Distinguishing Types of Sanctions

As a rule, sanctions in the areas of finance and logistics services are imposed on legal or natural persons. Their current whereabouts are often unknown. The transactions affected are usually prohibited. Such sanctions might, for example, order the freeze of assets, funds, and economic resources owned, in the possession of or controlled by certain persons. The provision of technical assistance and various other services may equally be prohibited.

Persons subject to sanctions are listed, for example, in annexes to the regulations establishing the sanctions. Other lists are published by the authorities monitoring compliance with particular sanctions.

If sanctions are imposed on persons regardless of their current place of residence and if these sanctions mainly consist in prohibitions, sanctioned party list screening is the suitable application area within Compliance Management.

Sanctions in the area of finance and services are often imposed on the government, state-owned enterprises and/or the military of particular countries. Although these sanctions actually target particular persons, they are generally perceived as being directed against the countries as such.

If representatives of a state are the main or even the only subject of sanctions, the embargo check is usually best suited to implement this control regime in SAP GTS, all the more because most of the affected countries do not figure among the important trading partners.

As a precaution, both embargo check and sanctioned party list screening block all transactions that involve at least one business partner suspected of being subject to sanctions. The users can lift the block if a transaction proves not to be affected by the prohibitions.

Sanctions may also prohibit the import or export of certain goods, in particular arms and ammunition, dual-use items, and primary raw materials. However, the states imposing such sanctions may authorize the import or export of these goods, if they are intended solely for civil end-users, for humanitarian purposes or - in the case of armament - for UN crisis management operations, for example.

Faced with the choice of application areas when mapping sanctions relating to goods in SAP GTS, the crucial questions are:

1. Are the goods to be traded listed in the legal regulation that establishes the sanctions? (Do we import or export any of the listed goods?)
2. If so, can commercial transactions be authorized under certain conditions? (Could we obtain licenses for importing or exporting these goods?)

Only if both questions are answered in the affirmative, legal control is the right choice.