License Screening Configuration Steps

License setup involves the following major steps:

Define Regimes
Define Authorities
Define Regions and Countries
Define Jurisdictions
Define Control Types
Define Control Codes
Define License and License Exception Rules
Define Compliance Rule Sets
Define Compliance Rule Set Groups
Define License Category
Define License Type
Define License-based Constraint Sets
Define License Code
Create and Modify Licenses

Define Regimes

Define Regimes, which are required to identify the regulation that you are trying to model. For example, American companies across the world and companies in the USA exporting dual use items and technology are required to comply with the Export Administration Regulation (EAR).

Navigate to Master Data > Power Data > Compliance Rules > Regime.

Enter a Regime ID = EAR
Enter a Description = Export Administration Regulations
Enter a Regulation Reference = US-EAR. You can use this field to enter more information about the regulation as well as the official URL.
Leave Exchange Rate ID and Override Exchange Rate blank, which are not necessary for this example. Refer to the Compliance Rule topic for more detail on how to use these fields.
Enter a Default Currency ID = USD
Select a Category = COMPLIANCE

Define Authorities

Define Authorities, which are the entities or government agencies that enforce regulations. For example, the Department of Commerce is in charge of enforcing the Export Administration Regulations in the USA.

Navigate to Master Data > Power Data > Compliance Rules > Authority.

Enter an Authority ID = DPTOFCOMMERCE
Enter a Name = US Department of Commerce
Enter a Description = Government Agency that enforces the Export Administration Regulations (EAR)

Define Regions

Define Regions, which are the geographical areas where a regime applies. For example, the Export Administration Regulations (EAR) applies to the American companies globally. This regulation defines different country groups such as:

Country Group D:1 including among others countries Russia and Libya
Country Group NS1 including among other countries Russia, North Korea, and Libya
Country Group AT1 including among other countries Iran, Sudan, Syria, and North Korea

To create these country groups, navigate to Master Data > Power Data > General > Regions.

Enter a Region ID = GBL
Enter a Region Name = Global Region
For each country your company deals with, enter the Country Code ID information in the Region Details field. For example, enter:
- Geo Hierarchy ID = Country and Country Code ID = USA
- Geo Hierarchy ID = Country and Country Code ID = FRA
- Geo Hierarchy ID = Country and Country Code ID = RUS
Enter a Region ID = NS2
Enter a Region Name = National Security Country Group
For each country your company deals with, enter the Country Code ID information in the Region Details field. For example, enter:
- Geo Hierarchy ID = Country and Country Code ID = LBY
- Geo Hierarchy ID = Country and Country Code ID = IND
Enter a Region ID = AT1
Enter a Region Name = Anti-Terrorism Country Group
For each country your company deals with, enter the Country Code ID information in the Region Details field. For example, enter:
- Geo Hierarchy ID = Country and Country Code ID = IRN
- Geo Hierarchy ID = Country and Country Code ID = PRK
- Geo Hierarchy ID = Country and Country Code ID = SYR

Define Jurisdictions

Define Jurisdiction, which identifies the territory where an authority enforces specific regulations or regimes. For example, an Export Administration Regulation (EAR) is required to be followed by companies in the USA as well as American companies around the globe when exporting dual use items and technology.

Navigate to Master Data > Power Data > Compliance Rules > Jurisdiction.

Enter a Jurisdiction ID = EARJURISDICTION
Enter a Name = EAR Jurisdiction
Enter a Description = Jurisdiction for the Export Administration Regulations (EAR)
Enter an Authority ID = DPTOFCOMMERCE
Enter a Regime ID = EAR
Enter a Region ID = GBL

Define Control Types

Define two Control Types, which group controls based on company’s business needs. In this case, you will create one control type to group the reasons of control and other control type to group the exceptions.

Navigate to Master Data > Power Data > Compliance Rules > Control Types.

