Posted by on Apr 7, 2022

Anyone following the news knows that Russia is now the world’s most sanctioned country and that the sanctions are intended to cause Russia so much economic pain that it will withdraw from Ukraine.  Canada has joined other countries in imposing sanctions on Russia and Russians under the Special Economic Measures Act, the Customs Tariff, and the Export and Import Permits Act and has indicated that it will impose more sanctions if necessary.[1]

In addition to the political objective of Russian withdrawal from Ukraine, the sanctions have also affected business by either prohibiting the business outright or by increasing the cost of doing business.  Thus, sanctions may affect Canadians or Canadian companies that do business with Russia or Russians depending on the nature of that business.   Because some traders may try to get around the sanctions, Canadians and Canadian companies may find themselves unintentionally violating the sanctions by importing Russian goods or by unintentionally doing business with Russian companies or individuals.

Regardless of their objective, the sanctions pose a business risk for Canadians and Canadian companies that should not be ignored.  To reduce or eliminate that risk, any Canadian or Canadian company doing business in Russia or with Russians or intending to do business in Russia or with Russians, should take steps to understand their exposure to the sanctions.  To do this, we suggest the following:

i)   Review the sanctions to determine whether they could affect your current or planned business with Russia or with Russians. A brief overview of Canada’s sanctions in place at the time of writing, including the penalties for violating those sanctions and potential for continuing business despite the sanctions, is discussed in the attached Annex.

ii)   Review your business operations to determine whether you are currently doing business in Russia or conducting business that involves Russian goods, investment, financing, banking transactions, or transportation more broadly to determine whether that business could violate the sanctions.

iii)  Review your operations or business in other countries to determine whether they have any connections with Russia or Russians that could trigger penalties under Canadian sanctions or sanctions that may be imposed by that other country.

iv)  Consider your practices concerning business transactions to determine whether you or your company face a risk of seizure, forfeiture, or the inability to complete financial arrangements for any business transactions involving Russia or Russians.

Navigating the sanctions to determine your risk can be difficult, particularly in cases where it is not immediately clear that your current or future business could be affected.  If you need any help understanding the sanctions or their implications, please contact us.

Woods, LaFortune LLP is an international trade and customs law boutique.  Our lawyers have expertise in export controls and sanctions.  If your current or potential business raises concerns that you could intentionally or unintentionally violate the Russia sanctions, we would be happy to review your business practices to determine whether they risk violating Canada’s sanctions and to advise you on the steps to take to reduce or eliminate that risk, including the possibility of seeking Government permits or orders that would allow you to continue to conduct business in Russia or with Russians.

Depending on the nature of your business, we could also advise you on the possibility of successfully influencing the Canadian government on current and future sanctions.  Our lawyers have expertise in government relations and would be happy to review the possibility of lobbying government and, if required, to work with you to convince government to issue more targeted sanctions that would allow your business to continue unimpeded.

If we can be of help, please contact Michael Woods or Gordon LaFortune to discuss these matters further.


Michael Woods                                Gordon LaFortune

Woods, LaFortune LLP                   Woods, LaFortune LLP     

(613) 355-0382                                 (613) 424-3921


Canada’s Sanctions[2]

