in seeking approvals from the office of the Minister of Foreign Affairs, such as by compiling similar permit applications so they could be considered jointly. In other cases, [REDACTED]. As an example within Canada, IRCC has delegation for the issuance of work permits to foreign nationals. While the Minister of Citizenship and Immigration is responsible for administering the Immigration and Refugee Protection Act, associated regulations grant authority to IRCC officers to issue permits within an approved framework.

Looking more broadly at policy decisions that affect the management of permit applications, a strategy used by like-minded countries is the provision of general permits (see Annex VII), which can reduce the number of permit applications. While Canada’s sanctions legislation gives the Minister of Foreign Affairs this authority, this approach has been avoided in order to maintain stronger oversight over the permits issued. GAC has faced criticism from the AEFA for not adopting this approach. Overall, efforts to improve the permit processing system were insufficient to manage the large volume of applications the Sanctions Division will likely continue to receive.

Managing delisting applications

[REDACTED]

Finding 16: Processing delisting applications within established timelines was not feasible following the increase in applications in 2022, which posed legal risks to Canada.

Delisting is an integral part of Canada’s sanctions framework and supports the fair and transparent application of sanctions. Designated persons can apply to the Minister of Foreign Affairs to attempt to make a case that they do not meet the criteria for being listed and to request that their name be removed from the sanctions regulations. Applications are considered on a case-by-case basis. Delisting requires an amendment to the relevant regulation.

Timelines for processing delisting applications

The process for delisting persons is complex. It requires numerous consultations and approvals, both within and outside the department. Some sanctions regulations set out requirements for processing delisting applications. For the JVCFOA, the Minister is required to make a decision within 90 days receiving a complete application. For SEMA, it varies. There is a 90-day requirement for the Russia regulations but other regulations do not set a time limit.

[REDACTED]

Managing CBSA referrals

Finding 17: The Sanctions Division adapted to the increase in CBSA sanctions referrals effectively.

The CBSA’s sanctions referral process is in place to ensure that goods that are subject to sanctions are not permitted to leave or enter Canada, and that goods that are not subject to sanctions are not unnecessarily detained. Timely responses from the Sanctions Division are critical, particularly for perishable goods.

The number of CBSA referrals received by the Sanctions Division increased significantly following the Russian invasion of Ukraine. There were 5 or fewer referrals a year from FY 2019-20 to 2021-22* and 45 requests in FY 2022-23. The process of responding to CBSA referrals can involve considerable stakeholder outreach and technical and legal consultations, which was handled by a small team that also had other responsibilities. The Sanctions Division’s average response time for referrals in FY 2022-23 was approximately 45 days. Response times for individual referrals ranged from 0 to 126 days. Despite the variance in response times, the Sanctions Division was able to complete all referrals received within the evaluation period. Of the 45 FY 2022-23 requests, the Sanctions Division responded to the CBSA that the detained items were prohibited (22), not prohibited (19), or the requests were withdrawn by the CBSA (4).

The case-by-case nature of the CBSA’s referrals, some of which took place outside normal working hours, necessitated responsiveness, ad hoc coordination and working-level engagement. Communication was considered effective. Interviewees noted an improvement since the Sanctions Division was created in 2018, largely due to their responsive adaptations to the referral process. For example, the Sanctions Division’s creation of a “lead sheet” for CBSA referrals allowed for more complete assessments coming from the CBSA regarding potential sanctions violations, which reduced the number of exchanges required and relieved some of the workload. In addition, in response to comments from the CBSA and others regarding limited notice of new sanctions regulations, the Sanctions Division amended its operating procedure to ensure that, once sanctions packages are signed by the Governor General and before they are announced publicly, a message was sent to a list of other government departments, including the CBSA. This advance warning is considered helpful in allowing the CBSA to apply the new regulations as soon as they are implemented. [REDACTED]

While the Sanctions Division’s system for processing CBSA sanctions referrals has improved and was sufficient for managing the increase in requests, it required significant operational effort and may not be sustainable as GAC’s development of sanctions packages fluctuates in response to global crises. One possible area for improvement is how CBSA referrals are submitted. There was no automated portal or email address specifically for CBSA referrals. They are sent to the Sanctions Division’s general email inbox, which was congested with permit-related inquiries and general questions, and could continue to restrict efficiency moving forward.

* The earliest data available.

Outreach and guidance

Finding 18: Several factors limited the Sanctions Division’s outreach to the public and private sectors, although plans are in place to continue enhancing engagement efforts.

