Understanding Financial Sanctions Validation

For U.S.-based companies and their foreign subsidiaries, a federal regulation from the Office of Foreign Assets Control (OFAC) requires that suppliers be validated against a Specially Designated Nationals (SDN) list prior to payment. OFAC acts under Presidential wartime and national emergency powers, as well as authority granted by specific legislation, to impose controls on transactions and freeze foreign assets under U.S. jurisdiction. Many of the sanctions are based on United Nations and other international mandates, are multilateral in scope, and involve close cooperation with allied governments.

PeopleSoft provides you the ability to download the list of SDNs from the OFAC, the European Union, as well as enterprise sources. Once installed, you can manually search the list to validate suppliers. In addition to manual searches, you can enable searches to be performed automatically when processing transactions. If, for example a supplier name or address matches one on the SDN list, PeopleSoft provides a process for administrators to verify that the match is correct and prevent any financial transactions from occurring with that individual or entity or approve the transaction if the match proves to be a false positive.

This section discusses:

Overview of financial sanctions validation.
Financial sanctions validation and transaction processing.
Examples of financial sanctions validations.

PeopleSoft provides validation of your suppliers against any financial sanctions list at the supplier level, voucher level, and payment level. The system validates the supplier's:

Names.
Payment alternate names.
Withholding alternate names.
Addresses.
Country.

To perform financial sanctions validation:

Specify options on the Financial Sanctions Options page of the Installation component (INSTALLATION).

How the system validates your suppliers depend on if you enable financial sanctions for PeopleSoft Payables and eSettlements at the installation level or the bank level. The system's actions are discussed in detail in the following section.

The Search Framework search engine is used to perform the search on the financial sanctions data. For the system to identify the most accurate match results, the system searches only the name fields against the name search index and the address fields against the address search index. The system passes the name and address fields and weighting factors to the search indexes. It then compares the results of the Search Framework and reports it as a possible match if the score is greater than the Search Framework Score Threshold field defined on the Financial Sanctions Options page.

See Financial Sanctions Options Page.
If you enable financial sanctions at the bank level, you must specify the banks on the Bank Information page.

Note: This step is not applicable if you enable financial sanctions at the installation level, because all suppliers are validated.

See Defining Bank Information.
Load the financial sanctions list into the system using the Import Financial Sanction List page.

You must build search indexes for downloaded financial sanctions data. Use the Search Index Admin page to build and rebuild the search indexes.

Note: After you load a file, you must rebuild the search indexes.

See Importing the SDN List.
(Optional) Review the financial sanctions data using the Financial Sanctions Inquiry page to verify transactions and supplier status.
See Searching the Financial Sanctions Data.
Create a supplier using the Supplier Information component.
At the supplier level, the system validates your supplier names and addresses:
- Upon saving the supplier if financial sanctions is enabled at the installation level, and the SDN Validation at save check box is selected on the Supplier Set Control page.
- On an ad hoc basis by clicking the Financial Sanctions edit button if financial sanctions is enabled at the installation level, and the SDN Validation at save check box is not selected on the Supplier Set Control page.
- Running the Financial Sanctions Validation Application Engine process (AP_SDN_VAL).
Enter supplier transactions.

Again, how the system validates your suppliers depends on if you enable financial sanctions for PeopleSoft Payables and eSettlements at the installation level or the bank level. The system's actions are discussed in detail in the following section and other set of topics in the documentation PeopleSoft Payables and the PeopleSoft eSettlements .

See Voucher Validation.

See Understanding Pay Cycle Alerts.

See Understanding Supplier Registration.

When you enable financial sanctions validation, the system validates supplier names (names, payment alternate names, and withholding alternate names) and addresses (addresses and country), and if there is a potential match to the financial sanctions list, it updates the Financial Sanctions Status field on the Financial Sanctions Status collapsible region on the Identifying Information page. You determine if the match is accurate and then manually set the supplier's financial sanctions status to Blocked. The system does not allow payments to suppliers with a financial sanctions status of Blocked or Review.

This section discusses how the system updates the supplier's financial sanctions status and the action it takes during supplier entry and transaction processing for financial sanctions enabled at the installation level and at the bank level.

Financial Sanctions Validation Enabled at the Installation Level

How the system validates your suppliers is dependant upon how you set up financial sanctions validation options. For this table, the system validates:

On the Supplier Information component at save if financial sanctions is enabled at the installation level, and the SDN Validation at save check box is selected on the Supplier Set Control page.
On the Supplier Information component on an ad hoc basis by clicking the Financial Sanctions edit button if financial sanctions is enabled at the installation level, and the SDN Validation at save check box is not selected on the Supplier Set Control page.
During the pay cycle selection process if the Financial Sanctions list edit field is selected on the Payment Selection Criteria - Preferences page.
As otherwise noted in the table.

