A trading house with operations in North America and Europe signs a distribution agreement with a counterparty it has screened carefully. Weeks later, Global Affairs Canada updates the applicable sanctions list. The counterparty's parent now appears. The agreement cannot proceed as signed. The immediate question is not whether a licence exists – it is which licence route applies, and whether the business qualifies to use it without a case-by-case application to Ottawa.
Canada administers its sanctions licensing regime through the Special Economic Measures Act ("SEMA") and related instruments, with Global Affairs Canada ("GAC") as the competent authority. Businesses working under Canadian sanctions must choose between a general permit (a standing authorisation covering defined categories of transactions without prior approval) and a specific permit (a case-by-case authorisation for transactions that fall outside any general permit). That choice determines your timeline, your compliance obligations, and your exposure if the transaction is later challenged.
This guide sets out the decision sequence, the cross-regime comparison with OFAC and OFSI, the common errors, and the point at which external counsel adds the most value. As of June 2026, the Canadian regime is fully in force and actively enforced.
Step 1 – Understand the governing authority and legal basis
GAC administers Canadian autonomous sanctions under SEMA, which empowers the Governor in Council to impose measures against foreign states, entities, and individuals. The relevant thematic regulations under SEMA set out the specific prohibitions and the permit conditions that can override them.
SEMA permits fall into two categories. A general permit is issued by the Minister of Foreign Affairs and published in the Canada Gazette. It authorises an entire class of transactions – for example, dealings necessary to wind down a pre-existing contract, or transactions related to certain humanitarian activities. A specific permit is a written authorisation issued to a named person for a named transaction. It requires a formal application and a waiting period that, in practice, can extend considerably.
The critical threshold issue is whether your proposed transaction falls within an existing general permit at all. Many businesses assume a general permit must exist for their category. That assumption is wrong. GAC issues general permits selectively. If none applies, a specific permit is the only route.
Canada also maintains export controls under the Export and Import Permits Act ("EIPA"), administered by ECJU's Canadian equivalent within GAC. For dual-use goods or technology, a separate export-permit analysis sits alongside – and is not satisfied by – a SEMA permit. Practitioners advising on Canadian sanctions must check both.
Step 2 – Map the transaction against the applicable general permits
Before assuming you need a specific permit, verify systematically whether a general permit covers your activity. General permits are published in the Canada Gazette and on the GAC website; they vary by the sanctions programme in question and are updated without a fixed schedule.
The review should cover three questions in sequence.
- Does the general permit apply to the relevant sanctions programme? General permits are programme-specific. A permit issued under one set of thematic regulations does not extend to a different programme, even where the prohibited conduct looks the same. Confirm the permit references the regulations that govern your counterparty or goods.
- Does the transaction fall within the permitted category? General permits define permitted activity by reference to transaction type, counterparty category, or purpose. A permit that covers the maintenance of accounts does not cover the disbursement of funds for new commercial activity.
- Are conditions attached, and can you meet them? General permits routinely impose record-keeping conditions, reporting obligations, and restrictions on the use of funds or goods. Failure to comply with conditions means the permit does not protect the transaction.
In our experience, the second question is where most firms err. They identify a general permit, confirm it applies to the programme, and proceed without reading the conditions carefully. A general permit that requires the transaction to be "solely for personal remittances" does not cover a commercial payment to the same category of recipient.
Step 3 – Assess eligibility for a specific permit
If no general permit covers the transaction, a specific permit is available under SEMA where GAC is satisfied that the proposed activity is consistent with the purpose of the relevant regulations and does not undermine the objectives of the measures.
There is no automatic right to a specific permit. GAC exercises discretion. The application must set out the identity of the parties, the nature of the transaction, the goods or services involved, the amounts, the purpose, and why the permit should be granted. Supporting documents – contracts, corporate structure charts, ownership verification, and end-use assurances – are expected.
Processing times are not guaranteed, and they are not short. Businesses that have submitted specific permit applications describe waiting periods that range from several weeks to several months depending on the programme and the complexity of the facts. Applicants must account for this when planning timelines for the underlying transaction.
One practical point that is often overlooked: if you are uncertain whether your transaction requires a permit at all, a written request to GAC for a legal interpretation is possible in principle, but it is not a structured fast-track and there is no binding ruling mechanism equivalent to an OFAC specific licence that forecloses enforcement risk once issued. The status of GAC's written responses requires careful handling, and in our view legal advice should precede any reliance on informal guidance.
How does the Canadian regime differ from OFAC and OFSI?
Canada, the United States, and the United Kingdom operate licensing regimes that share common objectives but diverge significantly in structure, scope, and timing – and those differences matter for any business that operates across North America and Europe.
Under OFAC, the distinction between a general licence (published in the Code of Federal Regulations or as a free-standing instrument) and a specific licence (an individual written authorisation) tracks closely to the Canadian model. The differences are in volume and speed. OFAC publishes a larger and more granular library of general licences, covering categories such as personal remittances, legal fees, and authorised transactions with blocked governments. Processing times for OFAC specific licences vary, but the agency publishes guidance on its processing practices.