GAC is responsible for conducting outreach activities to increase awareness among the Canadian public and private sectors on compliance with sanctions regulations, as per the Cabinet Directive on Regulation and the intended results of the 2018 funding for establishing the Sanctions Division. Prior to the COVID-19 pandemic, the Sanctions Division adopted an outreach strategy and began engaging with the public and private sectors through a number of outreach activities, including meetings with stakeholders, participating in conferences and panels, and giving presentations. However, the combined effects of the COVID-19 pandemic, the invasion of Ukraine and the human resources strain within the Sanctions Division limited their outreach efforts. The Sanctions Division conducted virtual outreach activities during the pandemic, when possible, but these were limited. Efforts ramped up in mid-2023 with the creation of an outreach and guidance team in the Sanctions Division whose goal is to improve stakeholder engagement. While banking and bar associations were the primary groups of focus the engagements carried out in early 2023, the Sanctions Division acknowledged that the expanded use of sanctions involved various Canadian industries. In response, the Sanctions Division staff travelled to Halifax in November 2023 to educate diverse stakeholders on sanctions, including GAC, the CBSA, the RCMP and other government departments, provincial governments, lawyers, chambers of commerce, universities and relevant industries (such as fishing, marine technology and aerospace industries). Once the Sanctions Bureau is established and adequately staffed, it plans to continue enhancing outreach efforts across the country.

Finding 19: GAC has not fulfilled its regulatory obligation for written interpretive guidance.

Under the Cabinet Directive on Regulation, GAC has the responsibility to provide the public and regulated communities with all relevant information on what is expected of them in a format that is easy to understand. This is essential for compliance, and ultimately the effectiveness, of a regulatory program. Canada has also made an international commitment to provide such guidance as a member of the Financial Action Task Force, in areas where there is an overlap with money laundering and terrorist financing. GAC has been updating information about sanctions, including in the official webpage for the consolidated sanctions lists (autonomous and UN sanctions) and the FAQ page about sanctions. However, GAC has not yet published written guidance documents for its sanctions regulations and is an international and domestic outlier in this regard. Canada’s like-minded allies have published extensive guidance on sanctions, demonstrating the range of topics that could be addressed. Domestically, other Canadian departments provide comprehensive written guidance for their regulations. [REDACTED]

Figure 6: Enforcement constraints related to guidance

Finding 20: The lack of published interpretative guidance for the public and private sectors had some undesirable consequences.

The lack of interpretive guidance for the public and private sectors, which is a regulatory obligation, had undesirable consequences. This became a greater concern after 2022 with a larger number of stakeholders affected under the expanded Russia Regulations. The lack of guidance risked creating an unnecessary burden on the public and private sectors and individual Canadians, as well as limiting compliance and enforcement actions.

• Increase in public inquires: The lack of interpretive clarity led to an increase in public inquiries seeking clarification from GAC, to which GAC was not always able to respond in a timely manner.
• Financial institutions and an increase in permit applications: Financial institutions have been particularly vocal in requesting guidance, given the prohibitions on dealing with the financial assets of a sanctioned person or entity. Due to this lack of guidance, financial institutions stopped a greater number of transactions than expected, which caused additional unintended impacts on Canadian clients. The uncertainty caused individuals to pursue permit applications for their transactions, which may not have been necessary, adding to the increase in permit applications, increasing the workload and further delaying permit decisions.
• Questions from other government departments: Other government departments and enforcement entities increasingly contacted GAC for guidance on implementing sanctions, which added to the workload for both the sanctions operations team and the enforcement entities themselves. For example, when regulations prohibiting the export and import of certain goods were implemented without referencing industry classification codes, the Sanctions Division received an influx of questions from CBSA officers about how to enforce these provisions.
• Enforcement activity: The lack of written interpretive guidance limited the ability of companies to successfully comply with sanctions despite their attempted due diligence and made it difficult for enforcement agencies to demonstrate that they intentionally violated sanctions regulations. Similarly, where enforcement agencies know that clear guidance is not available, they cannot demonstrate that a person could reasonably have been expected to know that they were violating the sanctions and, as a result, are unlikely to proceed with an enforcement action (see text box).
• Canadian courts filling the gap: In the absence of guidance, there is also a risk that Canadian courts may independently interpret the regulations’ intent, which may not align with the government’s objectives.

The reports of the Senate (2023) and House (2017 and 2024) Committee reviews highlighted how insufficient guidance impacts the Canadian economy, including commercial disputes and disadvantages for Canadian companies.

Performance measurement

Reviewing regulatory program results

Finding 21: The absence of performance assessment has hampered evidence-based decision making on the use of sanctions. However, strategies to assess impacts are being explored.

