Canadian sanctions - Dealings prohibition and asset freeze

All sanctions regulations made under the Special Economic Measures Act (SEMA), the Justice for Victims of Corrupt Foreign Officials Act (JVCFOA) and most regulations made under the United Nations Act (UNA) comprise a dealings prohibition, also called a dealings ban. A dealings ban prohibits Canadians and persons in Canada from transacting with designated persons, making any goods available to them, or providing services to their benefit. As part of this prohibition, designated persons are effectively subject to an asset freeze, aimed at preventing designated persons from gaining access to property or other assets.

A dealings ban may include prohibitions related to:

• dealing in the property of a designated individual or entity, or of any entity owned or controlled by a sanctioned person following the definition of deemed ownership;
• entering into transactions or facilitating transactions related to the property of a designated individual or entity; and
• providing financial or related services to a designated individual or entity.

A “dealing in property” may apply to real property (e.g., land or buildings), as well as all other forms of property, including physical goods – such as equipment, vehicles, and artwork – or intangible property – such as money, financial instruments, and intellectual property.

Dealings bans apply to both direct and indirect transactions with designated individuals or entities. Under most sanctions regulations, it is also prohibited to enter into or facilitate transactions related to dealings with designated individuals or entities through intermediaries.

Depending on the regulations, some exceptions may apply, such as in the case of diplomatic activities, in respect of pre-existing contracts or for transactions required to move financial assets away from designated individuals or entities. Always consult the relevant regulations to determine the prohibitions and potential exceptions that may apply to your activity.

Duty to disclose

Under most of the UNA and SEMA regulations, persons in Canada and Canadian outside Canada must disclose the existence of property in their possession or control that they have reason to believe is owned, held or controlled by or on behalf of a designated person. They also must disclose any information about a transaction or proposed transaction in respect of such property.

Disclosures must be made without delay to the Royal Canadian Mounted Police or in certain cases, disclosure can also be made to the Director of the Canadian Security Intelligence Service depending on the regulation.