SAP Global Trade Services (SAP GTS) Sanctioned Party List Screening

⇨ When dealing with foreign entities, many companies believe that a screening method is not required for their sales and purchase orders against the sanctioned party lists.

⇨ SAP’s Global Trade Services (GTS) has world class screening capabilities that mitigate the risk involved in trading with the sanctioned parties.

⇨ The SPL screening within GTS is extremely robust and can screen large numbers of business partners and documents quickly and accurately and provides a user-friendly screen where users can review the results and release false positives.

When dealing with foreign entities, many companies believe that a screening method is not required for their sales and purchase orders against the sanctioned party lists. While come companies contend that they either know their business parties or they do not want to spend on a systematic screening process, others state that they use manual screening processes or conduct screening after orders have been processed and shipped. In both cases, companies often face fines when they realize that they shipped to entities that they should not have shipped to. As of 2020, violations of the Trading with the Enemy Act fines amount to $90,000 per violation, while violating the International Emergency Economic Powers act carry a fine of about $308,000 per violation.¹

SAP’s Global Trade Services (GTS) has world class screening capabilities that mitigate the risk involved in trading with the sanctioned parties. The solution allows for screening in real time as purchase and sales orders, and deliveries are entered into the system. The system checks business partners and documents against the sanctioned lists and determines the future disposition of the partner/document based on system configuration. SAP GTS requires the user company to purchase the various sanctioned party list from third-party providers. This allows companies to screen against the list that are only applicable to them. The list that can be purchased include Department of Treasury (OFAC) list, United Nations list, Department of Commerce (BIS) list, Department of State (DOS) list, Department of Homeland Security (DHS) list, European Union (EU) list, lists published by foreign countries, banking and shipping lists and state medical exclusion list. Companies can also create their own list of business entities that they wish to not conduct business with.

SAP GTS Sanctioned Party List Screening Process

When a business partner is generated in the feeder system, it is sent to GTS system. The business partner in GTS is screened against the various sanctioned party lists through an algorithm that uses configured parameters. These parameters can be set based on the company’s risk aversion. If there is a hit on the business partner, the entity gets added to the Blocked Partners list. Users can go in and review the blocks to see if they are actual blocks or false positives. In the newest edition of GTS Edition for HANA or GTS E4H, the Fiori tile “Manage Blocked Partners” (Image below) takes the user to the Blocked Business Partners list.

The user can then see in the Business Partner list to see if it is an actual hit or a false positive. If the partner is an actual hit, the company can take the appropriate steps.

If it is a false positive, the business partner can be removed from the Blocked Partners and the company is free to complete business transactions with the partner.

From the Managed Blocked Partners screen, the user can Release the Block, confirm that it is indeed a Hit, Add the Partner to either the Negative or Positive List, Set Processor, Place Business Partner in an On Hold Status, and Re-run the SPL Screening on the Partner. If the user determines that the business partner is not on the Sanctioned Party List (False Positive), they can Release the Block. This will remove the block on the business partner and on any documents for that business partner.

Once the user conducts their research and determines that the business partner is a confirmed hit against the SPL, the user can Confirm the block which indicates that this indeed is a hit. On the Managed Blocked Partners screen, the user can also place the Partner on either the Positive List or the Negative List. If placed on the Positive List, the Business Partner will never be blocked during screening. If on the Negative List, the Business Partner will always be blocked.

However, these lists need to be periodically checked to ensure accurate screening. A user can be set to manage this Block using the Set Processor function. Another function available on the Manage Blocked Partner screen is the On-Hold Function which places the Business Partner in an On-Hold Status. The last function available on the screen is the Run SPL Screening which will rerun SPL screening on the Business Partner.

As new lists or delta lists (lists that only have changes to existing lists) are published, the system can be set up to check all existing business partners against these lists. This can be set up to run via a nightly batch program.

The system will also check documents to ensure that a sanctioned party is not on the document. GTS can screen Sales Documents, Deliveries, Purchase Orders, and Freight Orders out of Transportation Management. In conducting Sanctioned Party List screening on documents, GTS’s first step is to check the partners on the document. If any of the partners are blocked for SPL, the document will go on block. GTS will also check to see if any of the addresses for the partners have been overwritten on the document. If any have been, GTS will screen the address against the various list in GTS. If a document is blocked, the document will be on the Blocked Document screen within GTS.