Performance measurement

The Cabinet Directive on Regulation requires regulatory programs to be evaluated, including their effectiveness in achieving stated objectives. This is, in part, to inform the choice to use regulations compared to other policy instruments. While a regulatory process is the only option to put legally-binding sanctions into place in Canada, foreign policy goals may also be pursued through other diplomatic policy instruments. However, GAC did not systematically collect evidence on the effectiveness or unintended impacts of Canadian sanctions, which could inform the choice of the geographic desks or other policy makers on whether to use sanctions over other types of policy instruments. While the geographic desks hold country and regional expertise, there was no guidance, reporting requirements or formal feedback mechanisms in place for the geographic desks and the Sanctions Division to share observations on sanctions effectiveness.

Academic literature and experiences of like-minded allies suggest that the impact of sanctions is very difficult to measure, given the challenge of isolating the effects of sanctions from other factors. The most common approach is to observe the impacts of sanctions on a country’s economy or trade. For example, the US does this with the help of their intelligence community, although they do not assess the overall effectiveness of sanctions programs in achieving broad policy goals. GAC has also received criticism from academics and in the 2023 Senate Committee report on the need to clearly define objectives beyond the broad statements of intent in the Regulatory Impact Statement so that these are clear to the public and to sanctioned persons and so it is possible to determine when objectives are achieved.

The Sanctions Division’s Grants & Contributions funding was used to fund external research activities with the goal of gathering approaches for assessing the humanitarian impact of sanctions. In 2023, the Sanctions Division created a Research and Analysis team and began developing a methodology for tracking economic impacts, which will in part address the 2023 Senate Committee report recommendation for GAC to develop a methodology to evaluate the effectiveness and impact of sanctions. Work was underway in 2023 to better assess the economic impacts of the Russia sanctions, including with GAC’s Office of the Chief Economist to identify potential sanctions circumventions using trade data.

Reporting

Public reporting has been largely limited to the number of persons sanctioned, set out in GAC’s Departmental Results Report. The 2023 Senate and 2024 House Committee reports recommended that GAC create an annual report on the implementation of sanctions. While there was no plan by GAC to do so, the discontinued UK Annual Review of Sanctions provides one potential model. This review reports on regulatory activities such as additions, amendments and removals; engagement and outreach activities, such as the number of email subscribers and engagements; enforcement activities; and compliance trends.

Conclusion, Recommendations and Considerations

Conclusion

While Canada has long used economic sanctions as a foreign policy tool, prior to 2018 GAC traditionally treated its regulatory implications as an “off the side of the desk” affair. Given the lack of a regulatory culture, the requirements and implications of a regulatory program have only recently come to the forefront with the exponential increase in sanctions that Canada put in place in response to the Russian invasion of Ukraine in 2022.

This critical event, as well as an overall shift to using sanctions as a foreign policy tool of choice, has highlighted the inadequate resources and capacity, lack of systems and lack of a comprehensive approach to meet the requirements and expectations of a regulatory program in Canada. At the same time, it has highlighted that the regulatory system was not designed to be used in the urgent and frequent manner in which it has been used for sanctions.

Growing into a regulatory role

The creation of the Sanctions Division at GAC has been essential in managing the growth in the use of sanctions. Acutely understaffed for the increase in sanctions measures since February 2022, this small division, in collaboration with the geographic desks, with domestic and international legal teams within GAC, and others, made best efforts to implement increasingly complex sanctions measures and the large and unforeseen workload resulting from permit and delisting applications, in addition to the complex new asset seizure and forfeiture regime. As the Sanctions Division grows into a Sanctions Bureau, with an anticipated large increase in human resources, it will be able to continue to expand the extent to which GAC carries out its regulatory role. However, given the workload implications of the new sanctions environment and as it starts while beginning to address some of the areas that had been previously neglected due to necessity, the new Bureau will still have to make choices about which activities to prioritize. These new resources will also not address the need for surge capacity within the geographic desks.

The Sanctions Division and others within GAC that work to develop and administer sanctions have been constrained in their ability to develop and

administer sanctions by the overall departmental approach to sanctions. The department’s focus has been to implement new sanctions measures while focusing less on assessing the potential unintended impacts of implementing those measures, the need for resources to manage the administrative consequences, and collecting evidence on the extent to which sanctions are an effective policy instrument in the circumstances in which they are being applied. Overall, there has been a disconnect between the political appetite for risk and GAC’s capacity to manage the consequences of this increase in the use of sanctions.

Canada compared to like-minded allies

While Canada is at times at the forefront of putting new sanctions into place, it is behind its like-minded allies in terms of the constraints of its regulatory process, the resources dedicated to the sanctions function, the publishing of essential guidance and the use of general permits to try to minimize unintended impacts on Canadians. Although these policy approaches are largely outside the Sanctions Division’s control, they do have a significant impact on day-to-day sanctions operations and on Canadians who are attempting to abide by sanctions regulations. In the meantime, the new asset seizure and forfeiture regime for sanctions (a global first) has added uncertainty and complexity to Canada’s sanctions landscape.

