Sanctioned party list screening in SAP GTS

Governance, Risk and Compliance (GRC) automate controls to facilitate compliance with financial, environmental, health and safety and trade regulations, enforce internal controls, increase the efficiency of audits, identify risks and employ proper governance procedures to keep all these activities up to date and effective

A sanctioned party list contains a list of persons and companies with whom trade is prohibited by law. These boycott lists are issued by government agencies and can be obtained from data providers. All traders must comply with these lists.

The Sanctioned Party List (SPL) Screening service in SAP GRC Global Trade Services (SAP GRC GTS) lets you check business partners’addresses (such as the consignee) automatically against the sanctioned party lists before goods are exported. It is a system-independent solution that performs and logs the SPL check and is fully integrated into the complete business process.

 

Master Data

Master data including sanctioned party lists, business partners and comparison. You can also monitor lists that are due to expire soon and that can be archived

 

SPL Screening for Logistics

 

Sanctioned party list
A list of individuals and companies that have been formally denied export privileges or sanctioned by the US Government. It includes the US Commerce Department Denied Persons List, US Treasury Department Specially Designated Nationals List, US State Department Statutory Debarred Parties, and other parties subject to US Government trade sanctions.Under US ITAR regulations, person or firm ineligible to participate in transactions involving ITAR-controlled products and technology (military ruggedized products, TEMPEST, and wargaming software). Names of Debarred Parties are published by the US State Department and are included in the Company’s Denied Parties List (DPL). Debarred Parties may receive US Department of Commerce-controlled products and services.

With respect to US export regulations, a person or firm that has been formally denied export privileges by the US Commerce Department. The names and addresses of Denied Parties are published by the Commerce Department in the Denied Persons List and are listed in the Company’s Restricted Parties List (RPL).

Denied Persons List
A list, referenced in Supplement No. 2 to Part 764 of the US EAR, of specific persons that have been denied export privileges, in whole or in part. The full text of each order denying export privileges is published in the US Federal Register. Formerly known as the Table of Denial Orders (TDO).

 

SPL screening

–          SPL Screening while initiating the business with customer

–          SPL Screening when business partner change the address

–          SPL Screening when document partner change the address

–          Periodic check on business partners

–          Periodic check when document partner changes address

–          Simulated SPL screening of Business partners

–          Simulated SPL screening of document partners

–          Releasing blocked Business partners

–          Releasing blocked Documents

–          Monitoring Sanctioned party lists’

–          Monitoring positive / negative lists

–          Monitoring Blocked business partners

–          Monitoring Blocked documents

–          Audit trail

 

Embargo
As defined by the United States, a country with which the US will not trade. It is US policy to deny license applications for exports and re-exports to these countries, with few exceptions. US License Exceptions cannot be used for deliveries to these countries, with few exceptions. The Embargoed Countries are:

Cuba Iran Myanmar Sudan

 

Antiboycott Laws/Regulations
The laws/regulations of the US and other countries which forbid compliance with unsanctioned economic boycotts, and which may require reporting to national governments requests for boycott-related certifications or statements.

What is Antiboycott Screening?

An “economic boycott” is a program under which a country (or group of countries) refuses to do business with another country, its companies, or citizens in an attempt to cause economic damage. Under U.S. law, an “unsanctioned economic boycott” is a boycott against a country friendly to the United States.

“Boycott-related requests” are requests to comply with a boycott, or to furnish information which will be used in support of a boycott. “Boycott-related requests” may be formal or informal, oral or written.

The US and other national governments prohibit direct or indirect participation in certain economic boycotts, for example, the League of Arab States Boycott of Israel. US law and regulations require that most requests received by US firms to enter into agreements, furnish information or take actions supportive of such boycotts be reported to the Government.

The primary boycott of Israel bars the importation of Israeli goods or services into the boycotting Arab State. There is also a secondary aspect of the Arab Boycott, which precludes dealings with firms or persons in third countries that have been blacklisted by the Central Boycott Office because of their relationship with Israel.

The countries which currently enforce the boycott of Israel and blacklisted parties are: Kuwait, Lebanon, Libya, Qatar, Saudi Arabia, Syria, the United Arab Emirates, and Yemen. Iraq is not included in this list, but its status with respect to future lists remains under review by the Department of Treasury.

The following boycott-related terms, phrases and conditions are illustrative only and not exhaustive.

