Describing Embargo/Legal Control

Legal control function allows an organization to maintain master data and business transactions in accordance with the legal requirements for imports and exports. Monitoring and simulation tools are available to help an organization ensure that all business is compliant with current import and export laws.

Legal control includes checking business transactions for products that require licenses, as well as the check for embargo situations for these business transactions. These activities are supported by legal control by a series of checks, which can be configured to ensure legal compliance of your business transactions:

• License Management provides for the management of product related licenses required for products that are imported/exported.
• Simulation for Legal Control allows an organization to determine in advance whether specific licenses are required for planned transactions.
• Legal Control Monitoring Checks allow for screening and review of trade related documents to determine if they are complete/incomplete, are blocked due to sanction list screening, incomplete licenses, and so on.
• Embargo Check function checks to see if any embargo situation is applicable to a transaction

• Native integration into sales and procurement processes.
• Create and manage licenses, including quantities or values that are decremented as used.
• Automated check for and determination of license requirement.
• Block transactions proactively if license required but not available.
• Maintain full history for auditability.

• Minimizes supply chain delays by proactively checking for licenses.
• Reduces risk of non-compliance.
• Proactive checks throughout sales and procurement processes prevents trade violations.

Export control is legislation that regulates the export of goods, software, and technology.

Many governments implement export controls. Typically, legislation lists and classifies the controlled items, classifies the destinations, and requires exporters to apply for a license to a local government department.

The picture above shows the Legal Control home screen.

The Display Documents app delivers the following features:

1. Overview of all Trade Compliance-checked documents available in the GTS system. 
2. Logistics documents.
3. Financial documents.
4. Display of status of Legal Control check, Sanctioned Party List Screening check, Embargo check, and Hazardous Substance check.

The app consists of a filter bar at the top of the screen and a result list at the bottom, where the existing checked documents are displayed.

The Manage Blocked Documents app delivers the following features:

1. Overview of all blocked Trade Compliance documents available in the GTS system from below two business area.
2. Logistics documents.
3. Financial documents.
4. Analytical list page provides graphical display of blocks and graphical filter options, next to classical list filter options.
5. One app to resolve multiple blocks in multiple legal regulations.

On the top of the screen, when using the Visual Filter, you can see three predefined charts. By selecting one of the sections in the charts, you can filter. It is also possible to use several sections to combine filter values and narrow down the result list.

The result list is adapted according to the selection in the filter. Additional to the table, there is a chart which visually displays the selected results.

By choosing the document number, you can see related links and navigate to the respective apps:

• Display Check Log.
• Display Customs Document.

Choosing the little arrow at the end of the line will navigate you to the details of the Trade Compliance blocks for this document.

Via the Related Apps button you can navigate to the Change Legal Control Data app where you can manually assign licenses and change control data. You can also display the Check Log via this button.

For legal control, you will see important header data like the document reference number, the logical system, or the status.

You will see for which items a block exists and the reasons for the block.

You can also add comments.

As a new concept, the Processing Status has been introduced in GTS, edition for SAP HANA. The Processing Status is available for all Trade Regulation areas (Legal Control, Embargo, SPL) as well as for documents and business partners.

To use the new concept, perform the following steps:

1. Set yourself as processor by using the Set Processor button.

   Then choose Adopt. The status changes to In Process automatically.

   

2. Set another user as processor by using the Set Processor button, and then Forward. The status will remain New.
3. Set status On Hold via the respective button. You will automatically be set as processor.

Once the block is released or confirmed, the processing status changes automatically to Completed.

An embargo is a government-imposed order that restricts or halts the exchange of particular goods or services with a specific country. It is often used as a political or economic weapon in international relations, and could be applied for a variety of reasons, such as to pressure a country to change its policies or practices, or in response to conflicts or wars.

• Smooth integration into logistics processes.
• Synchronous control of business transactions.
• Support all relevant embargo scenarios.
• Complete audit trail and archiving capabilities.

• Implementing the embargo functionality automates and helps ensure global trade compliance to eliminate global trade violations.
• Proactive checks throughout sales and procurement processes prevents trade violations.

'TechGlobal', procures specific parts for their products from a variety of international suppliers. One of the supplier firms is based out of country 'Z'.

Due to geopolitical issues, the government of TechGlobal's home country enforces an embargo on country Z, making it illegal for firms in their country to trade goods or services with companies in country Z.

Now, in this situation, TechGlobal's ERP system comes into play.

As soon as the embargo is enforced, the system automatically updates the supplier list, flagging the company in country Z as a possible risk. This is usually done by integrating real-time geopolitical data or subscription-based sanctions lists into the ERP system.

Once the embargo is in place, the next time a TechGlobal procurement officer tries to place an order from the supplier in country Z, the ERP system will block this transaction. The system can either produce a warning message about the embargoed status of the country or prevent the transaction from going through entirely.

Because of this embargo management within the ERP system, TechGlobal avoids violating international laws, potentially saving itself from heavy fines and damaged reputation. It also forces the company to search for alternate suppliers, ensuring minimal disruption to the supply chain.

An ERP system is an effective tool for maintaining trade compliance, particularly in complex international operations where geopolitical situations can directly affect business transactions.