Alignment with GAC’s Transformation Implementation Plan (TIP)

GAC’s 2023 TIP highlights the commitment to continue to work toward the goal of being well-equipped to serve Canadians and to better deliver on multiple mandates. The dynamic area of sanctions demonstrates the need and opportunity to continue to improve GAC’s capacity as a sanctions policy-maker and regulator. The recommendations outlined are well aligned with the objectives of GAC’s 2023 TIP:

• increasing efficiency and better managing workload to improve the well-being of GAC’s teams and increasing effectiveness
• creating surge capacity for a more agile service model
• connecting with Canadians through strengthened communications
• ensuring that GAC’s tools and systems are responsive to the department’s emerging needs

Recommendations

1. Formalize and publish comprehensive written guidance for the public and private sectors to assist Canada’s public and private sectors in interpreting sanctions regulations and to fulfill Global Affair’s obligations as a regulator.
2. Prioritize strategies to improve the efficiency of permit application processing, which could include consideration of:
   • a more automated system for processing permit applications or for, export-related permits, integrating it into TID’s NEXCOL system
   • the use of general permits and exception
   • delegating the authority required for approving a wider range of permits to lower levels
3. The Sanctions Bureau (ISD) should work together with GAC’s new Pan-geographic Affairs Branch (GFM) to develop an action plan to ensure that geographic desks are effectively supported in the research, development, and implementation of sanctions. This action plan should go beyond the provision of tools and training, and should seek to ensure that, when necessary, geographic desks have access to surge support for open-source research required to support designations.
4. Strengthen the strategic policy role of the Sanctions Bureau. This might include:
   • formalizing policies that help guide internal decision making, including policy guidance around when to use sanctions
   • dedicating staff to follow and analyze policy developments affecting the sanctions landscape domestically and internationally
   • increasing capacity to address emerging policy issues more proactively
5. In order to improve efficiency and effectiveness in the operational environment of Canadian sanctions, consider undertaking a comprehensive review of:
   • overall policy coherence
   • authorities and roles
   • definitions and concepts
   • level of authority for approval of regulations

This could take the form of a department-led legislative review.

Considerations for Global Affairs Canada

Managing the sanctions pipeline

1. GAC should consider developing an annual sanctions plan that would serve as an information and capacity management tool, reflecting anticipated sanctions packages for existing regimes (such as anniversary dates and specific events). The plan would also allow for adaptability to emerging world events and a reassessment of priorities throughout the year. This would help the Sanctions Bureau manage the sanctions pipeline, better anticipate non-urgent sanctions requests and align resources accordingly.
2. To provide policy guidance within GAC and help ensure that proposed sanctions have been properly considered, the Sanctions Bureau should consider developing a policy framework to establish key policy considerations that stakeholders should respond to before moving forward to establish sanctions, such as that planned by the US Treasury.

[REDACTED]

GBA Plus

5. The Sanctions Bureau should consider integrating GBA Plus and gender equality considerations into the Research and Analysis unit’s work plan and helping support Canada’s intent to improve responsiveness through research that further explores the gendered aspects of Canadian and international sanctions and advocacy efforts.

Sectoral compliance activities

6. In order to inform the potential expansion of compliance activities to a variety of sectors, the Sanctions Bureau should consider carrying out an initial needs assessment to help determine which sectors should be prioritized, which aspects could be appropriately taken on by other government departments other than GAC, where the most critical gaps are, and what is needed in terms of key activities and potential resources to enable such activities.

Training

7. The Sanctions Bureau should consider expanding training opportunities and resources to develop expertise among new and existing Sanctions Division staff, staff within GAC and staff in OGDs. This may include:
   • actively seeking out relevant training opportunities that exist outside GAC, the GoC or Canada (perhaps in collaboration with like-minded allies) and maintaining a list of these training opportunities
   • developing an orientation package for new the Sanctions Bureau staff and staff working on sanctions in the geographic desks or in other divisions, including a list of useful learning resources for staff
   • developing additional training opportunities for relevant staff within GAC and extending invitations to training programs, such as Sanctions 101, to other audiences (such as Trade Commissioners), as well as other opportunities that may be possible in part through collaboration with the Canadian Foreign Service Institute (CFSI)
   • developing an informal sanctions Community of Practice, which could include staff working on sanctions (peripherally or directly) across the department, and potentially staff from OGDs, who can share news, exchange resources and share best practices and challenges

Tools

8. The Sanctions Bureau should consider establishing an email inbox specifically for CBSA sanctions referrals in order to separate the referral process from the general sanctions mailbox that receives numerous permit-related and other inquiries, which are less time-sensitive.
9. The Sanctions Bureau should consider developing feedback tools, such as surveys, to provide the information needed to report on the performance indicators outlined in the 2018 and 2023 Treasury Board submissions. This should include tools for measuring the ultimate outcome of increased awareness among the Canadian public and private sectors on how to comply with sanctions.