An improvement made in SAP GTS E4H is that there is only one blocked document area. In previous versions, the user had to go to SPL Blocked documents to clear SPL blocks, then Embargo to clear Embargo blocks, and finally Legal Control to clear Legal Control blocks. In the latest version, the user can clear all using the Manage Blocked Documents Fiori Tile. By clicking on this tile, the user can see all blocked documents (SPL, Embargo, and Legal Control).

The page shows the blocked documents in graphical form and the number by Foreign Trade Organization (Company Code), Legal Regulation (SPL, Embargo, Legal Control) and type of document.

The user can filter the results by clicking on the appropriate selection and drill down into a SPL block by clicking on the arrow at the far right of the screen. By drilling down, the user can go to screens that help in researching if the blocked document is indeed a true hit or a false positive. If it is a false positive, the user can release the document and process it.

SAP GTS SPL Screening Functions

There are other screening functions in addition to screening Business Partners and Documents in SAP GTS. These functions are screening general addresses and the list of external addresses.

The Check General Address Function allows the user to enter the name and address of an entity that they wish to screen.

The system compares this address to the various lists and returns the search results immediately.

This function has many uses within companies, but it is used extensively by companies to prescreen their customers and vendors. This allows companies to know early whether they need to do business with entities. This helps in precluding setting up the business partner in the system only to find out that they are a sanctioned party.

The second screening function is the Check External Addresses Offline which allows the user to load a file in a prescribed format into the system. The system screens these entities against the loaded Sanctioned Party List for names and addresses and shows the results. This function is extremely beneficial if there are numerous entities that are not in the system and need to be checked.

SAP GTS SPL Audit

One of the selling points about SAP GTS is that there is an ability to go back and audit the SPL screening to see why business partners, documents, and addresses were blocked and/or released. Anyone who tried to run these audits reports prior to them being run on HANA will appreciate the speed and responsiveness that HANA provides. Earlier, these reports were slow to produce with substantial wait time to produce them. With HANA, they can be displayed quickly and facilitate auditing the Sanctioned Party List screening.

The audit trail reports are available for Documents, Business Partners, External Addresses (those checked from an external file) and General Addresses (manually entered addresses).

This audit screen displays whether the system or a user placed the entity on block. It also shows who released it, if applicable. The screen will also show why blocks were removed, the date they were removed on and allows efficient auditing of such entries.

SPL within SAP GTS Edition for HANA(E4H)

Within the newest release of SAP GTS (GTS E4H), there have been some changes made to the Sanctioned Party List screening that should be noted. Users should be aware of these changes because some are quite significant.

The first change that needs to be mentioned is one that will help individuals to know when something is on not only the SPL block but any GTS block. Within S4 documents on the status tab, there are three different GTS statuses listed for: Embargo, SPL, and Legal Control. This allows users within S4 to see if a document is on GTS block and what kind of GTS block the document is on.

A second change to SPL in GTS E4H is that TREX screening is no longer an option. The only two options available now are the original GTS search and the HANA search. It is advisable to use the HANA search since it couples an accurate comparison with the speed of the HANA database.

Another change to SPL is that HR Business Partners (Internal Employees) are no longer screen-able within GTS. This is due to various issues with employee privacy.

One last change that needs to be noted is that Case Management is not supported within GTS E4H. Case Management was used by some companies to elevate problematic SPL hits up to a supervisor or someone with more knowledge/authority.

Conclusion

SAP’s Global Trade Services provides a world class Sanctioned Party List screening tool that can be used to mitigate the risk of shipping to prohibited entities. The SPL screening within GTS is extremely robust and can screen large numbers of business partners and documents quickly and accurately. It provides a user-friendly screen where users can review the results and release false positives. Lastly, it provides an audit tool that can be used to research why an entity was blocked and/or released.

SAP GTS can benefit companies by minimizing the risk inherent in doing business in today’s global marketplace.

¹ Dow Jones