Understanding the Purpose of Application Areas in Compliance Management

Control regimes in international trade can be subdivided into two basic types: Prohibitions and Restrictions. This distinction is essential to the correct mapping of their legal bases in SAP Global Trade Services (SAP GTS).

A commercial transaction could, for example, be prohibited due to sanctions against a person involved in this transaction. Import and export restrictions often take the form of a requirement to obtain official permission prior to the execution of a commercial transaction. Other restrictions limit the quantity or the value of a commodity that may be imported or exported.

In this context, the term "permission" is quite broadly defined. A permission could, for example, be an authorization, a license or an official certificate of any kind.

Within Compliance Management, SAP GTS provides three application areas to cope with control regimes in international trade:

• Embargo check
• Sanctioned party list screening
• Legal control

Embargo check and sanctioned party list screening are intended to ensure compliance with prohibitions. If set up correctly, these application areas force a case-by-case examination of all commercial transactions involving at least one business partner who might be subject to sanctions.

In contrast, legal control is the right choice for addressing restrictions in the form of permission requirements of any kind. Based on their classification, the system detects restricted goods and determines the type or types of permission required for their import or export. The lifecycle of permissions is accompanied from the application to the expiry of their validity.

The reasons for restricting the import or export of certain commodities are not decisive for the choice of an application area. Some sanctions, for example, establish prohibitions but others provide for permissions to supply restricted goods to certain recipients.