To define the first Control Type:

Enter a Control Type ID = EAR CONTROL
Enter a Description = EAR Controls group
Enter a Control Category ID = LICENSE
Enter a Regime ID = EAR

To define the second Control Type:

Enter a Control Type ID = EAR CONTROL EXCEPTION
Enter a Description = EAR Controls group
Enter a Control Category ID = LICENSE
Enter a Regime ID = EAR

Define Control Codes

Define Control Codes, which represent the reasons of control transactions. Control codes are commonly defined in the regulations. For example, the EAR specifies an anti-terrorism control. The regulation also indicates that the company needs to know about its potential customers before engaging in business with them. In this case, you will have to define two control codes:

Navigate to Master Data > Power Data > Compliance Rules > Control Codes.

To create the Anti-Terrorism Control:

Enter a Control Type ID = EAR CONTROL
Enter a Control Code = AT
Enter a Description = Anti-terrorism Control under the EAR
Enter a Precedence = 2

To create the Anti-Terrorism Control:

Enter a Control Type ID = EAR CONTROL
Enter a Control Code = NS
Enter a Description = National Security Control under the EAR
Enter a Precedence = 1

To create an Exception Control:

Enter a Control Type ID = EAR EXCEPTION
Enter a Control Code = LVS
Enter a Description = Limited Value Shipment under the EAR
Leave Precedence blank as it doesn’t apply to Exception Controls

To create the Due Diligence Control:

Enter a Control Type ID = EAR CONTROL
Enter a Control Code = DUE DILIGENCE
Enter a Description = Due diligence required on First Time Customer Order
Enter a Precedence = 3

In the EAR regulations, when more than one type of licenses is required, the highest precedence across controls and across rules sets in a rule set group will determine the final and unique control to be applied, and therefore, the required license. Precedence only applies when the EAR algorithm is selected as a parameter in the rule set group.

Define License and License Exception Rules

Define Compliance Rules with a control category of ‘LICENSE’. These rules will be applied to transactions and put them on hold due to the requirement of a license, permit, or authorization. Define also Compliance Rules with control category of ‘LICENSE EXCEPTION’ that may override the ‘LICENSE’ rules.

For example, an Anti-terrorism License is required for the following scenario: Shipping an item with an Export Control Classification (ECCN) 3A001.a.1 from the US and its insular possessions to countries in D:1 territory. The regulation reference is the EAR 744.17. So the rule can be:

Navigate to Trade Compliance Management > Power Data > Compliance Rule > Compliance Rule.

Compliance Rule tab:
- Enter a Compliance Rule ID = EAR-1
- Select a Control Category = LICENSE
- Select a Regulation Reference = EAR 744_17
- Enter an Effective Date = 2009-01-09
- Select the Active check box.
- In the Rule Parameters section:
  - Under Product Classification, select a Product Classification Type ID = ECCN US with a Product Classification Code = 3A001.a.1
  - Under Regions, select a Region Qualifier = SHIP_TO with a Region ID = NS2 and select the Included check box.

Controls tab:
- Select a Regime ID = EAR
- Select a Control Type = EAR CONTROL
- Select a Control Code = NS

In a second example, a National Security License is required when shipping an item with an Export Control Classification (ECCN) 0A018.a from the US to countries in AT1 territory (including among others India, Georgia, and North Korea). The regulation reference is the EAR 744.17. The rule can be:

Compliance Rule tab:
- Enter a Compliance Rule ID = EAR-2
- Select a Control Category = LICENSE
- Select a Regulation Reference = EAR 774
- Enter an Effective Date = 2009-01-09
- Select the Active check box.
- In the Rule Parameters section:
  - Under Product Classification, select a Product Classification Type ID = ECCN US with a Product Classification Code = 0A018.b
  - Under Regions, select a Region Qualifier = SHIP_TO with a Region ID = AT1 and select the Included check box
Controls tab:
- Select a Regime ID = EAR
- Select a Control Type = EAR CONTROL
- Select a Control Code = AT

In a third example, an exception is required when shipping an item with an Export Control Classification (ECCN) 0A018.a from the US to countries in AT1 territory with a transaction value less than USD 3.000. The rule can be:

