Canadian sanctions guidance — Aerospace and defence sector

This guide is designed to help Canadian aerospace and defence organizations understand sanctions compliance and to manage sanctions risks as effectively as possible. This information is not exhaustive. It is recommended that each organization have a sanctions compliance program in place and review new measures on an ongoing basis. Consult with private legal counsel, as required. For information on Canada’s sanctions regime see Canadian sanctions. Additional resources can be found under thematic guidance.

On this page

• Overview
• Due diligence
• Export and import prohibitions of goods and technologies
• Arms and related material
• Red flags
• Enforcement
• Contact

Overview

When sanctions are implemented in Canada, all persons in Canada and Canadians abroad can face limitations in dealing or collaborating with sanctioned countries, or listed individuals and entities.

Canadian aerospace and defence businesses need to be aware of Canadian sanctions and how they may impact their work and relationships with clients or suppliers, both domestically and internationally. Sanctions may have implications when importing or exporting goods or technologies including dual-use or defence goods and technologies listed in Canada’s Export Control List, or when providing technical assistance or other services related to those goods.

In some situations, legally exporting an item could require both an approved export control permit, and a sanctions permit. A transaction involving a listed person (individual or entity) would be prohibited without a sanctions permit, even with a valid export controls permit.

This would also apply in the case of an activity prohibited by sanctions, even if none of the parties involved are listed. For example: an export permit is obtained to export an industrial good to a non-listed company. However, the export of the good to the destination country is prohibited by sanctions. A sanctions permit would then be required as well.

Due diligence

Certain actors in sanctioned countries may attempt to circumvent restrictions through different schemes which may benefit sanctioned individuals and/or entities under Canadian legislation. Canada encourages the effective and robust compliance of sanctions through rigorous due diligence, which can help assess whether an activity may trigger sanctions or if an activity is an attempt to circumvent Canada’s sanctions. General due diligence best practices can be found under Comply with Canada’s sanctions – due diligence practices.

Canadian sanctions change frequently. Subscribe to receive sanctions updates and monitor the latest announcements on Canada’s sanctions, including new additions to the sanctions lists and sanctions regulations.

There are some key considerations when evaluating activities in the aerospace and defence sector:

Transacting with listed persons

Screen any proposed engagement against the UN Security Council Consolidated List and the Consolidated Canadian Autonomous Sanctions List to determine if the individual or entity you propose to engage with is directly subject to Canadian sanctions.

It is often not sufficient to consider direct dealings with listed persons. Indirect dealings are also important to consider. Under most Regulations made pursuant to the Special Economic Measures Act (SEMA) and the Justice for Victims of Corrupt Foreign Officials Act, it is prohibited to enter into or facilitate a transaction related to a dealing with a listed individual or entity – even indirectly, such as through a third party – including if that third party is not Canadian and/or is located outside of Canada. See Dealings prohibition and asset freeze for more information.

Questions to consider:

• Are there any indirect associations between my client and listed persons, for example any indirect dealings with a listed person through associates, family members, subsidiaries, parent/holding company, intermediary bank, legal representatives, among others?
• Does my client have connections of concern, such as a history of engagement with legal entities or arrangements that may have a link to listed individuals, entities, government officials, and/or their proxies?
• Does the activity involve, or benefit, any listed person?
• Am I inviting, or is my client inviting, a person from a sanctioned country to Canada (or to a third location)?
• Am I making or receiving a payment to or from a person or entity (either directly or indirectly), or through a bank, in a sanctioned country?
• Am I in any way facilitating a sanctions violation?

Export and import prohibitions of goods and technologies

Canadian sanctions legislation contain a number of export and import restrictions that may affect the aerospace and defence sector. When considering the risks imposed by sanctions prohibitions, review sanctions legislation and the relevant regulations to determine if the proposed activity is permitted.

