SPL for Geniuses

Robert Waldrop
Global Trade Practice Leader
EntryPoint Consulting

[ STEVE RUGGIERO

[ ED HUDAK

ASUG INSTALLATION MEMBER

MEMBER SINCE: 2000

ASUG INSTALLATION MEMBER

MEMBER SINCE: 1998

[ SHERRYANNE MEYER

ASUG INSTALLATION MEMBER

MEMBER SINCE: 1999

[ EntryPoint Global Trade Practice

Longest-standing SAP GTS Partner Practice in the US and leader in market
share and client references, including the following 35 US, European and
Asian GTS clients . . .

Goodrich, Avaya, Microsoft, Cooper Industries, Entegris, AkzoNobel

Littelfuse, Nike, Perkin Elmer, Dow Corning, Fonterra, IFF, Grundfos
McCormick, Bose, Danisco, Computer Associates, CommScope,
Heat and Controls, Citrix, Henkel, WR Grace, Tellabs, Conoco Phillips
Texas Instruments, Dow Chemical, Sun, Life Technologies,
LSI, Medrad, NVIDIA, Rhodia, Tyson, Intel, Hughes Network Systems

Practice employs industry-trained GTS consultants, each with a minimum of

five full GTS deployments, along with trade compliance specialists
supporting clients trade operations.
Produce weekly GTS Tips n Tricks newsletter. Ask me about subscribing.
Real Experience. Real Advantage.

[ Learning Points
1. Get answers to the seven most important questions about
how Sanctioned Party List (SPL) screening is used at your
company.
2. Gain insight into understanding your companys true level of
reasonable care, information that could prove crucial if your
company ever receives a customs audit.
3. Learn how some simple changes to your SPL design can truly
turn your instance of GTS into a best-in-breed application for
sanctioned party list screening.
Note: This is an expert-level presentation. Prior knowledge of
this topic will be helpful in fully understanding the concepts.
Real Experience. Real Advantage.

[ What is SPL?
There are lists of individuals, firms and other entities that are restricted
by national and international law from engaging in certain types of
commerce.
Sanctioned Party List (SPL) Screening is the service SAP GTS
provides to ensure that a company is not conducting
inappropriate business with a person or company on any of
these Sanctioned Party Lists.
This can include customers (and their contact people), endusers, vendors, employees, visitors, and financial institutions.
Screening will be conducted against the above entities at both a
master-data and transactional level.

Real Experience. Real Advantage.

[ The most important questions about SPL

1. Which fields should I use for screening?
2. Which comparison direction is correct?
3. Do I have to screen against all Name and Street fields?
4. Do I need TREX?
5. Which words should I exclude from screening?
6. How can I reduce blocks caused by one-word SPL names?
7. What partners should I put on the positive list?

Real Experience. Real Advantage.

[ 1. Which fields should I use for screening?

SPL does allow you to:
Select 1 or more fields to compare (e.g. name, street, city, country)
Indicate whether each field will trigger a hit on its own (OR), or in
combination with other fields (AND).

SPL does not allow independent address matching to occur when

combined with the name field in a single SPL process:
SPL cannot represent the logic:
Name OR (Street AND City AND Region AND Country)
True address matching cannot take place (i.e. Name match = NO,
Address match = YES)
Real Experience. Real Advantage.

[ 1. Which fields should I use for screening?

Combining name and address fields within a single match algorithm:
Could produce unreasonable hits or misses
Could produce hits and misses that are not fully understood by your
compliance team (who are more comfortable with thinking in terms of
distinct Name and Address matching).

Real Experience. Real Advantage.

[ 1. Which fields should I use for screening?

SPL will attempt to match address fields against the least-detailed address
record in the SPL entry
About half of all SPL entries have one blank address record (either as
the only address record or one of many).
For these records, having the Name field in your matching logic, will
cause all address fields to be ignored.

Real Experience. Real Advantage.

[ 1. Which fields should I use for screening?

If you dont fully understand, youll not know . . .

That true address matching is not being performed

Address fields may prevent blocks from occurring when you

dont want them to:

You do not block business partners based on their address

matching that of a denied party.

Some exact name matches may not result in a block, due to

address field mismatches.

Address fields may not prevent blocks occurring in the way

that is obvious

Most SPL entries will ignore address fields

Your hit rate is not being reduced as much as you believe

Real Experience. Real Advantage.

[ 1. Which fields should I use for screening?

If you do fully understand, youll be able to . . .

Defend your SPL design and processes in the case of a

customs audit.

Simplify your SPL design to improve your level of compliance

Remove the mixing of name & address fields

Use of name-only (or name/country) matching recommended
by EntryPoint and MK Data.

Decide to introduce separate address-only SPL regulation.

Attain true address screening

Have system reflect the reasonable care levels of your
companys trade compliance team.

Real Experience. Real Advantage.

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[ 2. Which Comparison Direction is Correct?

Is the minimum word or phrase match percentage* calculated against the
denied party or business partner.

Until recent versions of GTS, comparison direction could only be

against the denied party.

Words and phrases are both (typically) shorter on denied party.

Matches are more likely and of lower quality.
Iran Iranian (100%); David David Johnson Electronics (100%)

In current versions of GTS, direction can be changed

GTS 7.1: partner comparison direction for word match.

GTS7.2 (SP10): partner comparison direction for phrase match.

