Ottawa tightens financial restrictions on transfers to Russia

In one of its final acts, the federal government has introduced new regulations aimed at slowing or halting financial transfers to Russia. Under the new rules, all bank and wire transfers — regardless of the amount — must undergo strict background checks, according to a notice from the Department of Finance.

“Anti-money laundering and anti-terrorist financing measures Russia has implemented are ineffective and insufficient,” stated the Regulatory Impact Analysis Statement.

Blacklock's Reporter says the finance minister concluded that allowing unrestricted transfers could threaten the integrity and reputation of Canada’s financial system.

The restrictions, enacted under the Proceeds Of Crime And Terrorist Financing Act, immediately apply to all electronic transfers involving Russia. With 100 Russian rubles worth approximately $1.75 Canadian, even the smallest transactions will be scrutinized.

The government cited concerns that Russia or foreign entities may be using financial channels to evade sanctions.

Banks, credit unions, and money transfer companies must now treat every transaction to or from Russia as high-risk.

The regulation requires financial institutions to verify the identities of all individuals or entities involved, record the source of funds, determine the transaction’s purpose, conduct due diligence to assess the risk of sanctions evasion, and demand proof of beneficial ownership.

The finance department did not disclose the current volume of financial transactions between Canada and Russia, which have been under sanctions since 2022 following Russia’s invasion of Ukraine. Census data indicates that more than 548,000 Canadians have Russian ancestry.

Despite imposing economic sanctions, cabinet acknowledged in a 2023 Inquiry Of Ministry that it had not expropriated any Russian assets in Canada.

The only Russian property currently in custody is a cargo plane that was grounded at Toronto’s Pearson International Airport shortly after the invasion. The government stated that steps toward its forfeiture “will be taken in due course.”

Cabinet has also announced the freezing of millions in Russian assets under the Special Economic Measures Regulations. The RCMP claims it has effectively frozen $135.7 million in Russian assets, but no further details have been provided.