Compliance Rule tab:
- Enter a Compliance Rule ID = EAR-3
- Select a Control Category = LICENSE_EXCEPTION
- Select a Regulation Reference = EAR 774
- Enter an Effective Date = 2009-01-09
- Select the Active check box.
- In the Rule Parameters section:
  - Under Product Classification, select a Product Classification Type ID = ECCN US with a Product Classification Code = 0A018.a
  - Under Regions, select a Region Qualifier = SHIP_TO with a Region ID = AT1 and select the Included check box
Controls tab:
- Select a Regime ID = EAR
- Select a Control Type = EAR CONTROL
- Select a Control Code = LVS

The fourth example is about a company that performs a due diligence on first time customers at the time of receiving the first order, independently of the ship-to country. In this scenario, the transaction is put on hold. A compliance analyst performs the due diligence and depending on the results, he/she may release the hold applying a manual authorization. The rule can be:

Compliance Rule tab:
- Enter a Compliance Rule ID = EAR-4
- Select a Control Category = LICENSE
- Select a Regulation Reference = EAR
- Enter an Effective Date = 2009-01-09
- Select the Active check box.
- In the Rule Parameters section:
  - Under Transaction Remarks, select a Remark Qualifier = FIRST CUSTOMER ORDER with a Remark Text = YES. You should have created this Remark Qualifier previously.
Controls tab:
- Select a Regime ID = EAR
- Select a Control Type = EAR CONTROLS
- Select a Control Code = DUE DILIGENCE

Refer to the Compliance Rule topic for more detail on how to define compliance rules.

Define Compliance Rule Set

Create a Compliance Rule Set and Compliance Rule Set Group which are required to run the screening process. An example is a Compliance Rule Set = EAR-RULE-SET that includes the EAR-1 Rule, EAR-2 Rule and EAR-3 Rule created above.

Navigate to Trade Compliance Management > Power Data > Compliance Rule > Compliance Rule Set.

Compliance Rule Set:
- Enter a Compliance Rule Set ID = EAR-RULE-SET-1.
- Enter a Regime ID = EAR.
- In the Compliance Rule section:
  - Select a Compliance Rule ID = EAR-1
  - Select a Compliance Rule ID = EAR-2
  - Select a Compliance Rule ID = EAR-3

Another example is a Compliance Rule Set = EAR-RULE-SET-2 that includes the EAR-4 rule created above:

Compliance Rule Set:
- Enter a Compliance Rule Set ID = EAR-RULE-SET-2
- Select a Regime ID = EAR
- In the Compliance Rule section:
  - Select a Compliance Rule ID = EAR-4

Define Compliance Rule Set Groups

For the above examples, if you want to get two independent results - one for the EAR controls related to the ECCN codes in the Commerce Control List (CCL) and the other to identify first time customer, then you should create two rule set groups.

Navigate to Trade Compliance Management > Power Data > Compliance Rule > Compliance Rule Set Group.

Compliance Rule Set Group:
- Enter a Compliance Rule Set Group ID = EAR-RULE-SET-GROUP
- Select a Compliance Algorithm ID = EAR
- In the Compliance Rule Set section:
  - Enter a Sequence Number = 1
  - Select a Compliance Rule Set ID = EAR-RULE-SET-1
  - Select an Override Option = Allowed
  - Select an Exception Override Type = Allowed
Compliance Rule Set Group:
- Enter a Compliance Rule Set Group ID = EAR-RULE-SET-GROUP-2
- Select a Compliance Algorithm ID = EAR
- In the Compliance Rule Set section:
  - Enter a Sequence Number = 1
  - Select a Compliance Rule Set ID = EAR-RULE-SET-2
  - Select an Override Option = Not Allowed
  - Select an Exception Override Type = Not Allowed

When you decide to use the EAR algorithm, and two or more rules apply to the transaction line between the same rule set, only the control with the highest precedence will be considered as a result on this rule set. If you decide to use the cumulative algorithm, the precedence across controls is not used and the result will include all the controls that apply to the transaction line. In the later scenario, if two controls require two licenses, the company should apply for both of them.

