If you run an international business, there are few terms scarier than Sanctioned Parties List (SPL) and embargo. Both represent enormous possible pitfalls. Both open you up to fines, loss of license, and severe legal jeopardy. If you buy or sell the wrong item to the wrong country, or do business with a person or company on the SPL, you will, at the least, have a series of costly headaches.
Making sure you have an automated screening process for embargoes and SPLs is a must for your business. You don’t want to run the risk of simple mistakes and human error missing a connection that could get you in trouble. Automating this process as much as possible is a vital part of risk management.
We live in an era where regulations are changing quickly. Many of the old rules are being thrown out. If you run a company, not only are your potential fees skyrocketing, but you could be in personal legal jeopardy. In a new game, with new rules, you need the newest and best technology partners.
SAP GTS has many embargo and SPL screening features which can protect you from these troubles—if they are implemented correctly. Having a partner who knows how to implement SAP GTS so that it aligns with your business goals and keeps you on the right side of regulations is the best way to keep cash flowing in, and not diverted toward fines and legal fees.
Embargo Screening Solutions: How SPL And Embargo Lists Are Changing
While the embargo list and the SPL are similar, they cover different things. The embargo list covers countries specifically. SPL targets individuals and companies with whom trade is forbidden by law.
While this sounds straightforward, it isn’t. Embargoes usually cover an entire country, but in an era of global trade, it can be far more complex than “don’t trade with Iran”. Are products built in Iran for foreign companies embargoed? What about goods built with parts that are partially made in Iran? Is it illegal to do business with a company doing business in Iran?
This is made more complex by the SPL, which covers individuals and companies. A company that makes parts in Iran or trades with North Korea might be covered. An individual from a company with whom no nation has any quarrel might own a company that sells arms to the DPRK, and ends up on the list. Doing business with any of their subsidiaries might land you in hot water.
If you are doing business in multiple locations, you know that regulations can come from everywhere, and they can come for any reason, usually revolving around global politics.
Politics and individual actions interplay in confusing ways. Look at ZTE, a major supplier for Android. After it was found that they violated US sanctions in North Korea and Iran, they were blacklisted by the US government. Though they came off the list after paying a $1 billion fine, they had already lost $3 billion in market value.
What does that mean? It means you can’t do business with them. You also can’t do business with any companies which are more than 50% controlled by any of the companies or people on the list. Think of what that means in the case of ZTE or Huawei; think of how many companies and subsidies these giants own. Will you be able to keep track of all of them?
You probably aren’t risking a multi-billion fine (we hope!). But that doesn’t mean your business won’t be at risk for violating an SPL or an embargo. Your business can still be damaged, and go under. You could also face personal liability an individual risk.
Governments are getting more aggressive about going prosecuting individuals instead of just the amorphous idea of a “company”. If your business violates the law, you might personally be on the hook for fines, or even lengthy prison sentences. Even if the violation is caused by simple human error, you are still liable.
You need technology and a partner to protect yourself.
Protecting Yourself with Embargo and SPL Screening Solutions
There are a few ways that GTS works to protect you. These include:
- Screening against global and/or national embargoes
- Screening embargoed countries for all-export or all-import transactions
- Facilitated maintenance of embargoed countries
- Detecting if something goes wrong, including failed screenings, blocked documents, and escalations of uncertain entries.
The last point is especially important when it comes to audits. If any violations occur, having a paper record of how and why can keep you out of more serious trouble.
Probably the most important part of your GTS system is automation. By scanning government data according to your enterprise goals, it knows when you are going to be in violation. It is able to automatically update your processes and alert you if something is going awry.
Automation works quickly and efficiently, and removes the possibility of human error. A GTS system can be set up to keep you out of hot water—but only if it is set up correctly.
Why You Need the Right Implementation Partner for Embargo and SPL Screening Setup
Proper setup of your SAP GTS is an absolute must. You can’t just press a button labeled “Sanctioned Parties List (Stay Away).” Your automated system has to know what to check, when to check, and where to check it. It has to know that you have a changing supply chain, and be able to find the connections throughout your system.
Above all, you need to look globally and long-term during set-up. Your system needs to be proactive and adaptable for any future changes. That’s why it is so crucial to have a good business partner, someone who understands your business and knows how to create a system that works for you and your people.
The right partner is someone with a long record of implementation success, but one who knows that true success comes from empowering you to take control. You and your business are more liable than ever for SPL and embargo list compliance. Being empowered to handle constant change is your best protection.