On Friday, Canadian regulators issued the following notice regarding amendments to the Special Economic Measures (Iran) Regulations:
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 February 5, 2016 the Governor in Council made a further amendment to the Special Economic Measures (Iran) Regulations (“SEMA Iran Regulations”) under the Special Economic Measures Act (SEMA). The amendment came into effect on February 5, the date on which it was registered and will be published in the Canada Gazette at a future date.
Among other changes, the amendment removes the broad prohibitions on providing or acquiring financial or other services to or from Iran and removes the prohibition on making investments in entities in Iran. The amendment also modifies the list of individuals and entities listed in Schedule 1and subject to an asset freeze and dealings prohibition. Further details on the amendment can be found on the Canadian Sanctions Related to Iran page on the Global Affairs Canada website.
FRFIs should ensure that they have appropriate measures and controls in place to block non-exempted transactions with all individuals and entities listed in Schedule 1, 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) which have also been amended.
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 in relation to individuals and entities listed in Schedule 1; search their records on a continuing basis for the names of listed individuals and entities; determine whether they are in possession or control of property of listed individuals or entities; prevent activity with respect to such property and listed individuals and entities and other prohibited activity; and disclose prescribed information to the Royal Canadian Mounted Police (RCMP) without delay, as noted below.
FRFIs should note that the list of persons designated under the Regulations Implementing United Nations Resolutions on Iran (RIUNRI) does not include the names of individuals and entities listed under the SEMA Iran Regulations. In addition, OSFI will not issue a separate list of individuals and entities, nor monitor changes to the list of individuals and entities, nor issue reminders. Financial institutions should therefore ensure they have procedures in place to update their lists of individuals and entities 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 listed individuals and entities. As with other similar searching and disclosure requirements, the obligation to determine whether FRFIs are in possession or control of property of listed individuals and entities is a continuing one. For example, at a minimum, it is our expectation that FRFIs be able to search their records for names of listed individuals and entities 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 listed individual or entity, 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:
- Federal Policing Criminal Operations Fax : 613-825-7030
- National Operations Centre (NOC) Ottawa, ON Fax : 613-993-0260
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 listed persons under the SEMA Iran Regulations 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:
Global Affairs Canada
United Nations, Human Rights and Economic Law Division
125 Sussex Drive, Ottawa, ON