Girish Mahajan (Editor)

Denied trade screening

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Denied Trade Screening AKA: Denied Party Screening, Sanction Party Screening Denied Trade Lists: lists created and compiled by government authorities/agencies and/or organizations that warn its members/citizens/business to either beware or refrain from interacting with those individuals or entities on the lists. Further, these lists act as the foundation of establishing either notification or direct prohibition of those under the issuing authority not to contact or interact, either by communication or by business transactions or by social transactions. AKA: Denied Party Lists (DPL), Sanction Party Lists (SPL)

Screening is the process of comparing these lists to internal lists (company customers, vendors, contractors, employees, investors, guests, etc.)

Denied trade screening is the process of screening parties involved in an export transaction for the purpose of complying with the safety standards of the U.S. Government. Effective trade screening not only includes denied parties but also controlled products and embargoed or sanctioned countries. The purpose of screening the receiving parties of finished goods is to exude "due diligence" and "reasonable care" when completing transactions with foreign entities, ensuring the safety and intention of the products and importers.

With 80-plus denied trade lists already published, more items and checks need to be included in an exporter's validation process. Exporters demonstrating "reasonable care" should perform screenings on a periodic basis as well as perform screenings throughout the movement of the goods within the supply chain. With more country-specific rules being applied, countries have their own denied party lists, some of which include:

  • World Bank Listing of Ineligible Firms
  • U.S. Bureau of Industry and Security - BIS
  • EU Financial Sanctions Unit
  • U.S. Food & Drug Administration
  • United Nations Sanction List
  • Alqaida and Taliban UN Consolidated List
  • Office of Foreign Assets Control
  • International Criminal Tribunal for Rwanda
  • The U.S. government restricts all individuals or companies from exporting any service or product to any party contained in a U.S. government export denial, blocked, and debarred persons lists. The failure to comply with the above regulation is a violation of U.S. law and can result in criminal or civil prosecution, as well as denial of export privileges.

    Every organization is responsible for updating and maintaining information about the parties to whom they ship. The U.S. government encourages exporters to perform screenings on a regular schedule. Companies, groups, and persons found on the lists are sanctioned by the United States government and are not allowed to receive exported goods from the U.S. or export goods from the U.S. Typically, depending on which list the match was found, a match would indicate the either of the following situations: 1) A strict export prohibition, 2) A specific license requirement for exporting to or making a business with the sanctioned entity, or 3) The presence of a "red flag" in this transaction with the sanctioned entity. Informed, voluntary compliance with U.S. export controls by the export trade community is an important contribution to U.S. national security and a key component of BIS's export administration and enforcement programs. All parties to U.S. export transactions must ensure their exports fully comply with all statutory and regulatory requirements. Software vendors, such as Visual Compliance, Intredex, Inc., Amber Road, Inc., OCR Services Inc. and MIC Customs Solutions automate the process of searching for denied trade parties and restricted trade parties.

    Companies such as OCR Services Inc. and Descartes Systems Group have established working software solutions for screening against multiple lists. SAP, an ERP software, offers a solution since 2004. The software solution for SAP America is the Global Trade Services module (SAP-GTS) which falls under their Governance, Risk, and Compliance (GRC) directory of software solutions. This solution was created from their previous SAP module of Foreign Trade (SAP-FT). SAP-GTS is the most expansive and comprehensive software for global trade. SAP-GTS was originally designed to accommodate big business (conglomerates, multinational corporations) that due business centered on export and import. However, since the rapid increase in globalization, more and more companies (including mid size) are utilizing SAP-GTS for their screening processes.

    The required lists are uploaded into the purchasing company's software operation system (SAP system). Then the company using SAP-GTS software would compare its business partners against the entries on the selected denied party lists. These business partners include a company's vendors as well as their customers. Additionally, screening can be scheduled or to run ad-hoc as new business partners are added. Further, those required denied party lists can be updated with the latest versions of the lists (delta-files) from the issuing government agencies and international authorities. The SAP-GTS system would maintain those lists as well as log all updates and screenings. The SAP-GTS software would then identify if any business partner is a reasonable match to an entry on the denied party lists. The SAP-GTS software would then block any business connected to the software for that "possible positive" identification. The SAP-GTS software would then notify the company's authorized compliance team or legal team for further verification. If a positive match is encountered then the compliance/legal team are obligated to alert the appropriate authorities.

    Only a few service providers have engaged any software due the high level of risk, compliance complexities, and legal ramifications. Only a few recognized SAP Service partners have demonstrated competency in GTS. Of which, only Aurum Terra INC (ATI) has continuously proven itself with continued success since the inception of SAP-GTS. Not only, does ATI specialize in denied party screening, but it also offers full support of risk management, governance, and compliance. ATI has the benefit of years of international business, and global trade experience in SAP as well as outside of the software environment. Installing any software of this nature requires understanding of the software, but more importantly, an understanding of the legal responsibilities of any compliance regulations and obligations.

    References

    Denied trade screening Wikipedia


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