A trading house with long-standing supply agreements in a newly sanctioned market receives an urgent message from its Canadian subsidiary: the counterparty's bank accounts are blocked, payment rails have seized, and existing contracts are mid-performance. The subsidiary's counsel asks whether any authorisation exists to complete or exit the arrangements without triggering further liability. The answer lies in Canada's wind-down authorisation regime – and the clock starts immediately.
Wind-down authorisations under Canada allow persons subject to the Special Economic Measures Act ("SEMA") and the measures administered by Global Affairs Canada ("GAC") to complete or terminate pre-existing transactions following the imposition of new sanctions, subject to a defined authorisation procedure and strict conditions. As of June 2026, the authorisation is time-limited, purpose-specific, and requires proactive engagement with GAC before prohibited transactions are executed.
This guide sets out the governing regime, the step-by-step procedure, the cross-border dimensions a Canadian business must consider alongside GAC requirements, the most common errors, and the indicators that make specialist counsel necessary from the outset.
What is a wind-down authorisation and who needs one?
A wind-down authorisation is a time-limited permission granted by GAC under SEMA that allows a person to complete, exit, or settle a contract or arrangement that was lawful when made but became prohibited by the introduction of new sanctions measures. Without one, continuing to perform – even to close out a position – risks constituting a breach of the sanctions prohibitions themselves.
The need arises across a wide range of commercial relationships. Consider a manufacturer that shipped equipment under a long-term service agreement, a bank holding collateral under a facility, or a freight forwarder mid-transit when a designation is published. Each faces the same structural problem: the transaction began lawfully, the designation changed the legal position, and a residual obligation remains. The authorisation is the legal bridge between those two states.
In our cross-border practice, we see the need arise most acutely for businesses that operate simultaneously across multiple jurisdictions. A Canadian entity may need a GAC wind-down authorisation while its UK affiliate needs an OFSI licence and its EU subsidiary needs a Council-regulation derogation. The three instruments are not interchangeable. Each must be obtained separately, from the respective authority, on its own terms.
Who is caught? Any Canadian person or entity – including branches and subsidiaries operating in Canada – that holds a pre-existing obligation, an in-progress shipment, or a financial position affected by a SEMA measure requires the authorisation before it takes any step to complete or unwind that arrangement. GAC's position is that the prohibition bites from the moment the measure takes effect, not from the moment the business becomes aware of it.
Step 1 – Identify the triggering measure and map the affected positions
The first and most operationally demanding step is to identify precisely which SEMA measure has been introduced, when it came into force, and which of the business's existing positions fall within its scope. This is not a screening exercise in the conventional sense: it requires a legal reading of the measure alongside an inventory of every open contract, payment obligation, financial instrument, and in-transit shipment that touches the designated person or jurisdiction.
Begin with the GAC Consolidated Canadian Autonomous Sanctions List. That list is the primary reference for designated persons and entities. Then read the relevant SEMA regulations – identifying the specific prohibitions engaged and any existing general permits or exceptions already in force. Many businesses overlook the possibility that a general permit already covers their situation, making an individual authorisation unnecessary. Confirm the point before filing.
Map every affected position in writing. For each position, record: the nature of the obligation, the counterparty, the value, the governing law of the contract, the steps already taken, and the steps that remain. This inventory is the foundation of the authorisation request. GAC reviewers need to understand the full commercial picture. An incomplete picture produces a delayed or refused authorisation.
One practical discipline we recommend: date-stamp the inventory to the moment of the measure's coming into force, not the date of discovery. GAC's assessment of whether steps were taken before or after the prohibition attaches turns on that date. Any ambiguity about what was done before and what after will complicate the review.
Step 2 – Assess eligibility and select the authorisation route
Once positions are mapped, the next step is to determine whether each qualifies for a wind-down authorisation and, if so, which route applies. Under the Canadian regime, SEMA provides the statutory basis for authorisations, and GAC is the competent authority that both reviews and issues them. There is no single prescribed form; applications are submitted in writing to GAC's Sanctions and Restricted Trading Relations division, setting out the factual basis, the legal analysis, and the proposed terms.