Note: For this table, the assumption is that if the supplier's initial financial sanctions status is Cleared, the days before the next validation have expired and the Skip future validation field is not selected on the Financial Sanctions Status collapsible region on the Identifying Information page.

Source	System Validation	Financial Sanctions Status After Validation	Action
Supplier Information	At save. On an ad hoc basis.	Valid	The system saves supplier.
Supplier Information	At save. On an ad hoc basis.	Review	The system displays a warning message that the supplier is under review or blocked for financial sanctions. The system saves the supplier.
Supplier Information	When the days before next validation have expired: At save. On an ad hoc basis. If skip future validation: none.	Cleared	The system saves the supplier with no warning message, because you manually set this status. Note: If the supplier has an initial financial sanctions status of Cleared, and the system performs financial sanctions validation, the system automatically changes the supplier's financial sanctions status to Valid if there is not a match, or to Review if there is a potential match.
Supplier Information	None.	Blocked	The system saves the supplier with no warning message, because you manually set this status.
Regular Entry Vouchers - all voucher styles, except single payment voucher. Supplier's initial financial sanctions status is Valid or Cleared.	At save.	Valid or Review	For Valid status, the system saves the voucher. For Review status, the system displays a warning message that the supplier is under review or blocked for financial sanctions. The system saves the voucher.
Regular Entry Vouchers - all voucher styles, except single payment voucher. Supplier's initial financial sanctions status is Review or Blocked.	None.	Review or Blocked	The system displays a warning message that the supplier is under review or blocked for financial sanctions. The system saves the voucher.
Regular Entry Vouchers - single payment voucher. There is no initial financial sanctions status since you are using a single payment supplier.	At save.	Valid or Review Note: The system does not update the single payment supplier's financial sanctions status on the Supplier Information component, because it is only a template for single payment suppliers.	For Valid status, the system saves the single payment voucher. For Review status, the system displays a warning message that the supplier is under review or blocked for financial sanctions. You can save the single payment voucher and put the payment on hold, save the single payment voucher and not put the payment on hold, or not save the single payment voucher.
Quick Invoice and Summary Invoice Entry Supplier's initial financial sanctions status is Valid or Cleared.	At save.	Valid or Review	For Valid status, the system saves the voucher. For Review status, the system displays a warning message that the supplier is under review or blocked for financial sanctions. The system saves the voucher.
Quick Invoice and Summary Invoice Entry Supplier's initial financial sanctions status is Review or Blocked.	None.	Review or Blocked	The system displays a warning message that the supplier is under review or blocked for financial sanctions. The system saves the voucher.
Recording a manual payment using the Voucher component. Supplier's initial financial sanctions status is Valid or Cleared.	At save.	Valid or Review	For Valid status, the system saves the voucher. For Review status, the system displays an error message that the supplier is under review or blocked for financial sanctions. The system does not allow you to select Record as the payment action.
Recording a manual payment using the Voucher component. Supplier's initial financial sanctions status is Review or Blocked.	None.	Review or Blocked	The system displays an error message that the supplier is under review or blocked for financial sanctions. The system does not allow you to select Record as the payment action.
Manual Payment and Manual Draft Worksheet Supplier's initial financial sanctions status is Valid or Cleared.	Upon building the worksheet.	Valid or Review	For Valid status, the system builds the manual payment worksheet and allows you to save the worksheet. For Review status, the system displays an error message that the supplier is under review or blocked for financial sanctions. The system does not allow you to use the supplier for a manual payment worksheet.
Manual Payment and Manual Draft Worksheet Supplier's initial financial sanctions status is Review or Blocked.	None.	Review or Blocked	The system displays an error message that the supplier is under review or blocked for financial sanctions. The system does not allow you to use the supplier for a manual payment worksheet.
Express Payment Supplier's initial financial sanctions status is Valid or Cleared.	Upon creating the express payment.	Valid or Review	For Valid status, the system creates the express payment. For Review status, the system displays an error message that the supplier is under review or blocked for financial sanctions. The system does not create the express payment. Note: The Express Payment link is not available on the Voucher component if the supplier's financial sanctions status is Review or Blocked.
Express Payment Supplier's initial financial sanctions status is Review or Blocked.	None.	Review or Blocked	The system displays an error message that the supplier is under review or blocked for financial sanctions. The system does not create the express payment. Note: The Express Payment link is not available on the Voucher component if the supplier's financial sanctions status is Review or Blocked.
Pay Cycle Supplier's initial financial sanctions status is Valid or Cleared.	During the selection process.	Valid or Review	For Valid status, the system selects the supplier's vouchers for payment. For Review status, the system creates a payment validation error that you can view on the Pay Cycle Financial Sanction Warnings page.
Pay Cycle Supplier's initial financial sanctions status is Review or Blocked.	None.	Review or Blocked	The system does not select the supplier's vouchers for payment.

