First Step to Re-engagement: Canada Rolls Back Iranian Sanctions

In an abrupt reversal of the trend of increasing sanctions against Iran, which Canada has followed since 2011, the Government of Canada announced on February 5, 2016, that it would be implementing significantly less stringent restrictions against trade with, and investment in, Iran.

The announced amendments to the regulations that impose Canadian sanctions against Iran under the Special Economic Measures Act and the United Nations Act come on the heels of the January 16, 2016, confirmation by the International Atomic Energy Agency that Iran satisfied the commitments it made pursuant to the Joint Comprehensive Plan of Action (JCPA), a program intended to ensure that the Iranian nuclear program is not used for the development of nuclear weapons. While the five permanent members of the United Nations Security Council — China, France, Russia, the United Kingdom and the United States — agreed to ease their nuclear sanctions in consideration of Iran’s compliance with the JCPA, until recently Canada made no commitments to ease its existing sanctions regime.


Since Canada last tightened its sanctions regime against Iran in May 2013, Canada has had in place one of the world’s most all-encompassing set of trade restrictions, including a ban on exporting, selling, supplying or shipping goods to Iran, to a person in Iran, or for the purposes of a business carried on in Iran or operated from Iran. The import, purchase, shipment or transhipment of any goods exported, supplied or shipped from Iran was also prohibited, although certain exemptions were available. The provision or communication of technical data relating to liquefied natural gas, as well as certain other listed goods, was also prohibited, as was the provision of financial services.


Perhaps Canada’s most significant changes are its removal of its broad financial services prohibitions, as well as the prohibition on making investments in Iranian based entities. The ban on imports from Iran has also been lifted, and the restrictions regarding exportation, as well as the prohibition concerning the provision of technical data, now only apply to specific goods that are listed in Schedule 2 to the Special Economic Measures (Iran) Regulations.

Canada has also amended the Regulations Implementing the United Nations Resolutions on Iran, through which Canada implemented the resolutions adopted by the United Nations Security Council. While the revised regulations continue to impose restrictions on the sale, supply or transfer of certain military and dual-use goods, Canada added new prohibitions related to Iran’s nuclear program. For example, the amended regulations prohibit any person in Canada or any Canadian outside Canada from:

  1. Making available any property or providing any financial or related services related to uranium mining in Canada, or to the production or the use of nuclear materials and technologies listed in Information Circular INFCIRC/254/Rev.12/Part 1 (INFCIRC 254), in Canada, to Iran, to any person in Iran or to any person who is owned, held or controlled, directly or indirectly, by Iran or any person in Iran, or acting on behalf of or at the direction of Iran or any person in Iran, or
  2. Entering into or facilitating any transaction related to uranium mining in Canada, or to the production or the use of nuclear materials and technologies listed in INFCIRC 254 in Canada, with Iran, with any person in Iran or with any person who is owned, held or controlled, directly or indirectly, by Iran or any person in Iran, or acting on behalf of or at the direction of Iran or any person in Iran

In conjunction with these amendments, on February 5, 2016, Global Affairs Canada issued a new Notice to Exporters No. 196 – Exports of items listed on the Export Control List to Iran (Notice). The Notice explains that the government intended to maintain “tight controls on the export to Iran of goods and technology that are considered to be sensitive from a national and international security perspective”, and that applications for permits to export a wide range of such goods and technology to Iran “will normally be denied.”


Although the Government of Canada has lifted the general prohibitions against providing financial services to Iran and persons in Iran, a number of Iranian businesses and nationals remain designated under the amended regulations. Canadian financial institutions must continue complying with their screening and reporting obligations in respect of these designated lists and ensure that no financial or related services are provided to such persons. In addition, financing or otherwise facilitating a restricted transaction remains prohibited under the amended regulations. Accordingly, financial institutions must exercise due diligence to ensure that they are not directly or indirectly financing a restricted activity, such as a sale, supply or transfer of listed dual-use or military goods or a uranium-related transaction involving persons in Iran.


While trade between Canada and Iran is still restricted pursuant to the Special Economic Measures Act and the United Nations Act, the amendments announced on February 5, 2016, represent a significant change in Canadian-Iranian relations, as well as a significant opportunity for Canadians who now have the ability to trade with, conduct business in, and invest in Iran for the first time in years.

For further information about trade sanctions, please contact:

Greg Kanargelidis                   416-863-4306
Michael Laffin                         403-260-9692
Roy Millen                               604-631-4220

or any other member of our International Trade group.

For further information about any other aspect of this bulletin, please contact:

Dawn Jetten                            416-863-2956
Vladimir Shatiryan                  416-863-4154
Jacqueline Shinfield                416-863-3290

or any other member of our Financial Services Regulatory group.

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