Eligibility turns on three core questions. First, was the contract or arrangement entered into before the sanctions measure came into force? If the obligation post-dates the designation, a wind-down authorisation does not apply. Second, is the proposed activity genuinely a completion or termination – not a continuation of the underlying commercial relationship? Authorisations permit exit, not extension. Third, is the counterparty a designated person, or is the situation a jurisdiction-wide measure? Both can give rise to authorisation needs, but the factual basis of the request differs.
Consider also whether a general permit – a standing authorisation that permits a defined category of transactions without a separate application – already addresses the position. Canada has issued general permits in the context of certain humanitarian and diplomatic activities. Review the current general permit register before submitting an individual authorisation request.
The position above covers the standard case. Your facts – the counterparty, the goods, the route, the financial instrument, and the precise wording of the SEMA measure in play – change the analysis materially. For a preliminary eligibility assessment, contact Calder & Vance at info@caldervance.com.
Step 3 – Prepare and submit the authorisation request to GAC
A well-prepared authorisation request to GAC sets out the facts clearly, anticipates the regulator's likely concerns, and proposes conditions the applicant is prepared to accept. In our experience, requests that read as transparent and operationally precise move faster than those that describe the situation at a high level of abstraction.
The core elements of a request are: a factual summary of the pre-existing arrangement; a legal analysis confirming that it predates the measure; a description of every step that remains to be taken and why it is necessary to exit the position; the proposed timeline; the identities and roles of all parties involved; and any proposed reporting or monitoring conditions the applicant can offer to address GAC's oversight concerns.
On timeline: GAC does not publish a fixed processing period. In our practice, straightforward requests supported by clear documentation tend to receive responses within a matter of weeks; complex multi-party arrangements can take longer. The absence of a statutory deadline on GAC's side means there is no mechanism to compel speed. This is one reason why filing early – ideally within days of the triggering measure – is essential. Do not wait for the filing to be complete before alerting GAC: an early written notification that a request is forthcoming demonstrates good faith and can be relevant to any subsequent enforcement assessment.
Keep every communication with GAC in writing. Record the date, the channel, and the substance of any oral exchange. If GAC raises queries, respond promptly and fully. Partial responses slow the process. A reviewer who cannot assess the full picture cannot authorise anything.
How does Canada compare to OFAC, OFSI, and the EU on wind-down authorisations?
Canada's wind-down authorisation regime operates on a case-by-case basis administered by GAC, broadly comparable in structure to OFAC's specific-licence process in the United States and OFSI's licensing regime in the United Kingdom. But there are significant differences in procedure, timeline, and legal basis that matter for businesses operating across regimes simultaneously.
Under OFAC, a specific licence (a case-by-case authorisation to conduct an otherwise prohibited transaction) is required for most wind-down activity not already covered by a general licence. OFAC administers a formal licensing queue with published average processing times. The US regime also has a broader network of general licences covering common wind-down scenarios – including certain categories of pre-existing debt repayment and contract termination – that can permit activity without an individual filing. Canada's general permit coverage is narrower. Businesses that assume a general permit or general licence in one regime automatically corresponds to an equivalent in Canada are regularly wrong.
Under OFSI, the licensing authority issues written licences under the relevant thematic sanctions regulations made under the Sanctions and Anti-Money Laundering Act. OFSI has published licensing grounds that include a ground specifically covering the payment of pre-existing contractual debts to a designated person. The UK regime also requires that applicants demonstrate that the proposed steps fall within a recognised ground; GAC's approach is comparatively less prescriptive in how it frames the statutory gateway, but more demanding in the factual and documentary evidence it expects.
Under EU Council regulations, wind-down activity is addressed through derogations in the regulation itself, administered by the relevant national competent authority of each member state. Authorisation from the French competent authority, for example, does not bind the German authority. A business with entities in multiple member states may need concurrent derogation requests across several authorities, each applying the same regulation but with their own procedural expectations. Businesses used to the EU's built-in derogation structure sometimes find Canada's more open-textured approach less predictable.