A certificate of origin must be provided stating the products contain no {boycotted country} origin product.
A certificate must be provided stating that selling company does not have facilities in a {boycotted country}.
A certificate must be provided stating that company has no reason to be blacklisted by the Arab Boycott Office.
Negotiations by banks whose names are included in the Israeli Boycott blacklist are not acceptable.
A certificate must be provided that company has no facilities in a {boycotted country} nor does it employ persons of any particular origin or faith.
A certificate must be provided stating that company does not have any foreign partners or foreign ownership.
Instruction that no six-point star {or other religious or ethnic symbol} may be used on the goods, packing, or case.
Instruction that company agrees to abide by the laws of {boycotting country}, including the laws relating to the boycott of a {boycotted country}.
A certificate must be provided that the aircraft is otherwise eligible to enter the airports of {boycotted country}.

A bill of lading must be provided that states that the carrying vessel is allowed to enter {boycotting country}.
Contract clauses such as: “The Tenderer agrees to comply with all the laws of {boycotting country}” or “The Vendor shall abide by and comply in all respect with the rules of {boycotting country}”.

End user screening

Mandatory Trade due Diligence Screening of End-Users

Note: An End-User is defined as the company or person that ultimately receives and uses the products and/or services. An End-User cannot be a broker, freight forwarding agent, intermediary or a warehouse location.

US and other national government laws/regulations and Global Trade policies require end-user and ultimate consignee information made known to exporting company  to be screened in accordance with exporting company’s Restricted Parties List (RPL), Non-Proliferation (NPS), Trade Sanctions & Embargoes, and Diversion Risk screening policies.

The purpose of mandatory screening is to ensure that exporting company complies with US and other national government export regulations to neither directly nor indirectly conduct business with sanctioned/ embargoed parties, countries, or end-users engaged in prohibited activities without having obtained prior government authorization.

BOYCOTT OF ISRAEL The United States and other national governments consider the boycott of Israel to be an “unsanctioned economic boycott”. The following countries are known to or may participate in the boycott of Israel. Special care must be taken when processing transactions for these countries to ensure company does not comply with “boycott related requests”.

Kuwait, Lebanon, Libya, Qatar, Saudi Arabia, Syria, United Arab Emirates, Yemen.

Note: This list is for information purposes only. “Boycott-related requests” may originate from countries other than those listed above. Absence from this list does NOT mean company is relieved from responsibility for screening for “boycott related requests”.

WHAT IS DIVERSION RISK SCREENING?

“Diversion” is the transfer of products or services to individuals, companies, countries, or uses without appropriate government export authorization.

The exporting company must exercise due diligence in dealing with customers to ensure that exports and reexports of commodities and technologies are not used for or “diverted” to end-uses prohibited by applicable export regulations. “Diversion Risk Screening” helps ensure products and services will not be diverted to unauthorized parties or uses.

Examples of “diversions” include the delivery of products or services to a Restricted Party or sanctioned or embargoed country, or for proscribed uses such as the development of weapons of mass destruction. A “diversion” can take place without physical movement of a product if persons use the product for unauthorized activities. “Diverters” try to act as normal customers but often give themselves away by leaving signs or indications to their illegal intentions. These signs or indications are called “diversion risk indicators” or “red flag indicators”.

Diversion Risk Screening should be used at all phases of the order processing system.

DIVERSION RISK SCREENING REQUIREMENTS

Compliance manager must be alert for any unusual transactions, delivery instructions, or requests that are “out of the ordinary” and may signal a potential diversion. The Diversion Risk Indicators Checklist contains examples of “out of the ordinary” requests that may signal a potential diversion. This Checklist may be used for diversion risk awareness purposes, or to document Diversion Risk Screening for specific transactions where evidence of screening is required under national record retention requirements.

Diversion Risk Screening must occur at all phases of order processing and anytime the customer requests changes to the existing order. For non-revenue shipments, screening must be performedby the requestor of the shipment.

Any transaction indicating a potential diversion risk must be placed on export hold and escalated to Compliance Manager for advice and resolution in accordance with the Diversion Risk Escalation Procedure of the individual company. All records must be retained for audit purposes.

Check list for Diversion Risk
– Whether the customer is using Intermediate consignee, whether its location is incompatible with ultimate end user
– Whether the customer wants only Ex works , delivery terms
– Check whether the customer is suspected to have dealings with embargoed countries
– Whether the customer ask for only cash payment not interested in LoC payment
– want the document through non- banking channel only
– whether the products received by the imported can be diverted to embargoed country. Say for example the product export to Afghanistan can be easilTy reexported to Iran

SPL screening for Human Resources

SPL screening is also possible for your own employees due to integration of SAP HCM with SAP GTS. In fact, SPL screening is possible for the complete movement of humans within organization; this includes foreign travel by the employee for the business purpose, vendor visit  to  the organization for the purpose of business, and new employee recruit. This requires Governance, Risk and Compliance (GRC) policy framework for an organization to conduct check and monitor the human capital movement within or outside organization.

Embargoed National

A person who holds citizenship of an embargoed , has NO other citizenship, NO green card, NO permanent residency in another country, NO refugee or asylum seeker status in another country.

