Canada's sanctions law gains a new Part 2 requiring banks to report and remit profits earned on sanctioned foreign assets

Plain-language summary · AI-assisted · not legal advice

The Special Economic Measures Act has been restructured and expanded. The original sanctions provisions are now grouped under Part 1, while a brand-new Part 2 creates specific obligations for federally regulated financial institutions. Under Part 2, the Minister of Finance can require federal financial institutions to report foreign property they hold that is subject to a sanctions order, along with any profits earned on that property, and can then direct those institutions to pay those profits to the Receiver General. A new consultation requirement also means the Minister of Finance must be consulted before a sanctions order is made targeting certain systemically important foreign banks, foreign institutions operating in Canada, foreign payment service providers, central banks, or foreign stock exchanges and clearing systems. The Minister of Foreign Affairs retains responsibility for Part 1 enforcement, while the Minister of Finance is responsible for Part 2. A transitional provision limits retroactive application of Part 2 profit-remittance rules to profits derived from Russia-linked property as defined in the Special Economic Measures (Russia) Regulations.

Who this affects: federal financial institutions (banks and other OSFI-regulated entities) · foreign banks and payment service providers operating in Canada · businesses holding or transacting in sanctioned foreign assets · compliance and legal teams at Canadian financial institutions · federal ministers and regulators (Finance, Foreign Affairs, OSFI, CSIS, RCMP, FINTRAC)