For example, the Special Economic Measures (Russia) Regulations and the Special Economic Measures (Belarus) Regulations contain many goods and services prohibitions, including prohibiting:

• the sale or supply of many goods and technologies, whether or not they may be used in the manufacture of weapons
• services related to aviation and aerospace products, as well as the use of arms and related material
• research and development, scientific and technical assistance, etc.

Dual-use goods and technologies

A wide range of goods and technologies can be employed for both civilian and military purposes. Certain dual-use goods and technologies may be prohibited under specific sanctions regulations. For reference purposes, to help identify and understand what is considered “dual‑use”, a detailed list of goods and technologies defined as dual-use is available in the Export Control List and A Guide to Canada’s Export Control List, published by Global Affairs Canada, as amended from time to time.

Common High Priority Items List (CHPL)

Canada and its allies are increasingly working with third countries that do not apply autonomous sanctions against Russia, focusing on stopping goods from reaching the battlefield. The trade in battlefield goods is monitored through a Common High Priority List (CHPL) that was adopted by the Global Export Control Coalition (GECC) in 2023, of which Canada is a member. Canada has included those goods in the SEMA (Russia) Regulations. See export and import restrictions for more information on the CHPL.

Restricted Goods and Technologies List

The Restricted Goods and Technologies List outlines restricted goods and technologies, as referenced in the Special Economic Measures (Russia) Regulations and the Special Economic Measures (Belarus) Regulations. These goods and technologies do not have Harmonized System codes (HS) associated with them.

It is prohibited for any person in Canada and any Canadian outside Canada from exporting, selling, supplying or shipping any good, wherever situated, or to provide any technology, to Russia or to any person in Russia, if it is described in the List.

Arms and related material

An arms embargo can be imposed under the United Nations Act or the Special Economic Measures Act. 

The definition of arms and related material under Canada’s sanctions laws vary, but generally includes any type of weapon, ammunition, military equipment — including military vehicles — or paramilitary equipment, and their spare parts.

This definition includes all goods in the Group 2 (Munitions) list on the Export Control List as well as other items that have potential military application. Factors to consider in determining whether a good falls under that broader scope include:

1. The nature of the good:
   • Is the good specially designed or modified for military use, or of substantial military applicability?
2. The end use of the good:
   • Is the proposed end use in support of a military program or activity?
   • Are there red flags indicating missing information about the proposed end use of the good?
3. The end-user of the good:
   • Is the item destined to a military entity or a defence contractor/supplier?
   • Are there red flags suggesting connections, associations or significant ties between the end-user and a military organization?
4. Beyond goods prohibitions, would the good be of benefit, directly or indirectly, to a listed individual or entity with a military connection?
   • Does the transaction raise suspicions about the true end-user?

Some regulations that prohibit exporting and importing arms and related materials to and from the targeted country may also prohibit providing services or technology related to prohibited goods. Services restrictions may include the provision of financial services, insurance, and other services incidental to the manufacturing and export of prohibited goods. It is important to consider both goods prohibitions and other related prohibitions when considering an activity.

Red flags

Some individuals and entities may attempt to circumvent Canada’s sanctions through various transactions or activities. The sanctions red flags page, in particular the sections on dual-use / high-risk goods and end-user or end use of goods, may be helpful to detect suspicious activities.

It is important to analyze the risk of export control and/or sanctions circumvention. Reevaluate the red flag indicators and all available information after conducting further due diligence:

1. Can you explain or justify the red flags?
2. Can you establish bona fides of the party?
3. Can you confirm the legitimacy of the transaction?

If an activity raises one or more red flags, there may be a risk of sanctions circumvention. Further investigation is strongly recommended. You may review Canada’s sanctions legislation and associated regulations and seek legal advice to confirm if your activity is permissible or not.

Enforcement

For information on reporting sanctions violations and on penalties for contravening sanctions, see Sanctions enforcement in Canada.

Contact

For any sanctions inquiries or questions, contact the Global Affairs Canada Sanctions Bureau.