Once in a blue moon it happens. You run your SPL Blocked Partners report and you find a perfect match to a denied party. Great! The system is doing its job as designed. But, now what do I do?!
The identification of a denied party in your system, itself, does not represent a violation nor does it obligate you to report the findings to U.S. government authorities (one exception being scenarios involving defense articles applicable to 22 CFR 126) . However , a physical export to this party (or selling to a domestic denied party) could be a violation therefore your first steps are to ensure that all possible global supply chains to that party have been blocked.
First and foremost you want to escalate the situation through the proper compliance ranks within your organization. Secondly, you will need to get the right people involved to validate there are not any current transactions in the system. And, if there are, ensuring the transactions are not completed. Next, you will probably want to engage the right people to track down past sales history or recent sales leads. It is possible that sales have occurred with this party prior to their denial order and that would not be a violation.
Query your feeder system for other partners using similar address attributes (same city/country combinations, same street, etc.) to identify if the party has used an alias in the past. Research any global divisions or subsidiaries of the denied party and determine if they exist as partners in your feeder system. You will also need to engage any sales offices of the situation and get a better understanding of the relationship with the denied party and any past activity that has taken place. Once you get all that data together, your compliance consul will advise the proper steps to take.
From a system perspective, relying on GTS to block any attempted sales documents to the denied party is generally enough to protect your organization. However for true SPL hits where you absolutely cannot ship products, we recommend the additional step of building a mechanism directly into the SAP/ECC feeder system to block denied partners so that sales orders cannot be created for that partner. Besides the implementation of the copy control function that prevents subsequent transactions from taking place once a transaction is blocked, you should also considering using standard ECC Sales and Distribution or Procurement blocking functionality and create a blocking reason that would indicate ”contact trade compliance”. This indicates to the sales or procurement staff that the block involves more than a simple release in ECC.
Scenarios exist where exports to denied parties may be made with approval from the governing agency. In these scenarios, allow GTS to keep the business partner in the blocked partner queue. As subsequent sales documents are blocked by SPL for that partner, review each transaction to determine whether or not the transaction can be released. Additionally, you can create a license block to block and release these transactions.
For audit purposes, fully document the steps taken and use this opportunity to restate your corporate policies regarding denied party screening throughout the supply chain.
If you have any questions or concerns or would like to discuss your current system settings involving SPL, please leave a message on this blog or contact global_trade@entrypointconsulting.com.