* Note that we use word % for what GTS calls search term (% of common
letters for a word to match) and phrase % for what is called originating
feature (% of common words for a phrase to match).
Real Experience. Real Advantage.

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[ 2. Which Comparison Direction is Correct?

Recommendation to use business partner direction for word

comparison:

For all companies using GTS.

Will remove occurrence of very short SPL word causing block against
much longer partner word (e.g. MAN blocking MANAGEMENT)

Recommendation to use business partner direction for phrase

comparison:

For companies that use Name (and Street, if used) fields ONLY for
capturing business partner name (or formal street address).
Any superfluous information (e.g. Attn:, contact info) will cause true
matches to be missed (due to excessive number of words in the name
or street fields).
For example, Osama bin Laden, c/o Mailboxes Etc Waziristan will
not block against SPL entry Osama bin Laden.

Real Experience. Real Advantage.

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[ 3. Do I have to screen against all Name and Street

fields?

GTS supports the screening of the five name fields and five street fields. By
default, it will include everything captured in these fields in SPL.
It is recommended that you only screen those fields which hold the formal
name or street address of a partner.

For master data screening, you can exclude all name fields except
Name1 and Name2 via configuration.

Can suppress transfer/screening of other fields.

Exclusion of Name2 would require custom coding

For transactional screening, you cannot exclude any of the Name or Street
fields without custom coding (not an issue if manual name/address overrides
are not permitted by company).

Based on company standards on how partner data is captured and the

above configuration/customization, it could become feasible to use the
business partner direction for phrase comparison (see question #2).

Real Experience. Real Advantage.

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[ 4. Do I need TREX?
TREX is a free SAP search utility that improves the quality of SPL matching in
GTS 7.2 & 8.0. It is the most significant improvement of SPL.ever.

Eliminates the word within word constraint.

In order for two words to match, one must be found within the other
(default denied party found within partner)
Iranian and Iraniam will never match
Even though its a 96% word match, Forsvarsindustriorganisationex will
not match the SPL Forsvarsindustriorganisationen (true SPL entry).

TREX allows for a specific level of misspelling

Missing letter (SORD vs. SWORD)

Inverted letters (Society vs. Soceity)
Additional letters (Laboratories vs. Laboratory)

Real Experience. Real Advantage.

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[ 4. Do I need TREX?

Will reduce instances of short word matching long word beyond

what is already done using comparison direction and minimum
word match %.

Replaces need for vice-versa search strategy setting to eliminate

constraint on compared word lengths (target longer than source).

Has appearance of increasing hit rate, but in reality is more likely to

reduce the hit rate, due to:

Ability for company to increase both word match % and phrase match
% due to higher assurance that truly similar words will match.
Setting TREX sensitivity at a sufficiently high level will prevent truly
dissimilar words from matching.

TREX increases quality w/o increasing hit rate, permitting SPL

screening to achieve a performance that is best in class.

Real Experience. Real Advantage.

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[ 4. Do I need TREX?

Real Experience. Real Advantage.

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[ 5. Which words should I exclude from screening?

The only words that should be excluded from SPL screening are those that
have no descriptive value.
Adding descriptive words will both increase compliance gaps &
workload.
Will cause misses of probable denied parties
Will cause hits of obviously good business partners
The fewer excluded words you have, the more compliant you will be

Never make a word excluded because it is the cause of frequent

false-positive matches. It is a superficial, yet satisfying, way to
eliminate a symptom of a poor SPL design.

The word Company is a good choice for an excluded word, as it

adds no useful information to a partner name. The words Airline,
Computers or David are dangerous choices for exclusion.

Real Experience. Real Advantage.

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[ 5. Which words should I exclude from screening?

List of most common words in the SPL . . .

Real Experience. Real Advantage.

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[ 5. Which words should I exclude from screening?

Effective, but safe, excluded words . . .

Real Experience. Real Advantage.

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[ 6. How can I reduce blocks caused by one-word

SPL names?

Change your phrase comparison direction from denied party to

business partner (but only if you can satisfy the issues on questions # 3
and #4).
- OR Overwrite problematic one-word SPL words so they no longer
block (could be as few as 5 or as many as 50).
The blocks caused by any SPL name that will ALWAYS be immediately
released w/o research or escalation, provide no compliance value.
Can manually change those causing the greatest number of blocks (e.g.
changing DAVID to XXXDAVID).

Overwrite will be removed if particular SPL entry is ever updated as

part of delta screening process.
As this would be infrequent, could simply re-update when noticed.
Otherwise, could create simple exception report to send alert.
Real Experience. Real Advantage.

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[ 7. What partners should be put on the Positive List

You should only use for US/NATO government entities, your companys own
global locations or internal partners.
Overuse of positive list will both increase compliance gaps &
workload.
Will require frequent manual screening of positive list
Will be difficult to enforce consistent policy on when used.

Like the over-use of excluded words, the over-use of the positive

list is a superficial, yet satisfying, way to eliminate a symptom of a
poor SPL design.

Can eliminate repeated blocks against single business partner by:

Ensuring your nightly delta screening only looks at most recent

updates.
Setting GTS to not re-block a released partner

Real Experience. Real Advantage.

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Thank you for participating.

Please remember to complete and return your
evaluation form following this session.
For ongoing education on this area of focus, visit the Year-Round
Community page at www.asug.com/yrc

[ Session 1310

Robert Waldrop

Real Experience. Real Advantage.

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