Annexes

Annex I

Sanctions development and approval process

Snapshot of the Canadian sanctions landscape:

• 31: Autonomous and multilateral sanctions regulations under Canadian sanctions Acts
• 3,500 +: Overall number of individuals and entities designated under Canadian autonomous sanctions
• 2,000 +: Number of those related to the invasion of Ukraine
• $121 million +: Value of frozen assets in Canada
• $290 million +: Value of blocked transactions by the financial sector
• 1,000 +: Number of companies that have stopped doing business with Russia

The development and approval process for sanctions regulations

The development of a sanctions package is complex and follows a multi-step process. The following provides a highly simplified summary of the process of developing and approving a regulation under Canada’s three sanctions Acts. Regulations are created through a GIC process. Under these Acts, regulations and any amendments must be approved by the GIC (the Governor General, on the advice of Cabinet). However, more recently, the regulatory process for sanctions has been conducted in a highly condensed manner (in days or weeks) compared to a typical process of 6 months or more.

Figure 7:

Annex II: Other legislative instruments

Canadian sanctions-related legislation

The UNA, SEMA and the JVCFOA are the legislative instruments that Canada uses to impose sanctions. Other related Canadian legislation also provides authorities for Canada to use in support of international peace and security and to enforce international norms and laws. The evaluation team did not review this legislation and responsibility for them lies outside GAC. However, it is useful to be aware of how this complementary legislation and its authorities are relevant to the enforcement of sanctions and to GAC’s coordination role.

In addition to authorities under the UNA, SEMA and the JVCFOA, the Minister of Foreign Affairs also has authorities under the Export and Import Permits Act and the Freezing Assets of Corrupt Foreign Officials Act. The authorities of the CBSA and the RCMP to enforce sanctions regulations are also defined within this related legislation.

The Criminal Code: The listing of terrorist entities under the Anti-terrorism Act and the Criminal Code provides the authority to apply appropriate criminal measures to entities, some of whom may be listed under United Nations regulations. These measures may include the seizure, restraint and forfeiture of an entity’s property. In addition, Canadian banking institutions are required to report on the entities’ property and must not allow those entities access to their property.

The Immigration and Refugee Protection Act: Provides authority to deny entry into Canada to foreign nationals who are designated under Canadian sanctions legislation.

The Proceeds of Crime (Money Laundering) and Terrorist Financing Act: Provides authority to require that regulated entities monitor and report on certain types of transactions; for the Minister of Finance to issue directives to financial institutions to apply countermeasures on transactions originating from or destined for designated foreign jurisdictions and entities, and to recommend that the GIC issue regulations limiting or prohibiting financial transactions. This Act is a key piece of legislation in Canada’s anti-money laundering and anti-terrorist financing (AML/ATF) regime. Canada’s 2023 AML/ATF Strategy notes that sanctions are a tool against financial crime, particularly terrorist and proliferation financing, and corruption. The AML/ATF measures and tools are also relevant in preventing, detecting and countering sanctions evasion, notably after the coming into force of Bills C-59 and C-69 in June 2024, which provided additional authorities to FINTRAC.

The Freezing Assets of Corrupt Foreign Officials Act: When a foreign state requests assistance from Canada, Canada may restrict or prohibit access, dealings or financial services relating to the property of a politically exposed foreign person (such as a government official or politician) where the property is asserted to have been misappropriated or acquired inappropriately by virtue of their office, or a personal or business relationship. This applies to any Canadian whether inside or outside Canada or to any person while in Canada, regardless of where the property is located. This was enacted in 2011 to respond to the events of the Arab Spring, when deposed regime officials were suspected of holding proceeds of corruption in foreign jurisdictions.

The Export and Import Permits Act: Gives authority to the Minister of Foreign Affairs to control and authorize the issuance of export control permits for exporting or transferring any goods or technology to countries named in the Area Control List. This includes controlled items listed under the Arms Trade Treaty, as well as dual-use items and military exports. Export permits are only authorized after due diligence is conducted to ascertain that the export or transfer would not contribute to undermining peace and security or be used to commit or facilitate serious violations of international human rights laws.

Annex III: Key Government of Canada actors

Figure 8:

Annex IV: Intended results of the 2018 funding for sanctions (GAC)

GAC committed to the following outputs and outcomes for funding received over 2019-20 to 2022-23 (this funding was not ultimately received until April 2020):

Immediate (0-12 months)

• Output(s)/outcomes(s)

Augment Global Affairs Canada’s operational capacity to coordinate Canada’s sanctions, including increased capacities in the following areas: policy coherence; research and analysis; regulatory and legal capacity; analytical and due diligence capacity; and, whole-of-government coordination.

