How to Use Sanctioned Territory Screening in GTM

Companies are subject to regional, unilateral, and multilateral embargoes when doing business with foreign entities for reasons related to anti-terrorism pacts, economic sanctions, etc. Typically, these entities are countries subject to sanctions, including embargoes as well as persons, businesses, and organizations subject to financial sanctions. For example, in the United States of America, the Office of Foreign Assets Control (OFAC) administers and enforces economic sanction programs primarily against countries and groups of individuals.

Both for import and export trade, laws in many countries require companies to ensure that no goods are shipped to/from prohibited countries, organizations, or individuals. With the Sanctioned Territory Screening capability, Oracle Global Trade Management (GTM) helps to maintain compliance with such laws and reduces the risk associated with shipping items to embargoed destinations.

The screening can be performed:

• Manually via the user interface
• Invoked externally via integration or as a web service
• In the context of a party
• In the context of a trade transaction via a compliance rule or a compliance policy

The key input to sanctioned territory screening is source and destination information. When you trigger a sanctioned territory screening, GTM displays the results as a list of sanctions (defined as compliance rules) which are in place between the specified territories.

If no matching rules are detected by the system, then there would be no restriction in doing business with the specified entity.

This topic focuses on the setup required and the process details of sanctioned territory screening using the GTM user interface.

Setup

As part of the setup, you need to define the following data to support the ad hoc sanctioned territory screening functionality:

• Country Code: These are the ISO 3166 country codes that identify individual countries. GTM includes pre-defined, public data codes for most countries. You can, however, add additional countries if needed.
• Region: A region defines a geographic area. In GTM, a region can be a single entity (e.g. a specific country such as France). Alternatively, it can be a group consisting of several entities or countries (e.g. European Union or NATO). For regions, you can set up varying levels of detail. You can use a region to group countries, or you can set up regions at a more granular level such as state/province.
• Regime: Regimes define a set of rules or regulations related to a specific subject that must be followed when importing or exporting. Regimes can be multilateral (e.g. international), regional, domestic, or interstate.
• Control Category: Control category defines the high level category for a control and drive the logic of a compliance rule. GTM ships with a number of control categories including SANCTION.
• Control Type: Control type specifies the type of control you are using. It is related to a control category and is used in the screening process. Examples include Embargo, Enhanced Proliferation Control Initiative (EPCI), Anti-Boycott Regulation, etc.
• Control Code: Control codes refer to actual codes associated with the control type.
• Compliance Rule: Compliance rules allow you to configure your screening to fit any combination of rules or policies that you deem to be necessary. On the Compliance Rule tab, you can specify:
  • Control Category
  • Description
  • Regulation Reference ID
  • Effective and expiration dates for the compliance rule
  • Various rule parameters, which are optional, including:
    • Item
    • Product Classification
    • Parties
    • Transaction
    • Regions
    • Country

On the Controls tab, you can specify details about the controls associated with this compliance rule. You can specify multiple controls.

Note: Though you can model sanction screening rules based on countries, it is recommended that you use the Regions section to configure your rules to get better screening results. (See the Regions section in the Compliance Rule help topic for more details.)

• Compliance Rule Set: Compliance rule sets are used to build the rule set groups that are used in compliance policies.
• Compliance Rule Set Group: By grouping rules, you can control how those rules will be used by compliance policies during screening.

For example, if you want to create a sanction rule to screen any cargo originating in the USA such that its possessions cannot be shipped to a destination of Cuba, you can configure data as:

• Region:
  1. Consists of the USA and insular areas including Guam, the U.S. Virgin Islands, and Puerto Rico
  2. Consists of the country of Cuba

• Regime: US-EAR (Export Administration Regulations)
• Control Category: SANCTION
• Control Type: EAR EMBARGO
• Control Code: EMBARGO TO CUBA
• Compliance Rule: You can specify the following in the Compliance Rule tab:
  1. Control Category: SANCTION
  2. Description: EAR EMBARGO TO CUBA
  3. Two regions including:
     • A Region Qualifier of EXPORTER (or SHIP FROM) with a Region ID of USA. This region is included in this compliance rule.
     • A Region Qualifier of IMPORTER (or SHIP TO) with a Region ID of CUB. This region is also included in the compliance rule.
  4. On the Controls tab, you can specify:
     • Control Type: EAR EMBARGO
     • Control Code: EMBARGO TO CUBA

Process

This section will explain the process for sanctioned territory screening via the ad hoc query, Party manager, Trade Transaction manager, and web service.

