On March 22, 2024, Global Affairs Canada (GAC) silently updated its page frequently asked Questions (FAQ) on Canadian sanctions. Over the past two years, the business law community has repeatedly asked GAC to provide more guidance on the sanctions laws imposed by Canada, particularly with regard to ambiguous provisions such as those relating to presumed ownership, the interpretation of which may vary or be surrounded by uncertainties. This lack of assistance, which exposes Canadian companies to risk and “over-compliance,” is glaring when compared to the much more comprehensive guidance provided by the United States Office of Foreign Assets Control and the Office of Financial Sanctions UK Implementation.

The four new sections added to the FAQ address the following questions:

• What happens when a person is appointed? The answer provides general information on restrictions on persons who have been sanctioned.
• the date on which a ban applies. The scenarios presented in this section illustrate that a business that entered into a contract with a sanctioned business before that business became subject to such sanctions may accept goods from that business that were paid for before the imposition of the sanctions, but will not be entitled to pay for goods supplied before the imposition of the sanctions if payment is due after the date the sanctions came into effect.
• Transactions with subsidiaries of designated entities. In 2023, the Canadian government introduced a broad and vague “deemed ownership” rule. In the new FAQs, AMC clarifies that the assets of a non-designated entity are owned or controlled by a designated person if the sanctioned entity is “known to exercise significant influence over them.” [l]‘strategic decision-making’ of the non-designated entity, regardless of the legal control of the sanctioned entity over the non-designated entity.
• Transactions with companies or third parties who in turn deal with designated persons. This section specifies that transactions with third parties of any nationality or located in any jurisdiction that facilitate a transaction with a designated person are prohibited. whether or not those third parties are subject to sanctions imposed by Canada.

The updated FAQ is not legally binding but provides guidance on AMC’s interpretation of sanctions. While it provides limited insight, it essentially confirms GAC’s broader interpretation of the provisions. In particular, GAC believes that the offence of aiding and abetting provisions target transactions with non-Canadian third parties who in turn do business with designated entities. However, significant ambiguities and questions remain, particularly with respect to the ownership deficit provisions. In the absence of additional guidance, it would be wise to proceed with caution with the sanctions provisions.