• Performance indicator(s)

Establishment of new diversion and additional legal resources, including creation of positions, staffing and administration.

• Target completion date

December 2019

• Data strategy

One off

Intermediate (12-16 months)

• Intermediate outcome 1

Increased capacity to provide guidance to the Canadian public, including the private sector.

• Performance indicator(s)
  • Percentage of inquiries to the sanctions e-mail mailbox or hotline answered within client service standards
  • Percentage of survey respondents (stakeholders) that indicate their level of understanding and satisfaction with increased sanctions guidance provided by new sanctions division
• Target completion date
  • Target to be determined once client service standards are established in FY 2019-20
  • Target to be determined after obtaining baseline data in 2019-20
• Data strategy
  • Annually; internal tracker
  • Annually; formal and informal feedback from stakeholders to be tracked internally; potential survey
• Intermediate outcome 2

Requests for permits, de-listings and certificates are processed in a timely manner

• Performance indicator(s)

Percentage of requests for permits, de-listings and certificates processed within client service standards

• Target completion date

Target to be determined once client service standards are established in FY 2019-20

• Data strategy

Annually; internal requests tracker

• Intermediate outcome 3

Reduce the backlog of amendments to the existing sanctions regulations consistent with Global Affairs Canada’s UN obligations

• Performance indicator(s)

Number of regulatory amendments prepared by Global Affairs Canada

• Target completion date

Reduce number of pending regulatory amendments

• Data strategy

Once a year; internal tracker

• Intermediate outcome 4

Increased evidence-based research on the impact and effectiveness of sanctions

• Performance indicator(s)

Number of research papers and/or white papers, and/or technical meetings on the impact of sanctions

• Target completion date

2/year, starting in 2019

• Data strategy

Once a year; internal tracker

Ultimate (24 months and beyond)

• Output(s)/outcome(s)

Increased awareness among Canadian public and private sector of how to engage in international business and international assistance in accordance with sanctions

• Performance indicator(s)

Percentage of survey respondents that indicate that their level of understanding of how to engage in international business in accordance with sanctions has increased

• Target completion date

Target to be determined after obtaining baseline data in 2019-20

• Data strategy

Annually; formal and informal feedback from stakeholders to be tracked internally; potential survey

Annex V: Planned resources related to sanctions

Planned funding for 2019-20 to 2022-23

Funding committed in 2018 included a total of $17,341,970 over a 4 year period (2019-20 to 2022-23) to strengthen Canada’s sanctions implementation capacity. The majority of funds ($15.5 million, or 89%) were to go to GAC to create the Sanctions Policy and Operations Division (PER), with a small Grants and Contributions budget for conducting research ($100,000/year) and included funding for a number of legal advisers. The CBSA also received funding ($1.9 million, or 11%) to strengthen enforcement capacity. GAC did not receive full access to this funding until 2020.

GAC budget

A total of $15,462,000 was budgeted for GAC, with an annual average over 4 years of $3.87 million and $3.87 million in annual ongoing funding thereafter.

Figure 9:

Funded full-time equivalents (FTEs) for GAC included 14 FTEs for the new Sanctions Division (PER) and 5 FTEs to provide legal advice, maintain evidentiary standards and ensure the rigorous development of sanctions listings in cases challenged in court.

Annex VI: Alignment of recommendations with the House (2017, 2024) and Senate (2023) Committee reports

The evaluation team reviewed 3 FAAE and AEFA* reports on the review of autonomous sanctions legislation to compare the findings and recommendations and cross-referenced them with the recommendations of this evaluation. Although the FAAE and AEFA reports had a broader scope, covering areas beyond GAC, the reports and recommendations largely align with the findings and recommendations of this evaluation. Below is a table of the evaluation recommendations** and similar recommendations from the FAAE and AEFA.

* The House of Commons Standing Committee on Foreign Affairs and International Development (FAAE) and the Standing Senate Committee on Foreign Affairs and International Trade (AEFA).

**Recommendation 3 from the evaluation report is not included in the table since there is no cross-reference with the FAAE and AEFA reports.

Annex VII: Excerpts from a comparative study of like-minded allies

The Sanctions Division’s counterparts in like-minded allies

Some countries house their sanctions regulator within their department of foreign affairs like Canada, and others within the Treasury. This list does not fully reflect all the entities that handle similar responsibilities to the Sanctions Division.