Under OFSI in the United Kingdom, the licensing categories are set out in statute – the Sanctions and Anti-Money Laundering Act ("SAMLA") and the relevant thematic regulations define the heads under which a specific licence may be granted. OFSI operates a defined category system rather than a discretionary public-interest ground. That means the applicant must fit within one of the named licence categories; if none applies, the licence cannot be granted regardless of the merits of the case. OFSI has published guidance on its processing expectations, and practitioners advising clients with parallel OFAC and OFSI exposure must manage both timetables simultaneously.
The EU operates a different structure again. General authorisations under EU Council regulations are analogous to general licences, but they are embedded in the regulation itself or published as separate Council decisions. Specific authorisations are granted by competent authorities in each member state, which means that a business operating in multiple EU jurisdictions may face different procedural requirements and timelines for what is substantively the same transaction.
Where does this leave a business caught by Canadian sanctions with counterparties that are also active in US or EU sanctioned markets? The answer is that each regime applies independently. A valid SEMA permit does not insulate a transaction from OFAC or EU rules. Conversely, holding an OFAC specific licence does not satisfy GAC. In our cross-border practice, we routinely advise clients that a compliant transaction in one jurisdiction may be prohibited in another without a separate authorisation.
There is also a stricter-prohibition principle that runs across all three regimes: where two or more applicable regimes overlap, the more restrictive prohibition governs. A business that believes it has taken the permissive reading of one regime's rules must still satisfy the stricter regime's conditions before the transaction can proceed.
What are the risk flags that warrant immediate legal review?
Several fact patterns recur in matters where the initial permit assessment went wrong. Each warrants counsel's involvement before the application is submitted – or, better, before the transaction is even proposed.
- Layered ownership structures. If the sanctioned person holds less than a direct majority but reaches the relevant threshold through intermediate entities, the question is not just whether a permit is needed but whether the entity is itself subject to the relevant prohibitions. Resolving that prior question correctly shapes the permit application.
- Time-sensitive closing conditions. A transaction under a definitive agreement with a fixed closing date cannot wait for a specific permit whose timetable is uncertain. Counsel can assess whether a general permit offers a compliant pathway, structure the timing to preserve optionality, or advise on what representations to make to counterparties about timeline risk.
- Goods with dual-use characteristics. Where the goods or technology in question could qualify as controlled under the EIPA, the SEMA permit analysis and the export-permit analysis must be conducted in tandem. They are separate applications to separate parts of GAC and they do not satisfy each other.
- Cross-border payment legs. A Canadian-law SEMA permit does not authorise the bank that processes the payment in US dollars through the US clearing system to clear the transaction. US dollar payments clear through the United States. An OFAC general licence or specific licence will be needed separately.
- Humanitarian and food transactions. GAC and OFAC both issue specific authorisations for humanitarian activity, but the conditions differ. A humanitarian permit under SEMA that allows the transfer of goods does not automatically authorise the financial flows necessary to complete the transaction, which may require additional authorisations from financial institutions' own regulators.
If a transaction has already been flagged by a financial institution, or a filing has been refused, an early review can preserve options that narrow with time. Contact Calder & Vance at info@caldervance.com for a confidential assessment.
How Calder & Vance approaches a Canadian licence determination
In a recent matter, a mid-size manufacturing business supplying components to a distributor in a third market discovered, after a change in the applicable programme's list, that its distributor's holding company had been designated under SEMA. The business faced two issues simultaneously: whether a general permit authorised it to continue deliveries already in transit, and whether a specific permit could be obtained for the next contractual quarter. We reviewed the published general permits against the specific transaction, confirmed that a general permit covered the in-transit goods subject to a record-keeping condition, and prepared a specific permit application for the forward deliveries. The matter illustrated a point we raise consistently: the two questions – does a general permit exist, and what does it require – must always be answered before committing to the specific permit route.
Our approach to Canadian licence matters follows a defined sequence:
- Confirm the applicable SEMA programme and regulations.
- Identify and review all published general permits under that programme.
- Map the transaction against each general permit's conditions precisely.
- Where no general permit applies, assess whether the specific permit criteria are met.
- Prepare the application, supporting documents, and any ownership analysis needed.
- Identify and address any parallel OFAC, OFSI, or EU authorisation requirements.
- Design the record-keeping and compliance conditions for the duration of the permit.
We assess eligibility, prepare and submit the permit application, and manage GAC's queries throughout the process. Where a parallel US authorisation is needed, we co-ordinate with local counsel in the relevant jurisdiction to ensure both timetables are managed together.
A common myth in this area is that a Canadian-law lawyer can handle the OFAC side of a Canadian-origin transaction, or vice versa. In practice, OFAC applications follow their own procedural requirements, use their own terminology, and are assessed against OFAC's own licensing policy, which does not mirror GAC's. A practitioner without active OFAC practice is not well-placed to assess whether a Canadian general permit satisfies the OFAC general-licence conditions for the same activity. We manage both sides of that analysis.
Related practices
- Frozen Account Management – BIS/EAR – managing access to assets held under US export-control holds
- Specific vs General Licence: Cross-Border Guide – comparing the licence routes across OFAC, OFSI, EU, and Canada
- Specific vs General Licence: EU Guide – how EU general authorisations and specific authorisations work in practice