Justice for Victims of Corrupt Foreign Officials Regulations

Document Properties

  • Type of Publication: Notice
  • Date:  November 3, 2017

This Notice is directed to the attention of all banks, authorized foreign banks, trust companies, loan companies, cooperative credit associations, cooperative retail associations, life insurance companies, property and casualty insurance companies and fraternal benefit societies (FRFIs).

On November 3, 2017 the Governor in Council enacted the Justice for Victims of Corrupt Foreign Officials Regulations under the Justice for Victims of Corrupt Foreign Officials Act (Sergei Magnitsky Law) (JVCFOA).

The following is a link to information provided by Global Affairs Canada.

http://www.international.gc.ca/sanctions/countries-pays/victims_corrupt-victimes_corrompus.aspx?lang=eng

The Regulations will be published in the Canada Gazette on a later date, but came into effect on the date they were registered.

In this Notice, “Regulations” refers to the Justice for Victims of Corrupt Foreign Officials Regulations.

Among other things, the Regulations impose a dealings prohibition on foreign nationals listed under Regulations made pursuant to the Act.  A foreign national whose name is listed in the Regulations is a person who is not a Canadian citizen or a permanent resident under the Immigration and Refugee Protection Act, and in respect of whom the Governor in Council is of the opinion has committed an act described below:

  1. is responsible for, or complicit in, extrajudicial killings, torture or other gross violations of internationally recognized human rights committed against individuals in any foreign state who seek
    1. to expose illegal activity carried out by foreign public officials, or
    2. to obtain, exercise, defend or promote internationally recognized human rights and freedoms, such as freedom of conscience, religion, thought, belief, opinion, expression, peaceful assembly and association, and the right to a fair trial and democratic elections;
  2. acts as an agent of or on behalf of a foreign state in a matter relating to an activity described in paragraph (a);
  3. in respect of a foreign national who is a foreign public official or an associate of such an official, is responsible for or complicit in ordering, controlling or otherwise directing acts of corruption — including bribery, the misappropriation of private or public assets for personal gain, the transfer of the proceeds of corruption to foreign states or any act of corruption related to expropriation, government contracts or the extraction of natural resources — which amount to acts of significant corruption when taking into consideration, among other things, their impact, the amounts involved, the foreign national’s influence or position of authority or the complicity of the government of the foreign state in question in the acts; or
  4. has materially assisted, sponsored, or provided financial, material or technological support for, or goods or services in support of, an activity described in paragraph (c).
The JVCFOA establishes that the Governor in Council may make orders or regulations with respect to the restrictions or prohibition of the following activities in relation to a foreign national:
  1. the dealing, directly or indirectly, by any person in Canada or Canadian outside Canada in any property, wherever situated, of the foreign national;
  2. the entering into or facilitating, directly or indirectly, by any person in Canada or Canadian outside Canada, of any financial transaction related to a dealing referred to in paragraph (a); and
  3. the provision by any person in Canada or Canadian outside Canada of financial services or any other services to, for the benefit of or on the direction or order of the foreign national;
  4. the acquisition by any person in Canada or Canadian outside Canada of financial services or any other services for the benefit of or on the direction or order of the foreign national; and
  5. the making available by any person in Canada or Canadian outside Canada of any property, wherever situated, to the foreign national or to a person acting on behalf of the foreign national.

Duty to Determine and Disclose

OSFI expects that FRFIs will implement the necessary measures to search for the names of designated persons and freeze assets subject to the Regulations. As with other searching and reporting requirements, the obligation to search for designated names is a continuing one. For example, at a minimum, it is our expectation that FRFIs be able to search their records for designated names at least on a weekly basis, and more frequently if need be. New clients’ names should be checked against the names of designated persons as part of, or as soon as reasonably possible after, the process of account opening or otherwise entering into a business relationship.

FRFIs that are subject to the PCMLTFA are required to obtain and record prescribed information on the persons who own or control, directly or indirectly, 25% or more of clients that are corporations and other entities. It is OSFI’s expectation that FRFIs will search these records to determine if they are dealing with a corporation or an entity that may be owned or controlled, directly or indirectly, by a designated person under the Regulations.

The JVCFOA stipulates that FRFIs must determine on a continuing basis whether they are in possession or control of property that they have reason to believe is the property of a foreign national who is subject to an order or regulation.  OSFI expects that FRFIs will implement the necessary measures to search for the names of listed foreign nationals. As with other searching and reporting requirements, the obligation to search for designated names is a continuing one. For example, at a minimum, it is OSFI’s expectation that FRFIs be able to search their records for listed names at least on a weekly basis, and more frequently if need be. New clients’ names should be checked against the names of designated persons as part of, or as soon as reasonably possible after, the process of account opening or otherwise entering into a business relationship.

FRFIs that are subject to the Proceeds of Crime (Money Laundering) and Terrorist Financing Act are required to obtain and record prescribed information on the persons who own or control, directly or indirectly, 25% or more of clients that are corporations and other entities. It is OSFI’s expectation that FRFIs will search these records to determine if they are dealing with a corporation or an entity that may be owned or controlled, directly or indirectly, by a designated person under the Regulations.

If Canadian financial institutions have property in their possession or control that they have reason to believe is owned, held or controlled by or on behalf of a foreign national, or they have information about a transaction or proposed transaction in respect of property covered by the Regulations, they are required to report such information to the Royal Canadian Mounted Police or the Canadian Security Intelligence Service without delay. Information may be provided as follows:

RCMP
Anti-terrorist Financing Team
Unclassified fax: 613-825-7030

or

CSIS
Financing Unit
Unclassified Fax : 613-369-2303

Reporting to Financial Regulators

The JVCFOA requires FRFIs and a number of provincially regulated institutions to report monthly to their principal regulatory agency or body whether or not they are in possession or control of any property that they have reason to believe is the property of a foreign national subject to an order or regulation.  Where they are in possession or control of such applicable, these institutions must report the number of persons or dealings involved and the total value of the property.

Where to go for more information

For further information please see the Canadian economic sanctions website:

http://www.international.gc.ca/sanctions/index.aspx?lang=eng

This Notice is also being sent to the following for their information:

  • Provincial Regulators and Supervisors;
  • Canadian Association of Direct Response Insurers;
  • Canadian Bankers Association;
  • Canadian Fraternal Association;
  • Canadian Life and Health Insurance Association;
  • Canadian Securities Administrators;
  • Credit Union Central of Canada;
  • Insurance Bureau of Canada;
  • Investment Industry Regulatory Organization of Canada;
  • Trust Companies Association of Canada.