United States

• Office of Economic Sanctions Policy and Implementation housed in the Department of State
• Office of Foreign Assets Control (OFAC) housed within Department of Treasury

United Kingdom

• Sanctions Directorate housed in the Foreign, Commonwealth & Development Office
• Office of Financial Sanctions Implementation (OFSI) housed within His Majesty’s Treasury

Australia

• Australian Sanctions Office (ASO) housed within the Department of Foreign Affairs and Trade

New Zealand

• Ministry of Foreign Affairs and Trade/Legal Division

Enforcement authorities of sanctions regulators: unlike the US and UK regulators, GAC cannot apply civil penalties:

• United States
  • OFAC: Criminal and civil penalties; civil penalties can include, for example, issue a warning, publish known breaches, impose a monetary penalty
• United Kingdom
  • OFSI: Criminal and civil penalties
• Australia
  • ASO: Criminal penalties only; however, the introduction of civil penalties is under consideration within the 2023 legislative review (pending).
• New Zealand
  • MFAT: Criminal penalties only

Permit practices (also called licenses, exemptions, or certificates): most allies use general as well as individual permits:

• United States
  • OFAC Licenses:
    • Also issues general licenses
    • Online portal for applications
    • Timelines “will vary” depending on case complexity and volume
• United Kingdom
  • OFSI Licenses:
    • Also issues general licenses
    • Email submission for applications
    • Suggests applying at least four weeks in advance
• Australia
  • ASO Permits:
    • Also issues general licenses
    • Online portal for applications
    • Responds to applications “as quickly as possible”, subject to caseload
• New Zealand
  • MFAT Exemptions:
    • Email submission for applications
    • Goal of 20 working days, complexity-dependent
    • Unclear if general licences used

Annex VIII: TID’s NEXCOL system for processing export permit applications

GAC’s Trade and Export Controls Bureau (TID) manages the issuance of permits under the Export and Import Permits Act (EIPA). A 2017 House Committee report recommended that the GoC transfer responsibility for issuing permits under SEMA and the UNA to the GAC section that issues similar permits under the EIPA (that is, TID), although the 2 functions fall under different legislation, have different purposes and have not been integrated. There are other important distinctions between trade controls and sanctions. Export permits under the EIPA facilitate trade for specific controlled goods, while sanctions permits allow exceptions to prohibitions for foreign policy objectives. The EIPA focuses on arms control obligations and covers a limited range of goods, whereas SEMA and the JVCFOA apply to all economic activities in Canada and by Canadians abroad. However, the teams interact frequently on consultations related to their respective permits and the Sanctions Division uses TID’s automated NEXCOL portal to provide assessments of whether goods match the prohibited items on sanctions lists. As the Sanctions Division looks to develop a portal for processing sanctions permit applications, TID’s NEXCOL system can provide lessons learned for high-volume regulatory transactions. However, a caveat to adopting such a system is the considerable financial and human resources required for its development and implementation.

Key benefits of the NEXCOL system:

User-friendly interface

TID’s NEXCOL system for processing export permit applications was key to efficiently processing a high volume of export permits. The system’s updated interface (updated in FY 2020-21) made it easier to navigate and made the system even more user-friendly.

Integrated guidance

Since it is an automated function, where resources and guidance are directly available in the system, back-and-forth communication with applicants is limited. If a field within the application is not filled out correctly, a notice appears with a link to relevant guidance (including guidance related to sanctions).

Effective coordination

NEXCOL allows for efficient intradepartmental and interdepartmental coordination through its straightforward “tagging” system, where relevant teams across the government are notified when their consultation is requested. They can then provide an assessment directly within the system.

Information management

The NEXCOL system allowed for effective information management and data storage. The online system stores application data in one place, which is beneficial if the government ever needs to provide evidence for why a decision was made (such as in the case of a judicial review).

