- Type of Publication: Notice
- Date: May 29, 2013
This notice is directed to the attention of all banks, authorized foreign banks, trust and loan companies, cooperative credit societies, life insurance companies, property and casualty insurance companies and fraternal benefit societies (FRFIs).
On May 29, 2013 the Governor in Council brought into force, under the Special Economic Measures Act (SEMA), a further amendment to the Special Economic Measures (Iran) Regulations (“SEMA Iran Regulations”). The amendment will be published in Part II of the Canada Gazette in due course, but came into effect on May 29, the date on which it was registered.
The amendment expands the Canadian sanctions in force against the Islamic Republic of Iran, including the provision of financial services and financial transactions destined to or from Iran. The measures also prohibit imports from Iran and exports to Iran, and any investment in an entity in Iran. The amendment adds 82 newly designated entities and 30 newly designated individuals to the lists of Designated Entities and Individuals subject to an asset freeze and dealings prohibition.
OSFI draws the attention of FRFIs to the fact that Iranian banks and other financial institutions are included in the names added to the list of Designated Entities under the amendment. FRFIs should ensure that they have appropriate measures and controls in place to block non-exempted transactions with all Designated Entities and Individuals, including measures in their branches and subsidiaries located outside Canada, and that these measures are also applied against any branches and subsidiaries of Iranian banks or other financial institutions located outside Iran.
FRFIs should consult the consolidated text of the SEMA Iran Regulations as amended to determine specific compliance requirements.
OSFI notes that the SEMA Iran Regulations as amended continue to apply separately from, and in addition to, the Regulations Implementing United Nations Resolutions on Iran (RIUNRI).
Guidance from DFAIT on Exemptions
An exemption to most of the prohibitions has been introduced with respect to both communications- related goods and software (which is aimed at increasing the availability of consumer communication technologies that contribute to internet freedom), and goods used to purify water for civilian and public health purposes. Existing exemptions for activities that have as their purpose the safeguarding of human life, disaster relief, or the providing of medicine are maintained, and activities that have as their purpose the provision of medical supplies have been added to the exemptions.
FRFIs that process transactions which qualify for an exemption should ensure they take reasonable measures to obtain and record information that supports the exemptions.
DFAIT has advised OSFI that FRFIs are not under an obligation to undertake a transaction if they are not satisfied that it qualifies for an exemption. The onus for proving that a transaction qualifies for an exemption is on the originator of the transaction.
Searching, Freezing, Monitoring, Disclosure and Due Diligence Obligations
The SEMA Iran Regulations continue to impose searching, freezing, monitoring, disclosure and due diligence obligations on Canadian financial institutions.
Implementation of the SEMA Iran Regulations requires Canadian financial institutions to ensure they comply with the prohibitions on the provision of financial services; search their records on a continuing basis for the names of Designated Entities and Individuals; determine whether they are in possession or control of property of Designated Entities and Individuals; prevent activity with respect to such property and Designated Entities and Individuals and other prohibited activity; and disclose prescribed information to the Royal Canadian Mounted Police (RCMP) without delay, as noted below.
FRFIs should note that persons designated under the Regulations Implementing United Nations Resolutions on Iran (RIUNRI) do not include the names of Designated Persons under the SEMA Iran Regulations. In addition, OSFI will not issue a separate list of Designated Persons, nor monitor changes to the list of Designated Persons, nor issue reminders. Financial institutions should therefore ensure they have procedures in place to update their lists of Designated Persons and Individuals sanctioned under the SEMA Iran Regulations.
In addition, the prohibition on the provision of financial services in respect of goods (as prescribed) will require Canadian financial institutions to be duly diligent in ensuring that such financial services are not provided to persons who may be engaged in activities which involve dealings in such goods.
Searching and Monitoring Process
OSFI expects that FRFIs will continue to implement the necessary measures to search for the names of Designated Entities and Persons. As with other similar searching and disclosure requirements, the obligation to determine whether FRFIs are in possession or control of property of Designated Entities and Individuals 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.
Disclosure to Royal Canadian Mounted Police (RCMP)
If Canadian financial institutions have property in their possession or control that they have reason to believe is owned or controlled by a Designated Person, or they have information about a transaction or proposed transaction in respect of such property, they are required to disclose such information to the RCMP immediately. Information may be provided to the RCMP as follows:
Customs & Excise Branch Ottawa, ON
Fax : 613-993-2499
National Operations Centre Ottawa, ON
Fax : 613-952-7575
No Reporting to Financial Regulators
Please note that the SEMA Iran Regulations as amended do not require financial institutions to report to their financial regulators each month on the results of the continuous determination and reporting obligations. FRFIs should therefore not include information about the property of Designated Persons in their monthly OSFI-590 reports required under other regulations.
If any clarification is needed on the obligations imposed by the SEMA Iran Regulations, please contact:
Department of Foreign Affairs and International Trade
United Nations, Human Rights and Economic Law Division
125 Sussex Drive,
Fax: (613) 992-2467
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; and
- Trust Companies Association of Canada.