Indirect provision prohibitions by checking against Dow Jones SCO lists

Every company established in the EU is obliged to carry out sanctions list checks. The sanctions lists are contained in the various regulations issued by the EU. Outside the EU, sanctions lists also exist, such as in the US, where they are defined by OFAC (Office of Foreign Assets Control).

Sanctions: a foreign policy measure taken by governments to induce another state, person or institution to behave or refrain from behaving in a certain way. This can manifest itself in sanctions restricting or preventing business relations or preventing exports and imports of certain goods. To determine whether an existing or potential business partner is sanctioned, checks are made against sanctions lists.

The requirement to check against EU sanctions lists is directly applicable law within the Union. The check against other lists is fundamentally recommended in order not to violate the applicable law of other states.

The persons and companies on the lists are directly affected by sanction measures and it can thus be checked directly whether a business relationship may be entered into. However, it is somewhat more complicated if no business may be conducted with companies or persons even though they are not on any sanctions list. These are indirect prohibitions of provision.

This means that listed companies and persons may not be provided with economic resources. However, this would be precisely the case if transactions were conducted with companies that are (majority) owned by a listed person or company.

A well-known example, especially through the media, is the London football club Chelsea FC, which was owned by the Russian oligarch Roman Abramovich. Abramovich was sanctioned in connection with the Russian invasion of Ukraine, which resulted in such an indirect provision ban. The English capital club now has new owners and is currently no longer affected.

In order to be able to check such indirect provision prohibitions, the US company Dow Jones provides the so-called SCO lists (Sanctions Control & Ownership). The SCO lists can be obtained directly from Dow Jones for a fee.

The list comprises more than 21,000 companies, which were identified by the Dow Jones research team in more than 170 countries. The companies listed are those owned or controlled by individuals, companies or regions that have been sanctioned by OFAC and/or the EU. If an existing or even potential business partner is identified during the check against the SCO list, this can be a support in deciding whether to discontinue or not to enter into the relationship in the first place.

With the sanctions lists of the EU and the USA, a large amount of data is already available to be checked against. With the use of the SCO list, a considerable amount of data is added. It is therefore advisable to automate such checks and thus prevent avoidable errors. For this purpose, Mercoline provides SAP users with the fully integrated add-on M.SecureTrade Sanctions List Check, which with Q3/2022 can also process SCO lists (in the data format of Reguvis) and include them in checks.

The integration of the new list content is smooth and the familiar look and feel is of course retained for the user.

Dow Jones: https://www.dowjones.com/professional/risk/

Zoll.de: https://www.zoll.de/DE/Fachthemen/Aussenwirtschaft-Bargeldverkehr/Warenausfuhr/Personen/Liste/liste_node.html

Federal Office of Economics and Export Control (BAFA): https://www.bafa.de/DE/Aussenwirtschaft/Ausfuhrkontrolle/Embargos-Weitere_Massnahmen/embargos-weitere_massnahmen_node.html