You can use the License and Exception Override fields to model the EAR decision tree defined in the regulations. Refer to the Implementation of EAR Control Process in GTM How To topic for more detail and an example on how to set up these fields.

Refer to the Compliance Rule topic for more detail on how to define compliance rules, compliance rule sets, and compliance rule groups.

Define License Category

Specify how to classify or group licenses for business purposes. An example of how to use this classification is: License Category = US LICENSES which includes all licenses issued by the United States.

Navigate to Trade Compliance Management > Power Data > License > License Category

License Category:
- Enter a Category ID = US LICENSES.

Define License Types

Defining a License Type enables enables you to classify or group licenses for business purposes. An example of how to use this classification is License Type = BIS LICENSES, which includes all license issued by the U.S. Department of Commerce – Bureau of Industry and Security.

Users can establish allowed tolerances above or below the license quantity and value at the license type level. These tolerances are used at the time of determining eligible licenses. For example, if a license is issued for a value of USD 10,000 and it has a tolerance above the value for 5%, a user is able to assign up to USD 10,500 to transactions. Many authorities allow for this, particularly around value tolerance, to accommodate fluctuations in global currency rates.

Limiting factor enables the user to specify whether the maximum use of the license will be determined by the value, by the quantity or by any of the two, whichever arrives first to the corresponding defined ceiling.

Navigate to Trade Compliance Management > Power Data > License > License Type

License Type:
- Enter a Type ID = BIS LICENSES.
- Select a Category ID = US LICENSES.
- Enter a Tolerance Value Above (in %) = 5.
- Select a Limiting Factor = QUANTITY.

Define License-based Constraint Sets

Specify Constraint Sets to indicate the fields on the license that must match fields on the transaction to make a license eligible to be assigned. GTM can match on various data including item, item remark, product classification, involved parties, and user-defined categories and types.

An example is License-EARLICENSE444 that specifies the seller as Vision USA Inc, the buyer as Ministry of Education-India, the final user as New Delhi- University and the item as a digital computer with ECCN US = 3A001.a.1. The buyer, seller and final user involved parties on Sales Order456, as well as the item classification, should be the same as on the license in order to consider License-EARLICENSE444 as a potential license to be applied to release a hold on Sales Order456.

When creating a constraint set, select the constraint set type of TRANSACTION-LINE LICENSE DETERMINATION. In this example:

Navigate to Trade Master Data > Power Data > Constraint Set > Constraint Set

Constraint Set:
- Enter a Constraint Set ID = LIC-ABS-CONSTRAINT-SET.
- Select a Constraint Set Type = TRANSACTION-LINE LICENSE DETERMINATION.

Then select the constraints that apply to this constraint set. In this example:

On the Constraints tab::
- LICENSE INVOLVED PARTIES
- LICENSE LINE PRODUCT CLASSIFICATIONS

Then provide the constraint details. In this example:

On the Constraints Details tab:
- Involved Party Qualifier = BUYER.
- Involved Party Qualifier = SELLER.
- Involved Party Qualifier = END USER.

Define License Codes

A License Code allows you to classify licenses within license types. An example of how to use this classification is: License Code = EAR-NS under License Type = BIS LICENSES. Llicense code contains information that tells GTM how license balances should be calculated. The Balance Method configuration can be defined at the Transaction Type or User-Defined Code level. It identifies the date qualifier on the transaction that should be verified against the license effective and expiration date to make sure it is still valid; the balance type tells GTM whether the license is reserved or actually assigned; the quantity and value qualifier on the transaction to be considered for the balance calculation; the license line type (import or export line) that should be increased or decreased and the constraint set to be used to match facts on the transaction against criteria indicated on the license.