Note: You can routinely validate your suppliers using the Financial Sanctions Validation process.

See Financial Sanctions Validation Page.

Financial Sanctions Validation Enabled at the Bank Level

How the system validates your suppliers is dependant upon how you set up financial sanctions validation options. For this table, the system validates:

During the pay cycle selection process if the Financial Sanctions list edit field is selected on the Payment Selection Criteria - Preferences page.
As otherwise noted in the table.

Source	System Validation	Financial Sanctions Status After Validation	Action
Supplier Information	None	Valid, Cleared, Review, or Blocked	The system saves the supplier. Note: When you create a new supplier, the system initially sets the financial sanctions status to Valid.
Regular Entry Vouchers - all voucher styles, except single payment voucher. Supplier's initial financial sanctions status is Valid or Cleared.	At save only if you specify a bank for the remit supplier and the bank requires financial sanctions validation.	Valid or Review	For Valid status, the system saves the voucher. For Review status, the system displays a warning message that the supplier is under review or blocked for financial sanctions. The system saves the voucher.
Regular Entry Vouchers - all voucher styles, except single payment voucher. Supplier's initial financial sanctions status is Review or Blocked.	None	Review or Blocked	The system displays a warning message that the supplier is under review or blocked for financial sanctions. The system saves the voucher.
Regular Entry Vouchers - single payment voucher. There is no initial financial sanctions status since you are using a single payment supplier.	At save only if you specify a bank for the remit supplier and the bank requires financial sanctions validation.	Valid or Review Note: The system does not update the single payment supplier's financial sanctions status on the Supplier Information component, because it is only a template for single payment suppliers.	For Valid status, the system saves the single payment voucher. For Review status, the system displays a warning message that the supplier is under review or blocked for financial sanctions. You can save the single payment voucher and put the payment on hold, save the single payment voucher and not put the payment on hold, or not save the single payment voucher.
Quick Invoice and Summary Invoice Entry Supplier's initial financial sanctions status is Valid, Cleared, Review, or Blocked	None	Valid, Cleared, Review, or Blocked	The system saves the voucher.
Recording a manual payment using the Voucher component. Supplier's initial financial sanctions status is Valid or Cleared.	At save only if you specify a bank for the remit supplier and the bank requires financial sanctions validation.	Valid or Review	For Valid status, the system saves the voucher. For Review status, the system displays an error message that the supplier is under review or blocked for financial sanctions. The system does not allow you to select Record as the payment action.
Recording a manual payment using the Voucher component. Supplier's initial financial sanctions status is Review or Blocked.	None	Review or Blocked	The system displays an error message that the supplier is under review or blocked for financial sanctions. The system does not allow you to select Record as the payment action.
Manual Payment and Manual Draft Worksheet Supplier's initial financial sanctions status is Valid or Cleared.	Upon building a worksheet only if the remit supplier's bank requires financial sanctions validation.	Valid or Review	For Valid status, the system builds the manual payment worksheet and allows you to save the worksheet. For Review status, the system displays an error message that the supplier is under review or blocked for financial sanctions. The system does not allow you to use the supplier for a manual payment worksheet.
Manual Payment and Manual Draft Worksheet Supplier's initial financial sanctions status is Review or Blocked.	None	Review or Blocked	The system displays an error message that the supplier is under review or blocked for financial sanctions. The system does not allow you to use the supplier for a manual payment worksheet.
Express Payments Supplier's initial financial sanctions status is Valid or Cleared.	Upon creating the express payment only if the remit supplier's bank requires financial sanctions validation.	Valid or Review	For Valid status, the system creates the express payment. For Review status, the system displays an error message that the supplier is under review or blocked for financial sanctions. The system does not create the express payment. Note: The Express Payment link is not available on the Voucher component if the supplier's financial sanctions status is Review or Blocked.
Express Payments Supplier's initial financial sanctions status is Review or Blocked.	None	Review or Blocked	The system displays an error message that the supplier is under review or blocked for financial sanctions. The system does not create the express payment. Note: The Express Payment link is not available on the Voucher component if the supplier's financial sanctions status is Review or Blocked.
Pay Cycle Supplier's initial financial sanctions status is Valid or Cleared.	During the selection process for remit suppliers whose banks require financial sanctions validation.	Valid or Review	For Valid status, the system selects the supplier's vouchers for payment. For Review status, the system creates a payment validation error that you can view on the Pay Cycle Financial Sanction Warnings page.
Pay Cycle Supplier's initial financial sanctions status is Review or Blocked.	None	Review or Blocked	The system does not select the supplier's vouchers for payment.

