Economic Sanctions and Blacklists

Transcription

1 Economic Sanctions and Blacklists IE Canada Export Compliance Webinar Series John W. Boscariol February 27, 2015

2 1 Growing Impact of Economic Sanctions what s driving this? since 9/11, new emphasis of Canadian authorities on security (vs. government revenues) more recently, increased penalties, enforcement by U.S. authorities pressure from U.S. affiliates, suppliers and customers (and U.S. government) but Canada now a sanctions hawk Canadian companies are now more concerned than ever before about whom they deal with, where their products and technology end up, and who uses their services financings, banking relationships, mergers and acquisitions

3 2 Canada s Trade Controls export and technology transfer controls Export Control List & A Guide to Canada s Export Controls Area Control List (Belarus and North Korea) domestic industrial security Defence Production Act, Controlled Goods Program economic sanctions Special Economic Measures Act United Nations Act Criminal Code Freezing Assets of Corrupt Foreign Officials Act other trade control legislation blocking orders (Cuba) anti-boycott policy and discriminatory business practices laws anti-bribery law (Corruption of Foreign Public Officials Act and FCPA) compliance convergence

4 3 Canada s Economic Sanctions Regime challenges measures take effect immediately no consultations measures change often, in response to developing international events measures are layered multiple Canadian regulatory regimes measures in the country in which you re doing business US extraterritorial measures

5 4 Canada s Economic Sanctions Regime United Nations Act implementation of UN Security Council Resolutions Special Economic Measures Act impose economic sanctions absent or in addition to a UN Security Council Resolution Freezing Assets of Corrupt Foreign Officials Act politically exposed persons Criminal Code terrorist groups Area Control List under Export and Import Permits Act Belarus and North Korea

6 5 Canada s Economic Sanctions Regime Special Economic Measures Act and United Nations Act key measures (depending upon the country program) ban on providing or acquiring goods, services, technology/data assets freezes cannot deal with listed individuals, companies, organizations ( designated persons ) includes facilitation ban on investment aircraft, shipping, transport restrictions travel bans sectoral measures monitoring and reporting obligations

7 6 Canada s Economic Sanctions Regime generally apply to persons in Canada and Canadians outside of Canada permits generally available for anything that is prohibited under the sanctions measures apply to Economic Law Division of Department of Foreign Affairs, Trade and Development (DFATD) no general permits/licenses have been issued, although exemptions may be available grandfathering enforced by Canada Border Services Agency and Royal Canadian Mounted Police (RCMP)

8 7 Canada s Economic Sanctions Regime consequences of non-compliance criminal penalties fines in an amount that is appropriate in the opinion of the Court up to 10 years imprisonment CBSA detention and seizure operational costs reputational costs

9 8 United Nations Act Regulations targeted countries and groups Al-Qaida and Taliban Côte d Ivorie Democratic Republic of Congo Iran Sudan Yemen Central African Republic Lebanon Iraq Somalia Eritrea terrorists and terrorist organizations Liberia North Korea Libya

10 9 Special Economic Measures Act Regulations targeted countries Iran Syria Burma Zimbabwe North Korea Ukraine Russia South Sudan

11 10 Freezing Assets of Corrupt Foreign Officials Regulations politically exposed persons Egypt Tunisia Ukraine

12 11 Russia / Ukraine Economic Sanctions Measures designated person restrictions 273 entities and individuals broad prohibition on range of activities debt financing prohibition (30 or 90 days maturity) equity financing prohibition prohibitions against supply of listed goods or related financial, technical or other services for use in offshore oil exploration or production at a depth greater than 500 meters; oil exploration or production in the Arctic; or shale oil exploration or production export control policy no permit if material benefit to Russian military

13 12 Iran Economic Sanctions Measures UN Act regulations (2007 & 2010) 121 designated entities and individuals military, nuclear SEMA regulations ( ) 613 designated entities and individuals oil & gas, mining, shipping financial services ban supply ban purposes of a business carried on in or operated from Iran sourcing ban investment ban technical data restrictions Export and Import Permits Act (ECL) US-origin goods and technology extraterritorial US measures

14 13 Prosecutions Under Iran Economic Sanctions R. v. Yadegari July 6, 2010, first successful prosecution under the Iran sanctions regulations under United Nations Act attempted shipment to Iran through Dubai dual-use pressure transducers could be used in heating and cooling applications as well as in centrifuges for enriching uranium Ontario provincial court judge found that Yadegari knew or was wilfully blind that the transducers had the characteristics that made them embargoed also violations of Customs Act, Export and Import Permits Act, Nuclear Safety and Control Act, and Criminal Code sentenced to 51 months imprisonment (slight reduction on appeal)

15 14 Prosecutions Under Iran Economic Sanctions R. v. Lee Specialties Ltd. first prosecution under Special Economic Measures Act attempted shipment of 50 Viton O-rings to Iran ($15 total value) although dual-use, these were prohibited goods listed on Schedule 2 to the Iran SEMA regulations multiple changes in account and shipping addresses detained by CBSA guilty plea and $90,000 penalty

16 15 Burma Economic Sanctions Measures Canada had most aggressive sanctions of any country effective April 24, 2012 most Burma sanctions measures repealed currently 44 entities and 38 individuals are designated persons arms and related material embargo (including data transfers)

17 16 Key Issues in Interaction With US and Other Regimes screening against Canadian lists lists of over 2,000 designated persons individuals, companies, organizations Special Economic Measures Act regulations United Nations Act regulations Freezing Assets of Corrupt Foreign Officials Act regulations Criminal Code anti-terrorism provisions any involvement in the transaction purchaser, ultimate user, vendor, creditor, broker, service provider applies regardless of where Canadian company is doing business applies to non-canadians in Canada

18 17 Key Issues in Interaction With US and Other Regimes Canadian measures may be broader than those of the United States and other countries Russia / Ukraine 273 designated persons Belarus, Burma, Libya, North Korea Iran importance of home grown compliance policies

19 18 Key Issues in Interaction With US and Other Regimes Canadian measures can be in direct conflict with those of the United States Foreign Extraterritorial Measures Act blocking order in respect of US trade embargo of Cuba obligation to notify Canadian Attorney General of certain communications prohibition against complying with certain U.S. trade embargo measures criminal penalty exposure: up to $1.5 million and/or 5 years imprisonment provincial business discriminatory practices legislation

20 19 Key Issues in Interaction With US and Other Regimes Canadian measures can be in direct conflict with those of the United States Canadian human rights / employment laws and potential conflict with US controls under International Traffic in Arms Regulations Department of Defense Trade Controls (US State) US Export Administration Regulations (CCL) - Department of Commerce

21 20 Key Issues in Interaction With US and Other Regimes significant differences in administration and guidance on economic sanctions

22 21 Key Issues in Interaction With US and Other Regimes Canada does not have a voluntary disclosure program for sanctions violations voluntary disclosures or mandatory report to Royal Canadian Mounted Police if violation is suspected by DFATD during perm21it application process, they will notify RCMP no deferred prosecution or non-prosecution agreements

23 22 Implications for Economic Sanctions Compliance and Enforcement internal compliance programs must be home grown training and internal communications screening process and providers coordination of internal investigations and disclosures involving multiple jurisdictions

24 John W. Boscariol McCarthy Tétrault LLP International Trade and Investment Law Group www. Direct Line: LinkedIn: Twitter: