Contributing Lawyers

Canada

Cyndee Todgham Cherniak

United States

Susan Kohn Ross

Australia

Andrew Hudson



Summary of Canada's New Trade and Economic Sanctions Against Libya

On February 27, 2011, Canada's Prime Minister Harper announced that new regulations have been promulgated to establish new trade restrictions and economic sanctions against the Libyan regime and new obligations on Canadian businesses. When one says "Libyan regime", one has to include "government of Libya and its institutions".

Here is the unofficial link to the new Canadian regulations against Libya - http://www.international.gc.ca/sanctions/libya-libye_regs.aspx

On February 26, 2011, the UN Security Council unanimusly adopted Resolution 1970 to impose sanctions on Libya. Canada's trade restrictions and economic sanctions are more severe than those imposed by Resolution 1970.

New Sanctions

The new trade restrictions and economic sanctions are effective February 27, 2011 and include:

  1. Paragraph 3: Persons in Canada and Canadians outside Canada SHALL NOT knowingly export, sell, supply or ship arms and related materials to Libya or any person in Libya. The term "arms and related materials" means means any type of weapon, ammunition, military vehicle or military or paramilitary equipment, and includes their spare parts. This prohibition includes arms and related materials located outside Canada.
  2. Paragraph 4(1): Owners and masters of Canadian vessels SHALL NOT knowingly carry, cause to be carried or permit to be carried arms and related materials destined for Libya or to any person in Libya. The term "arms and related materials" means means any type of weapon, ammunition, military vehicle or military or paramilitary equipment, and includes their spare parts. This prohibition includes arms and related materials located outside Canada.
  3. Paragraph 4(2): Owners and masters of Canadian vessels SHALL NOT knowingly carry, cause to be carried or permit to be carried arms and related materials that are exported, sold, supplied or shipped from Libya after February 27, 2011. The term "arms and related materials" means means any type of weapon, ammunition, military vehicle or military or paramilitary equipment, and includes their spare parts. This prohibition includes arms and related materials that are not originating in Libya.
  4. Paragraph 4(1): Owners and operators of Canadian aircraft SHALL NOT knowingly carry, cause to be carried or permit to be carried arms and related materials destined for Libya or to any person in Libya. The term "arms and related materials" means means any type of weapon, ammunition, military vehicle or military or paramilitary equipment, and includes their spare parts. This prohibition includes arms and related materials located outside Canada.
  5. Paragraph 4(2): Owners and operators of Canadian aircraft SHALL NOT knowingly carry, cause to be carried or permit to be carried arms and related materials that are exported, sold, supplied or shipped from Libya after February 27, 2011. The term "arms and related materials" means means any type of weapon, ammunition, military vehicle or military or paramilitary equipment, and includes their spare parts. This prohibition includes arms and related materials that are not originating in Libya.
  6. Paragraph 5: Persons in Canada and Canadians outside Canada SHALL NOT knowingly provide or transfer, to any person in Libya, technical assistance, financial assistance or other assistance related to military activities. This includes the recruitment or provision of armed mercenary personnel, or the provision, manufacture, maintenance or use of arms and related material.
  7. Paragraph 6: Persons in Canada and Canadians outside Canada SHALL NOT knowingly import or procure arms and related material, wherever situated, from any person in Libya or any national of Libya.
  8. Paragraph 7(2)(a): Persons in Canada and Canadians outside Canada SHALL NOT knowingly deal, directly or indirectly, in any property in Canada as of February 26, 2011 or at any time after that date, that is owned or controlled by a designated person, by a person acting on behalf of, or at the direction of, a designated person or by a person owned or controlled by a designated person.
  9. Paragraph 7(2)(b): Persons in Canada and Canadians outside Canada SHALL NOT knowingly enter into or facilitate, directly or indirectly, any financial transaction related to a dealing referred to in paragraph 7(2)(a).
  10. Paragraph 7(2)(c): Persons in Canada and Canadians outside Canada SHALL NOT knowingly provide any financial or other related service in respect of the property referred to in paragraph 7(2)(a).
  11. Paragraph 7(2)(d): Persons in Canada and Canadians outside Canada SHALL NOT knowingly make any property or any financial or other related service available to a designated person, to a person acting on behalf of, or at the direction of, a designated person or to a person owned or controlled by a designated person.
  12. Paragraph 7(2)(e): Persons in Canada and Canadians outside Canada SHALL NOT knowingly make property or any financial or other related service available for the benefit of any person referred to in paragraph 7(2)(d).
  13. Paragraph 8(2)(a): Persons in Canada and Canadians outside Canada SHALL NOT deal in any property, wherever situated, held by or on behalf of a designated person.
  14. Paragraph 8(2)(b): Persons in Canada and Canadians outside Canada SHALL NOT enter into or facilitate any transaction related to a dealing referred to in paragraph 8(2)(a).
  15. Paragraph 8(2)(c): Persons in Canada and Canadians outside Canada SHALL NOT provide any financial or other related service in respect of a dealing referred to in paragraph 8(2)(a).
  16. Paragraph 8(2)(d): Persons in Canada and Canadians outside Canada SHALL NOT make any goods, wherever situated, available to a designated person.
  17. Paragraph 8(2)(d): Persons in Canada and Canadians outside Canada SHALL NOT provide any financial or financial-related service to or for the benefit of a designated person.
  18. Paragraph 9(a): Persons in Canada and Canadians outside Canada SHALL NOT knowingly do anything that causes, assists or promotes or is intended to cause, assist or promote any act or thing prohibited by paragraphs 1 to 18 above.
  19. Paragraph 9(a): Persons in Canada and Canadians outside Canada SHALL NOT knowingly do anything that causes, assists or promotes or is intended to cause, assist or promote any act or thing prohibited by paragraphs 13-17 above.