Note: You can routinely validate your suppliers using the Financial Sanctions Validation process.

See Financial Sanctions Validation Page.

Source	Financial Sanctions Enabled	Scenario	Expected Results
Supplier Information	Installation	The supplier name 1 is a match on the financial sanctions list.	The system updates the supplier's financial sanctions status to Review.
Supplier Information	Installation	The supplier name 2 is a match on the financial sanctions list.	The system updates the supplier's financial sanctions status to Review.
Supplier Information	Installation	The supplier's address 1 is a match on the financial sanctions list.	The system updates the supplier's financial sanctions status to Review.
Supplier Information	Installation	The supplier's country is a match on the financial sanctions list.	If the Search Framework score is greater than or equal to the score defined on the Financial Sanctions Options page, the system updates the supplier's financial sanctions status to Review. If the Search Frameworkscore is less than the score defined on the Financial Sanctions Options page, the system updates the supplier's financial sanctions status to Valid if the status is not already Valid.
Supplier Information	Installation	The payment alternate name 2 is a match on the financial sanctions list.	The system updates the supplier's financial sanctions status to Review.
Supplier Information	Installation	The withholding alternate name 1 is a match on the financial sanctions list.	The system updates the supplier's financial sanctions status to Review.
Regular Entry Vouchers - all voucher styles, except single payment voucher.	Installation	Enter a regular voucher. The supplier initially has a financial sanctions status of Valid, but during financial sanctions validation, the system identifies the supplier as a match on the financial sanctions list.	Upon saving the voucher, the system displays a warning message that the supplier is under review or blocked for financial sanctions. You can proceed with saving the voucher. The system updates the supplier's financial sanctions status to Review.
Regular Entry Vouchers - all voucher styles, except single payment voucher.	Bank	Enter a regular voucher. Do not specify a bank for the remit supplier.	The system saves the voucher, with no validation of the supplier.
Regular Entry Vouchers - single payment voucher.	Bank	Create a single payment voucher for a single payment supplier whose bank requires financial sanctions validation. The supplier is a match on the financial sanctions list.	The system displays a warning message that the supplier is under review or blocked for financial sanctions. You can save the single payment voucher and put the payment on hold, save the single payment voucher and not put the payment on hold, or not save the single payment voucher. The system does not update the supplier's financial status.
Quick Invoice and Summary Invoice Entry	Installation	Enter a quick invoice with a valid supplier. Run the Voucher Build process. Access the voucher and change the remit supplier to a supplier with financial sanctions status of Review. Save the voucher.	Upon saving the voucher, the system displays a warning message that the supplier is under review or blocked for financial sanctions. You can proceed with saving the voucher. The system does not validate at save if the supplier's financial sanctions status is Review or Blocked.
Manual Payment and Manual Draft Worksheet.	Installation	The supplier initially has a financial sanctions status of Valid. Enter a voucher and create a manual draft payment. When you attempt to build the worksheet, the system identifies the supplier as a match on the financial sanctions list.	The system displays an error message that the supplier is under review or blocked for financial sanctions. The system does not allow you to use the supplier for a manual payment worksheet. The system updates the supplier's financial sanctions status to Review.
Pay Cycle	Installation	The supplier initially has a financial sanctions status of Valid. Create a voucher with two schedule payments. Change the second schedule payment remit supplier to a different supplier. Save the voucher. Manually change the financial sanctions status of the second remit supplier to Review. Run a pay cycle that includes both schedule payments.	The system pays the first schedule payment. The system does not select the second schedule payment.
Pay Cycle	Bank	Specify USBNK as requiring financial sanctions validation. Enter two vouchers for Supplier 1. Specify USBNK as the bank for the first voucher. Specify TRBNK as the bank for the second voucher. Manually change the financial sanctions status for Supplier 1 to Review. Run a pay cycle that includes both vouchers.	The system does not select the first voucher. The system pays the second voucher.

Understanding Financial Sanctions Validation

Overview of Financial Sanctions Validation

Financial Sanctions Validation and Transaction Processing

Financial Sanctions Validation Enabled at the Installation Level

Financial Sanctions Validation Enabled at the Bank Level

Examples of Financial Sanctions Validations