Annex IX: List of finding statements

1. There was inherent tension between the use of sanctions as a foreign policy tool and the domestic requirements of a regulatory program.
2. The creation of a dedicated sanctions division improved GAC’s capacity as a regulator, but the increase in the use of sanctions exceeded GAC’s ability to manage the operational consequences.
3. The new context of sanction use demonstrated the need for more specialized expertise and training within GAC.
4. Misalignments between departmental authority, power and capacity have contributed to gaps in compliance and enforcement.
5. The creation of a dedicated sanctions unit at GAC improved policy coherence in terms of the development and implementation of sanctions measures.
6. Opportunities remain for developing more formalized policies to guide internal decision making and to proactively address overarching policy issues.
7. The UNA and SEMA are foundational in implementing Canada’s UNSC sanctions obligations and autonomous sanctions, respectively. SEMA has proven to be a more applicable tool for targeting human rights violations and corruption compared to the JVCFOA.
8. Inconsistencies in the language and content of Canada’s sanctions Acts and associated regulations have led to operational challenges.
9. The creation of Canada’s new asset seizure and forfeiture regime was a significant policy shift that remains largely untested. [REDACTED]
10. The compressed timelines for developing sanctions packages often constrained the ability to conduct research to support listings and other decisions, and to maintain standard regulatory practices.
11. GAC used targeted sanctions to limit impacts on vulnerable groups and applied sanctions in response to gender-based violence. However, analyses of potential differential impacts of sanctions on vulnerable groups has been limited.
12. Although the extent of the Sanctions Division’s coordination with other government departments varied depending on the nature of the sanctions, working level relationships allowed for effective coordination.
13. [REDACTED]
14. Following the significant increase in sanctions regulations in 2022, the existing system for processing permit applications did not allow GAC to respond in a timely manner.
15. The Sanctions Division made efforts to improve the efficiency of permit processing, but the high volume of permit applications outpaced these improvements.
16. Processing delisting applications within established timelines was not feasible following the increase in applications in 2022, which posed legal risks to Canada.
17. The Sanctions Division adapted to the increase in CBSA sanctions referrals effectively.
18. Several factors limited the Sanctions Division’s outreach to the public and private sectors, although plans are in place to continue enhancing engagement efforts.
19. GAC has not fulfilled its regulatory obligation for written interpretive guidance.
20. The lack of published interpretative guidance for the public and private sectors had some undesirable consequences.
21. The absence of performance assessment has hampered evidence-based decision making on the use of sanctions. However, strategies to assess impacts are being explored.

Annex X: Updates following completion of data collection and analysis for the evaluation

Data collection and analysis for this evaluation covered the period from 2018 up to the end of 2023, with some quantitative data being updated up to August 2024. After the report was drafted, the Sanctions Bureau reported several pertinent developments in 2024, as follows.

New funding and creation of the Sanctions Bureau

The Treasury Board submission seeking access to the $76 million in new sanctions-related funding, announced by the Prime Minister in October 2022 was approved. Accordingly, the new Sanctions Bureau at GAC was formally established and work in ongoing to staff newly-created positions, which will ultimately bring the total number of positions in the Bureau to 53 FTEs.

The new Bureau is made up of three divisions:

• Policy: Leads on Canadian sanctions policy and how sanctions tools can be used; manages sanctions-related briefings and parliamentary issues, including sanctions-related committee appearances; leads on sanctions-related research and analysis, including the management of Vote 10 sanctions programming; oversees the sanctions-related asset seizure and forfeiture authorities; manages sanctions-related judicial reviews in coordination with the DoJ.
• Outreach, Compliance and Enforcement: Leads engagement and provides consultations to the RCMP and the CBSA on sanctions enforcement; manages sanctions-related permit applications; conducts sanctions-related stakeholder outreach.
• Listings and Coordination: Coordinates all listings and delistings under Canada’s sanctions legislation (the UNA, SEMA and the JVCFOA); leads coordination with like-minded allies on listing and delisting efforts.

Sanctions packages and permits

From January 1, 2024, to August 20, 2024:

• Eighteen sanctions listing the regulatory packages entered into force, including four to establish new SEMA regulations pertaining to Guatemala, Sudan, Hamas’ terrorist attacks against Israel, and in response to Israeli extremist settler violence.
• Five sanctions delisting the regulatory packages that also entered into force during the same period.
• Eleven permit applications were processed and 19 new permit applications were received.

Stakeholder outreach and guidance

Stakeholder outreach activities have continued, including trips to Vancouver and Victoria in January 2024, Winnipeg/Emerson in April 2024, Regina in May 2024, and Toronto and Calgary in June 2024. The FAQs webpage on GAC sanctions has been updated to provide additional guidance to stakeholders.

Enforcement and oversight

Amendments to the Proceeds of Crime (Money Laundering) and Terrorist Financing Act, as outlined in the 2023 Fall Economic Statement and included in Bill C-59, permit FINTRAC to use its expertise in an effort to support sanctions enforcement. GAC and FINTRAC are actively planning how to work more closely to supervise financial institutions for the purpose of compliance with sanctions regulations.

Judicial proceedings

[REDACTED]

FAAE sanctions report

The FAAE published its report on Canada’s sanctions regime in January 2024, which included 23 recommendations that were broadly grouped into 5 categories:

• The administration of Canada's sanctions regime
• The governance and resourcing of Canada's sanctions regime
• The multilateral coordination of Canada's sanctions regime
• The effectiveness of Canada's sanctions regime
• The coherence and consistency of Canada's sanctions regime

The Sanctions Division drafted the response on behalf of the GoC, which was tabled on May 30, 2024. The response agreed, at least in principle, with most of the recommendations in the report.