The Transaction Line Saved Query on the Balance Method Details page helps the user to define a query that tells GTM how to identify the preceding transaction line from where license quantity and value will be taken. The Transaction Line Saved Query is optional. If it is not specified, GTM uses the transaction line reference number with a qualifier of PRECEDING TRANSACTION LINE to determine the sales order line. When using this method, the preceding transaction line should include the domain name (e.g. DOMAINXYZ.SALES ORDER456-0001). If you need more complex matching you can use the Transaction Line Saved Query. As an example, a Fulfillment Line ID=789-001 with 10 units should absorb the license quantity and value that has been assigned previously to the corresponding preceding Sales Order Line ID=456-001.

In this example, the setup for the license code for a Transaction Type=SALES ORDER can be:

Navigate to Trade Compliance Management > Power Data > License > License Code.

License Code:
- Enter a License Code = EAR-NS
- Select a License Type = BIS LICENSES
- In the Balance Method Details section:
  - Select a Transaction Type =SALES ORDER
  - Select a Date Qualifier=ORDER DATE
  - Select a Quantity Qualifier=ORDERED QUANTITY
  - Select a Balance Type=RESERVATION
  - Select a Quantity Balance Method=DECREASE
  - Select a Value Balance Method=DECREASE
  - Select a Constraint Set =LIC-ABS-CONSTRAINT-SET
  - Select a License Line Type=EXPORT

And the setup for the license code for the Transaction Type=FULFILLMENT LINE can be:

- In the Balance Method Details section:
  - Select a Transaction Type =FULFILLMENT LINE
  - Select a Date Qualifier=ORDER DATE
  - Select a Quantity Qualifier=ORDERED QUANTITY
  - Select a Balance Type=ASSIGNMENT
  - Select a Quantity Balance Method=DECREASE
  - Select a Value Balance Method=DECREASE
  - Select a Constraint Set =LIC-ABS-CONSTRAINT-SET
  - Select a License Line Type=EXPORT

Create and Modify Licenses

You can create and maintain as many licenses as you need. For example, in addition to tracking your own licenses, you can also track other licenses that are relevant to your business, like the licenses required by the buyers or sellers of your products. Creating these licenses helps to ensure your business partners have the right permissions for the business operations.

For each license, indicate the license category, license type and license code, the jurisdiction or regime, important dates such as requested, approval, effective, expiration, renewal and end dates. Then specify the control type codes that this license can release on transaction lines. These control type codes have been indicated previously in compliance rules and are applied as holds (i.e. reasons for control) on trade transaction lines when executing compliance rule screening with control category = LICENSE.

You can add more date qualifiers as well as relevant information that may be used in the constraint sets. This information includes ports, regions, involved parties, reference numbers and user-defined codes. Finally, you can add related licenses and registrations. In this example, the basic data on the license can be:

License:
- Enter a License ID = EARLICENSE444.
- Enter a License Number = 97541.
- Select the Active check box.
- Select a License Category = US LICENSES.
- Select a License Type = BIS LICENSES.
- Select a License Code = EAR-NS.
- Enter a Regime = EAR.
- Enter an Effective Date = 2017-01-01.
- Enter an Expiration Date = 2018-12-31.
- In the Control Type Code section:
  - Select a Control Type = EAR CONTROL.
  - Select a Control Code = NS.
- In the Involved Parties section:
  - Select an Involved Party Qualifier = BUYER with an Involved Party Contact = MINISTRY OF EDUCATION INDIA.
  - Select an Involved Party Qualifier = SELLER with an Involved Party Contact = VISION USA INC.
  - Select an Involved Party Qualifier = END USER with an Involved Party Contact = NEW DELHI UNIVERSITY.

Please refer to the Jurisdiction topics for more detail on how to define Jurisdictions and Regimes.

You can cover many items on a license line by indicating a commodity, a user-defined commodity, or a product classification, or you can specify a single item. In this example, the basic data of the license line can be:

On the License Lines tab:
- Enter a License Line ID = LINE-01.
- Select a Line Type = Export.
- Enter a Product Classification Matching Formula = ‘ECCN US’ like ‘3A001%’.
- Enter an Authorized Quantity = 10 and a UOM = EA.
- Enter an Authorized Value = 10000 USD.

Refer to the License Line topic for more detail on all the data elements you can add to license lines.