Sanctions Risk Update For 2026

Canadian companies should prepare for a more complex and faster-evolving sanctions environment in 2026. As geopolitical tensions deepen — particularly involving Russia, parts of Latin America, the Middle East, and regions of Africa — Canada and its key allies are expanding and refining sanctions measures in ways that create new operational, financial, legal, and reputational risks for businesses with international exposure.

What to Watch For

• Russia: Canadian sanctions remain firmly in place. Companies operating across jurisdictions will need to navigate growing divergence between Canada's measures and those of other NATO partners.
• Increased Exposure Through Global Partners and Intermediaries: Canadian regulators are placing heightened emphasis on indirect dealings and facilitation. Canadian involvement in a transaction that touches a sanctioned party — even through a non-Canadian intermediary — can trigger liability. This is especially relevant in jurisdictions where state-linked or high-risk entities are active participants.
• Financial and Insurance Constraints: Banks, lenders, insurers, and other financial institutions are adopting more conservative risk appetites. Even where Canadian sanctions do not prohibit a transaction, financial partners may decline to support activities in: Russia-adjacent markets; high-risk parts of Latin America; and jurisdictions with sanctioned political actors or state-owned enterprises. This may affect financing and lending arrangements, payments, and insurance coverage.
• TCO Designations: Canada is expected to continue designating transnational criminal organizations as terrorist entities under the Criminal Code — both to advance domestic security objectives and, in part, to respond to tariff threats and rising US pressure for stronger border security.
• Sanctions Risk in Central and South America: Canadian businesses operating in these regions should prepare for a significantly more complex regulatory and operational environment if cartels remain — or become newly — designated as terrorist entities under anti-terrorism laws. The implications will extend far beyond compliance departments and will meaningfully affect supply chains, banking relationships, vendor selection, and overall risk tolerance for operating in the region.
• Venezuela: While Canada has not issued new sanctions following the US capture of Maduro, it has reaffirmed non-recognition of his regime, support for a peaceful Venezuelan-led transition, and close monitoring of developments, signaling that additional sanctions may follow if circumstances evolve.
• Sanctions Evasion Enforcement: Expect heightened enforcement targeting intermediary jurisdictions, front/shell companies, and complex trade and payment routes. Authorities are also expected to strengthen coordination among GAC, FINTRAC, RCMP, and CBSA, and to step up proactive inquiries directed at financial institutions, exporters and importers, and other professional gatekeepers.
• Heightened Geopolitical Risk in Key Markets: Sanctions risk is rising in several regions where Canadian companies maintain significant operations or supply chains, including:
  • Latin America – where shifting political dynamics and potential terrorist designations may affect counterparties and logistics;
  • Africa – where sanctioned political elites and state-linked enterprises intersect with commercial activity; and
  • Russia and Central Asia – where strict prohibitions and counterparty risks remain high.
• Expect continued challenges arising from Canada's broad deemed-ownership rules, which capture entities that are not themselves listed but are deemed sanctioned because they are owned or controlled — directly or indirectly — by designated persons. Canada's approach remains significantly wider than that of many allies, often extending to situations where ownership is well below majority thresholds or where informal influence, direction, or control can be inferred. As a result, companies face substantial difficulty in determining whether a counterparty is "deemed listed," particularly when dealing with opaque corporate structures, offshore holding companies, or incomplete beneficial-ownership information.
• Businesses should anticipate heightened compliance expectations and ensure they can trace ownership and control through multiple layers of corporate structuring to avoid inadvertent dealings with deemed-listed entities.

What This Means for Your Business

Canadian companies should strengthen their sanctions-readiness by focusing on five core areas:

• Third-party and Supply-chain Risk: Reassess distributors, agents, service providers, and suppliers, with enhanced beneficial-ownership screening and controls to detect indirect or obscured exposure.
• Stronger Screening and Evasion Safeguards: Update sanctions-screening tools to capture entity, vessel, and corporate-structure risks; expand checks to include affiliates, routing jurisdictions, re-export pathways, and require end-use/end-user attestations for sensitive goods.
• Governance and Internal Readiness: Ensure legal, finance, compliance, and corporate-services teams are trained to identify red flags and escalate concerns; maintain executive and board-level oversight of sanctions and geopolitical risk.
• Documentation and Auditability: Maintain clear decision memos and evidence files for higher-risk transactions, including approvals, denials, and off-boarding decisions.
• Monitoring and Adaptability: Track geopolitical and regulatory developments across key regions and be prepared to adjust controls quickly as Canada, the US, the UK, and the EU continue to diverge in policy and listings.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.