LexSage

Canada Imposes Unilateral Economic

Sanctions Against Nicaraguan Officials

Written by: Cyndee Todgham Cherniak

Date: July 1, 2019

On June 21, 2019, the Government of Canada announced that it was implementing/imposing economic sanctions against nine Nicaraguan officials in response to ongoing gross and systematic human rights violations by the Government of Nicaragua. The economic sanctions and trade restrictions were imposed under the Special Economic Measures Act.    Canada may impose unilateral economic sanctions udner the Special Economic Measures Act when gross and systematic human rights violations havebeen committed in a foreign state.  The sanctinos are not impsoed under Canada's Magnitsky law. Similar economic sanctions against Nicaragua were imposed by the United States.

On June 21, 2019, the Special Economic Measures (Nicaragua) Regulations were published in the Canada Gazette.  The economic sanctions include asset freezes and a prohibition of dealings with the following nine Nicaraguan officials:

• Gustavo Eduardo PORRAS Cortes
• Sonia CASTRO Gonzalez
• Orlando Jose CASTILLO Castillo
• Oscar Salvador MOJICA Obregon
• Rosario María MURILLO Zambrana
• Fidel Antonio MORENO Briones
• Francisco Javier DIAZ Madriz
• Nestor MONCADA Lau
• Laureano Facundo ORTEGA Murillo

These individuals hold senior positions and include the President of the National Assembly, the ministers of health and transportation, and the head of Nicargua’s telecommunications industry.

Before June 21, 2019, Canada had not imposed economic sanctions against Nicaragua.  As a result, it is possible that activities that were legal on June 20, 2019 are now illegal.  Canadian companies and individuals with dealings in Nicaragua should review their activities to determine if the activities are now prohibited. If a company or person has any concerns, they should seek a legal opinion or a ministerial authorization.  Canadian companies and persons should not ignore these new prohibitions.

Subject to some exceptions, the new prohibitions include the following:

1. Any person in Canada or any Canadian outside Canada is prohibited from dealing in any property, wherever situated, that is owned, held or controlled by a listed person or by a person acting on behalf of a listed person;

2. Any person in Canada or any Canadian outside Canada is prohibited from entering into or facilitating any transaction related to a dealing in any property, wherever situated, that is owned, held or controlled by a listed person or by a person acting on behalf of a listed person;

3. Any person in Canada or any Canadian outside Canada is prohibited from providing any financial or related services in respect of a dealing in any property, wherever situated, that is owned, held or controlled by a listed person or by a person acting on behalf of a listed person;

4. Any person in Canada or any Canadian outside Canada is prohibited from making available any goods, wherever situated, to a listed person or to a person acting on behalf of a listed person.

5. Any person in Canada or any Canadian outside Canada is prohibited from providing any financial or related services to or for the benefit of a listed person.

6. Any person in Canada or any Canadian outside Canada shall not knowingly do anything that causes, facilitates or assists in, or is intended to cause, facilitate or assist in, any activity that is prohibited.

The Special Economic Measures (Nicaragua) Regulations also impose a positive obligation to report activities with the listed individuals.  Section 7(1) of the regulations require every person in Canada (including financial institutions) and every Canadian outside Canada to disclose without delay to the Commissioner of the Royal Canadian Mounted Police or 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, held or controlled by or on behalf of a listed person; and

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

To the extent that Canadian companies do business with these individuals or Nicaraguan entities that may be connected with the the individuals, they may have to cease doing business with those persons.  Canadian companies and financial institutions should immediately review their customer/client databases and search for these names.  Condominum corporations should determine if any unit holders match the list of sanctioned names.  Investment advisors should determine if they have investment portfolios belonging to these idividuals (before liquidating their Canadian assets and transferring the money to them).

For more information about compliance with Canada’s economic sanctions against Nicaragua, please contact Cyndee Todgham Cherniak at 416-307-4168 or cyndee@lexsage.com.  For more information, please read other articles posted on the LexSage website.

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