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Purpose:

The purpose of this article is to provide an understanding of the system logic and requirements in relation to Foreign trade Legal Control in the SAP system. Component area (SD-FT-CON)

Overview:

The aim of legal control is to determine whether the export is generally allowed. Embargos can be placed on countries by the United Nations or companies can be placed on a Sanctions Parties List for trade. Some business transactions also require a license for shipping from the authorities. The SAP legal control functionality incorporates all of these business scenarios and enables management of each of them. We will look at these in more detail in this article.   

Types of legal controls:

1) Sanctioned Party Lists are issued by various US authorities. These lists identify individual people or firms - both American and non-American - with whom, for various reasons, American companies may not trade or can only carry out restricted trading with. The stipulations also apply to subsidiaries of US companies abroad.

2) An Embargo includes all compulsory state measures relating to a ban on goods trading with a particular state, in order to prevent specific types of trading from taking place.

3) License required. In the SAP System, a code of rights is defined as a legal regulation. This regulates the export of goods in a particular country and specific and individual licences may be required to be able to transport these goods. To simplify the export control process, articles that are to be dealt with and processed in the same way by a given legal regulation are grouped together in the system. Every legal requirement produces lists that include all goods requiring approval. In the lists, every item is assigned an identification number, which is entered into the SAP System as an export control class number. 
 

Generic information:

When fully configured and set up correctly legal control will automatically determine whether an export is permitted considering the sanctioned party list, embargo and whether any export licenses are necessary (and if so, how many). This determination depends on:

  • Export's country of departure
  • Goods to be exported
  • Export's country of destination
  • Customers         
  • Export date

In the event that a business transaction requires a license, the system tries to automatically determine all necessary export licenses and classify the document item. The document item can be processed further if this classification is successful. Otherwise, it will be blocked for further processing. The deciding partner for the legal control check is the ship-to party, whose homeland determines the country of destination for the export. The crucial date for the legal control check is the requested delivery date in the sales order (this is the date of the first confirmed schedule line) and the goods issue date in the delivery. Data relevant for legal control can be stored in the material master. The SAP System can manage various types of export licenses that your company may receive for exporting various goods to various different customers and countries. You must create legal controls in the system so that legal control can automatically determine the export licenses. An export license is always only valid for one legal regulation and one company code and is classified for one type of license. It is always only valid for a set period of time.

An export license can be valid for:

  • A specific transaction type or for all types of transactions
  • A specific sales document or for all types of sales documents
  • One, several or all of the countries of destination
  • One, several or all of the partners (the partner role can also be specified here)
  • One, several or all of the export control classes

In the event that the license contains a maximum amount, assigned sales order values can only be updated until this amount is used up. Ultimately, legal control can no longer use this license.
One export license can have different statuses. Only when it has status C - Active, will the license be taken into consideration by the systems legal control for license determination.

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