Ad hoc Sanction Screening

The Sanctioned Territory Screening page enables you to perform an ad hoc screening of sanctioned territories or countries. GTM uses the data you enter and compares it to the sanction screening rule data you previously configured and displays the results.

On the Sanctioned Territory Screening page, you can specify multiple combinations of an Involved Country Qualifier and a Country Code. For the example used in the previous section, you can use:

• An Involved Country Qualifier of  SHIP_FROM with a corresponding Country Code of USA.
• A second Involved Country Qualifier of  SHIP_TO with a corresponding Country Code of CUB.

Note: These qualifier combinations are just examples. You can also use other combinations such as EXPORTER and IMPORTER qualifiers, MANUFACTURER and CUSTOMER qualifiers, etc.

When you click Match, GTM looks for all the sanction rules which apply to the country qualifiers and country values specified, and displays the Sanctioned Territory Screening – Potential Matches results page. The results page displays:

• Compliance Rule ID
• Control Category, Control Type, and Control Code
• Exception Rule ID, Exception Control Type, and Exception Control code
• Screening results is an indicator that there is a sanction rule which matches your criteria. For sanctioned territory screening, this field will always show a red cross mark (X).

In this example:

• Compliance Rule ID is EAR CUBA EMBARGO
• Control Category is SANCTION
• Control Type is EAR EMBARGO
• Control Code is EMBARGO TO CUBA

Specifically, there is one rule which matched your query. This rule is a sanction related to the US EAR embargo rules when shipping from the United States to Cuba.

Sanctioned Territory Screening via Party Manager

You can also screen parties to see if they are subject to sanctions. This screening also uses the compliance rules you previously defined to determine if an embargo or sanction is in place. The Party manager screen enables you to create new parties or view existing parties. In the Party manager, you can view name and address information. The country specified in the address information of the party is used during sanction screening.  You can also specify:

• User-defined Code
• Reference Numbers
• Remarks

In this example, your party is in Cuba. So you would want to screen it to see if there are any embargoes or sanctions in place.

To perform screening of sanctioned territories or countries, you can trigger the Sanctioned Territory Screening action. When you perform this action, GTM looks for the rules which you specified and displays the Sanctioned Territory Screening – Potential Matches results page where you can see the matching:

• Compliance Rule ID
• Control Type
• Control Code

If multiple sanction rules are applicable for a region/country, then all of them are applied during the screening and results are displayed accordingly.

Note: In case of sanction screening via Party manager, system screens the party only against the region mentioned. Hence, the values entered in the Region ID field of the Compliance Rule page are used for screening and the Region Qualifier values are ignored.

Note: If you want to see sanctions that a party is subject to, you can look at the Sanctioned Territory Screening Matches tab on the Party manager.

Sanctioned Territory Screening via Trade Transaction Manager

You can screen your compliance rules against transactions to determine if they are subject to any embargoes or sanctions.  

In our example, the transaction line is shipping from the USA and shipping to Cuba. You would want to see if this transaction is subject to any sanctions.

To trigger sanction screening against a transaction including its lines, select the Execute Compliance Rules action since compliance rules are used to model sanction screening. When you trigger this action, GTM screens the selected transaction against the compliance rule set group you specified, and displays the Compliance Rule Screening results page.

Alternatively you can also perform the Execute Policy action.

Note: For sanctioned territory screening, you need to select a compliance rule set group ID which has SANCTION specified as the control category.

Each transaction line will display a Screening Results grid. If a compliance rule has been met, the details will be specified in this grid including:

• Compliance Rule Set Group ID
• Compliance Rule ID
• Control Category
• Control Type
• Control Code

In our example, you can see that the transaction line is subject to a sanction based on the Control Category of SANCTION. Specifically, it is subject to the Control Code of EAR EMBARGO TO CUBA.

Note: If you want to see sanctions that a transaction line is subject to, you can look at the Sanctioned Control Results section on the transaction line.

You can also click Status available on a trade transaction/transaction line screen to view if there is any associated sanction screening related status. See GTM Internal Status Designations help topic for more details.

Note: In case a rule is no longer applicable for screening, it is suggested that you mark it as inactive on the Compliance Rule screen instead of deleting it. You might need it for future reference.

Sanctioned Territory Screening via Integration

You can also perform sanctioned territory screening via a service called ‘Embargoed Country Screen’. The system runs a match between the pre-defined XML data and the sanction rule in a process similar to the ad hoc screening process and displays the results, if any.