From the headlines to your AML/KYC system: the strange case of Mr. Wu

Breaking News That You Can Use

Recently, all the major news channels carried a high-profile story about a Chinese businessman, Ng Lap Seng, who was arrested by the FBI for financial crimes, on the very same day that the Chinese President, Xi Jinping, arrived in Seattle, to begin his U.S. visit. The headline in the ABC News feed was “FBI Arrests Chinese Millionaire Once Tied to Clinton $$ Scandal.”

This story almost certainly comes as unwelcome news for the Hillary Clinton campaign, since Mr. Ng (“last” names come first in China, right?) had extensive prior contacts with the Clintons. However, my interest in the story is not because of its impact on a potential presidential campaign, but rather because of its immediate relevance for the AML/KYC community. Shadowy character, flying around the world on private jets, carrying suitcases full of cash from unspecified sources, wiring massive amounts into accounts in U.S. financial institutions — it’s every compliance officer’s worst nightmare, I’d guess.

Fresh as today’s headlines may seem, this is actually a very old story, almost twenty years old, in fact. Back in the late 1990’s, Mr. Ng was already on the radar of various U.S. law-enforcement agencies, as well as that of the Senate Governmental Affairs Committee being run by then-Sen. Fred Thompson. An old story indeed. But looking back at the press of that time, you can find a very curious fact about Mr. Ng: he was also known as Mr. Wu. Sure, shady characters often have multiple identities that make their trails hard to follow. But Mr. Ng didn’t need to make up a new identity to become Mr. Wu. In fact, he didn’t need to change his name at all.

Huh? How can someone named Ng also be named Wu and not change his name? Easy — we did it for him.

Here’s an excerpt from the Feb. 26, 1998 edition of the Wall Street Journal that may clarify things a bit:

[…] choice of Macau as a refuge was scarcely an accident, since it is the base of his business partner Ng Lap Seng. (Mr. Ng is also known as Mr. Wu, since the Cantonese and Mandarin dialects have different pronunciations of the ideograph for his name.) […]

And there you go. All through this matter, there has only been one surname, and it’s a very popular one, too — within the top 10 most commonly occurring surnames in China (see: here).

That surname is:

Chinese ideograph for the surname romanized as Ng or Wu

So, seen from the perspective of an OFAC name-screening process, the surnames Ng and Wu need to be recognized as an exact match, because they are two different ways to represent the exact same Chinese ideograph.

Similar problems arise with many of the most common Chinese personal names, and there are quite a few very handy internet resources to help understand these romanization differences. However, if your notion of name-matching involves counting the characters that two names have in common, then you’ll need to hope that Mr. Ng shows up at your institution as Mr. Ng, and not as Mr. Wu. Or not even as Mr. Woo, for that matter.

A Job For Mr. Nobody

Let’s do a reset here. Here is what we know:

  • An international wheeler-dealer with a shady past and even shadier connections has been arrested by the FBI for financial crimes. He has a common Chinese surname.
  • This same individual has been under investigation by U.S. Federal agencies since at least the mid-1990’s.
  • Since the mid-1990’s, this same individual has been known to have at least two very different spellings of his surname, Ng and Wu.
  • Numerous authoritative public sources identify these alternate surname spellings as a regular and predictable pattern associated with the romanization of Chinese ideographic characters. Many of these same sources also provide equivalent alternate romanizations for many of the most commonly occurring Chinese surnames, covering as much as 800 million people.
  • Character-based name-comparison techniques, such as those provided by the OFAC SLSA tool, are generally useless for coping with this class of name-screening problems.
  • Many name-screening applications and products now in commercial and governmental use already include a mechanism for handling “nicknames,” such that, for example, Bill is understood as being a match for William. Computationally, this same mechanism should suffice to handle many types of table-oriented romanization patterns.

OK, so this would appear to be a significant risk-area for AML/KYC operations. But whose job is it to close this loop-hole in the name-screening coverage?

Is it the responsibility of the financial institution, to have a expert on romanization patterns on hand for Chinese names (and Korean names, and Russian names and Islamic names, and Hispanic names, and …)?

Is it the responsibility of the AML/KYC applications developers and/or vendors to be sure that vital knowledge like this is “baked in” to the process that is tasked with determining if Mr. Wu has the same name as Mr. Ng does?

Or is it perhaps the responsibility of OFAC and other national authorities who compile and curate AML/KYC name-lists to identify all obvious alternative romanizations associated with a name whose “native” form is not written in the roman alphabet?

Right now, it seems to me that we’re seeing yet another example of the old story about four people named Everybody, Somebody, Anybody, and Nobody. As usual, Mr. Nobody seems to be doing all the work.

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