Embargoed Party As defined by the US, a person or firm acting on behalf of or as an agent of a country subject to US embargo. The US Department of Treasury Office of Foreign Assets Control (OFAC) publishes lists of these parties (the list of “Specially Designated Nationals & Blocked persons”). US firms are prohibited from doing business with any party on the list or with any other party owned by or acting on behalf of an embargoed country, with few exceptions. The names of Embargoed Parties published by OFAC  should be included on the SAP GTS Restricted Parties List (RPL)

SPL Screening for Financial Accounting

The incoming and outgoing payments are required to monitor for the companies doing transactions globally. These includes bank and insurance companies also need to be screened along with payer and consignee’s address. Financial institutions can insure that sanctioned persons, groups and organizations are recognized in advance of payment transactions taking place, and, as a result, freeze funds or financial resources to prevent transactions being performed. These sanctioned parties are published and updated on a regular basis in different countries and by different organizations, and may contain, in some cases, the same sanctioned parties.

The compliance policy needs to screen the bank from which company receives L/C if the organization involves in letter of credit payment transaction with customer.  For example, a U.S. bank would have to reject a wire transfer between two third-country companies (non-SDNs) involving an export to a non-SDN company in Sudan. Since there is no interest of the Government of Sudan or an SDN, there is no blockable interest in the funds. The U.S. bank cannot process the transaction because that would constitute a transaction in support of a commercial activity in Sudan, which is prohibited by the Sudanese Sanctions Regulations. Similarly, a U.S. bank could not be involved in the financing of a prohibited transaction. A U.S. bank cannot so much as advise a letter of credit if the underlying transaction is in violation of OFAC regulations. Please note that the Iranian Transactions Regulations contain no blocking provisions (refer: http://www.treasury.gov/resource-center/faqs/Sanctions/Pages/answer.aspx). Insurance companies and banks are required by laws such as the Patriot Act (Providing Appropriate Tools Required to Intercept and Obstruct Terrorism) in the U.S. to prevent payment transactions taking place with people who appear on the sanctioned party lists

The “Sanctioned Party List Screening” service in SAP Compliance Management enables you to screen your business partners, thereby ensuring that you comply with national and international embargoes against countries and sanctioning of individuals and companies. To do so, you can perform compliance checks and legal controls at every stage in your logistics process, from quotation creation right through to billing document creation.

The integration of SAP GTS and Financial Accounting covers the following functions:

●      Creation of sanctioned party lists

●      Transfer and replication of the relevant FI business partners to SAP GTS

●      SPL screening of the relevant business partners

○       SPL checks against account holders

○       SPL checks against notes to payee

○       Synchronous checks of the business partners against SPL data during the payment transactions

●      Manual post processing of the checked business partners

The Sanctioned Party List Screening service can also be integrated with SAP for Insurance and SAP for Banking, among others.

To use SPL Screening for Financial Accounting, SAP Global Trade Services (SAP GTS) and Financial Accounting – Current Accounts (FI-CA), can either run on the same system or on different systems using Remote Function Calls (RFCs).

Cross Area Monitoring

The tab pages for the business areas Logistics, Human Resources, and Financials contain the following:

Asynchronous screening

Periodic Screening of business partners and document partners (in dialog and in the background)

Sanctioned party list screening of business partners with updated sanctioned party lists (in dialog and in the background)

Simulated sanctioned party list screening

With this function you can simulate the SPL screening for a business partner. This is very useful as a test SPL check to see whether a new partner address would be blocked by the system for business transactions in a live SPL check.

Analysis of audit trail data (SPL screening logs)

You have to log and save all sanctioned party list (SPL) screening activities to keep them accessible for official audits within the statutory retention period. SAP GRC Global Trade Services (SAP GRC GTS) logs the results at the legal regulation level. The logs enable you to keep a record of all the SPL screening your company has carried out, giving you an important source of documentation for legal purposes. You can archive these logs to reduce the load on your system and delete them from the tables once you have done this. The audit trail provides you with proof you need to present periodically to customs authorities, to demonstrate exactly which checks were performed, on which parties and when, and to show the results of these checks.

Monitoring of blocked business partners and documents

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4 thoughts on “Sanctioned party list screening in SAP GTS

  1. hi Ramji,

    your document on SPL Screening is very helpful. i am going through it and if i need any help will send a mail.

    Thanks,
    Srinivas

  2. I’m honored to obtain a call from a friend as he identified the important tips shared on your site. Browsing your blog post is a real excellent experience. Many thanks for taking into consideration readers at all like me, and I wish you the best of achievements as being a professional domain.

  3. Is there a workbench that allows to configure/fine tune the screening configuration for all partners? If Yes, is that something at the company level or can be set at different levels?

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