The practical lesson is this: where a cross-border group needs wind-down relief in several jurisdictions simultaneously, each application must be managed as a separate matter. The narratives must be consistent, but the legal analysis, the format, and the timing must each match the target authority's expectations. We regularly advise groups on co-ordinating concurrent applications to ensure that concessions or conditions accepted in one jurisdiction do not create compliance problems in another.
If a transaction has already been flagged by GAC or another authority, 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 discussion.
Step 4 – Implement the authorised wind-down and maintain documentary compliance
Once GAC issues the authorisation, the authorised steps must be taken precisely in accordance with its terms. The authorisation is not an open-ended permission. It will specify the permitted activities, the counterparties, the timeframe, and frequently the conditions – such as reporting obligations, restricted payment routes, or prohibitions on new contractual commitments.
Assign a named compliance co-ordinator to manage implementation. That person's role is to ensure that every step taken maps to the authorisation's terms, that nothing is done that the authorisation does not expressly cover, and that any required reports are submitted on time. GAC may require periodic reports on the progress of the wind-down, confirmation when the position has been fully exited, and documentation of the final settlement or termination.
Record-keeping is non-negotiable. Retain all contracts, correspondence, payment records, shipping documentation, and the authorisation itself in a dedicated compliance file. Under SEMA, penalties for violations include both civil and criminal consequences. If a question arises later about whether the wind-down was conducted within the authorisation's terms, that file is the only defence. In our practice, the clients most exposed to post-authorisation scrutiny are those that implemented the wind-down without a disciplined record-keeping structure and subsequently could not reconstruct the sequence of steps.
Pay particular attention to the end-date. If the wind-down is not complete when the authorisation expires, you must either cease all activity or seek an extension before the deadline. Continuing activity beyond an expired authorisation is itself a sanctions violation, regardless of whether the original authorisation was properly obtained.
Risk flags and when to involve compliance counsel
Certain patterns consistently increase the risk that a wind-down will go wrong – either triggering GAC scrutiny, resulting in enforcement action, or creating a compliance failure in a parallel jurisdiction. Recognising them early is the most effective control.
The first is speed pressure. When commercial counterparties or internal stakeholders push for rapid completion of a wind-down, the temptation is to take steps before the authorisation is in hand. That is invariably wrong. Taking an authorised step before the authorisation issues converts an orderly exit into a potential violation. GAC's retroactive validation of steps already taken is available in some circumstances, but it is neither guaranteed nor rapid.
The second is ownership uncertainty. Wind-down authorisations are granted for specific counterparties. If the ownership structure of the counterparty is unclear – for example, if there are layers of intermediate holding companies, nominees, or unverified beneficial owners – the authorisation granted may not actually cover the legal entity that holds the contractual right. Ownership mapping before the request is filed prevents this.
The third is currency and payment routing. Even where a wind-down is authorised, the payment rails used to settle must not themselves be prohibited. This is particularly relevant where the settlement flows through a bank in a third jurisdiction subject to its own measures. A step that is authorised under Canadian law may still be problematic if it passes through a US correspondent bank and triggers OFAC's rules, or through an EU institution subject to the Council regulation. The authorisation from GAC does not provide cover in those regimes.
The fourth is new-transaction risk. The period of a wind-down creates opportunity for commercial pressure from the counterparty to enter new arrangements – on the logic that "we're already engaged." Authorisations do not permit new transactions. Any new commitment, however described, outside the scope of the pre-existing arrangement is a fresh prohibition, not a continuation of the permitted wind-down.
The fifth is the myth that obtaining a wind-down authorisation resolves the compliance question entirely. In our experience, this is the most common source of later difficulty. Authorisation addresses the primary prohibition, but it does not address anti-money-laundering obligations, anti-corruption requirements, applicable export controls, or the compliance rules of the business's banking partners. All of these continue to apply in parallel.
Related practices
- Frozen account management under BIS and EAR – managing export-control holds and licence requirements for blocked accounts
- Wind-down authorisations under Canada: advanced issues – ownership mapping, multi-party arrangements, and post-authorisation reporting
- Cross-border wind-down authorisations – co-ordinating concurrent relief across OFAC, OFSI, EU, and Canada