I. Sanctions under the Special Economic Measures Act

  • Dealing with Designated Persons: Canada has frozen the assets of over 700 “designated persons” and prohibited any person in Canada and any Canadian outside Canada from dealing with the designated persons or their assets including: facilitating dealing or entering into any transaction related to dealing with those individuals or their assets; providing any financial or related services concerning that dealing; making any goods, regardless of where they are located, available to any designated persons, or providing any financial or related services to or for the benefit of any designated person.
  • Dealings in Russian Sovereign Debt: Banks and Financial Institutions are prohibited from direct or indirect dealings in Russian Sovereign Debt and in dealing with the National Wealth Fund of the Russian Federation, the Central Bank of the Russian Federation, and the Ministry of Finance of the Russian Federation.
  • Prohibiting the Export of Certain Technology: Canadians in Canada or outside Canada are prohibited from exporting, selling, or supplying any good, wherever situated, or providing any technology, to Russia or to any person in Russia set out in the Restricted Goods and Technologies List.  The List includes electronic equipment, telecommunication equipment, information security equipment and software, optical sensors, cameras and lasers, certain navigation equipment, aircraft, and diesel engines.  The List prohibits the export of goods that could benefit the Russian military.
  • Russian Ships and Aircraft: Canadian airspace is closed to Russian aircraft.  Russian ships or any ship used, leased, or chartered, in whole or in part, by Russians or for the benefit of Russians may not dock in Canada or pass through Canadian waters.
  • Insurance on Russian Aircraft and Aviation and Aerospace Products: Canadians and Canadian companies are prohibited from providing any insurance, reinsurance and underwriting services for aircraft and aviation and aerospace products owned by, controlled by, registered to, chartered by, or operated by entities and individuals that are resident, incorporated in or domiciled in Russia.
  • Petroleum Exploration Goods: Canadians are prohibited from exporting, selling, supplying, or shipping specific goods to Russia or to any person in Russia for their use in offshore oil (depth greater than 500m), shale oil or Arctic oil exploration and production.  Canadians are also prohibited from providing any financial, technical, or other services related to the goods subject to this prohibition.
  • Importing Russian Petroleum Products: Canadians in Canada or outside Canada are prohibited from importing, purchasing, or acquiring petroleum products from Russia or from any person in Russia.
  • SWIFT Banking System: Canada, and other countries, have removed Russia from the SWIFT banking system, which will make it harder to pay Russians or Russian companies or to be paid by Russians or Russian companies.
  • Action that Promotes the Prohibited Activities: The Government has prohibited any activity that assists or promotes the prohibited activities.

Penalty for Violating the Sanctions

A breach of any of these sanctions is punishable by a fine of up to $25,000 and/or a term of imprisonment of up to 5 years.

Permits or Orders that Could Allow Business to Continue

In exceptional circumstances the Government could issue a permit to a Canadian or Canadian business affected by the sanction could apply to Government for a permit that would allow it to continue a “specified activity or transaction” that would otherwise be restricted or prohibited.  Thus, a Canadian or Canadian business holding the permit could continue to do business specified in the permit with specific Russians or Russia.

“Designated persons” can also apply to have their names from the list of “designated” Russians and Russian companies.  If granted, Canadians and Canadian companies could continue to deal with those Russian individuals and companies subject to other economic sanctions that could affect those dealings.

II. Sanctions under the Customs Tariff

Canada amended the Customs Tariff on March 2, 2022, so that most Russian goods that were in transit and land in Canada after March 2, 2022, would be subject to 35% customs duties.  Russian goods already subject to MFN duties that exceeded 35% would continue to be subject to the higher MFN duty rate.

Importers who request MFN treatment for any Russian goods in transit on or before March 2, 2022, must file completed B3-3 Forms.

Penalty for Violating the Sanctions

In addition to the requirement to pay the higher duty rates, any Canadian importer that intentionally or unintentionally imports Russian goods that have not been properly declared as to origin, value for duty, or tariff classification could be subject to penalties under the Administrative Monetary Penalty System.

Permits or Orders that Could Allow Business to Continue

Depending on the circumstances, the Government can issue an Order allowing specific Russian goods to be imported without having to pay the additional customs duties.

III. Sanctions Under the Export and Import Permits Act

Effective February 24, 2022, Canada stopped issuing permits for the export and brokering of controlled goods to Russia and cancelled all valid permits for export and brokering that were issued prior to that date.  These measures primarily affected the aerospace, technology, and mineral sectors, but could have broader implications.

Penalty for Violating the Sanctions

A Canadian who intentionally or unintentionally violates these provisions by shipping goods to Russia without an export permit could be subject to a fine of up to $25,000, or be imprisoned for up to 12 months, or both.  In addition, the Canadian could face penalties under the CBSA’s Administrative Monetary Penalty System.

Permits or Orders that Could Allow Business to Continue

In exceptional circumstances, the Government may issue permits related to specific end-uses such as medical supplies or humanitarian needs.


[1] Canada has also joined other countries in imposing sanctions on Belarus and on the Ukrainian provinces of Donetsk and Luhansk.  Canadian sanctions imposed on Belarus and Ukraine are not discussed in this note.

[2] This section provides a general description of the sanctions imposed by Canada, the potential penalties for violation of those sanctions, and the possible action that could be taken to allow business to continue without violating the sanctions.  For a detailed analysis of specific sanctions in the context of your business, please contact Gordon LaFortune or Michael Woods.