Note: The term "designated person" covers persons covered by UN Security Council Resolution 1970 and (a) any political subdivisions of Libya; and (b) the Government of Libya, and any of its departments, institutions or agencies, including the Central Bank of Libya or the government of a political subdivision of Libya.

Note: The above prohibitions in paragraphs 1-7 do not apply with respect to

(a)  supplies of non-lethal military equipment intended solely for humanitarian or protective use, and related technical assistance and training;

(b) supplies of protective clothing and equipment, including flak jackets and military helmets, temporarily exported to Libya by United Nations personnel, representatives of the media and humanitarian and development works and associated personnel, for their personal use only; or

(c) other sales or supplies of arms and related material, or provision of assistance or personnel, as approved in advance by the Committee of the Security Council.

Note: the Canadian government may issue a certificate overriding any of the above prohibitions after careful consideration of a filed application.

Obligations

New obligations on Canadian persons include:

  1. Ongoing Due Diligence: Each of the following entities shall determine on a continuing basis whether it is in possession or control of property owned or controlled by or on behalf of a designated person:

(a) authorized foreign banks, as defined in section 2 of the Bank Act, in respect of their business in Canada or banks to which that Act applies;

(b)  cooperative credit societies, savings and credit unions and caisses populaires regulated by a provincial Act and associations regulated by the Cooperative Credit Associations Act;

(c) foreign companies, as defined in subsection 2(1) of the Insurance Companies Act, in respect of their insurance business in Canada;

(d) companies, provincial companies and societies, as those terms are defined in subsection 2(1) of the Insurance Companies Act;

(e)  fraternal benefit societies regulated by a provincial Act in respect of their insurance activities and insurance companies and other entities engaged in the business of insuring risks that are regulated by a provincial Act;

(f) companies to which the Trust and Loan Companies Act applies;

(g) trust companies regulated by a provincial Act;

(h) loan companies regulated by a provincial Act;

(i) entities that engage in any activity described in paragraph 5(h) of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act if the activity involves the opening of an account for a client; and

(j)  entities authorized under provincial legislation to engage in the business of dealing in securities or to provide portfolio management or investment counselling services.

2. Reporting: Every person in Canada and every Canadian outside Canada shall disclose without delay to the Commissioner of the Royal Canadian Mounted Police and to the Director of the Canadian Security Intelligence Service:

(a) the existence of property in their possession or control that they have reason to believe is owned or controlled by a designated person, by a person acting on behalf of, or at the direction of, a designated person or by a person owned or controlled by a designated person; and

(b) information about a transaction or proposed transaction in respect of property referred to in paragraph (a)‍.

For more information, please contact Cyndee Todgham Cherniak at 4160-307-4168.

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