Digital systems rely on accurate data to work properly. Inputting errors, or “fat finger” events, as they’re often referred to in financial industries, can be devastating. Recent trading history is littered with events that have cost investors billions of dollars: among the more notorious was the Deutsche Bank employee who confused gross with net and mistakenly sent $6bn to a US hedge fund.
KYC compliance is equally dependent on accurate data. Time and money can easily be wasted if a compliance check is conducted on a target wrongly selected because of something as basic as the wrong spelling of a name or address.
Automated compliance systems can eliminate most opportunities for error. But one market presents a special set of difficulties to KYC researchers: China.
Many Chinese regulatory bodies have been slower than the nation’s industries to integrate into the global economy. China’s companies registry is one such entity.
Officialdom in the People’s Republic only lists national companies by their official names and in their Chinese characters. China does have an official form of lingual conversion called pinyin, which recreates the sounds of the syllables that make up Chinese names in the 26 letters of the alphabet. But the companies registry insists on logging firms in Chinese characters.
Under a manual search, reverse transliteration – trying to trace the company’s official name from its pinyin conversion – would be difficult, because many different Chinese words may be translated into the same expression. For instance, the name written in pinyin as “Di” is used for more than 100 Chinese characters, all with different meanings despite having a similar sound.
It’s also often impossible to identify a firm from its adopted Western name because often they bear little resemblance to the official Chinese title. You’ll not find the huge media corporation Sina under that name for instance: It’s pinyin title is written “xīn làng” and, just to add to the confusion, is pronounced (roughly!) as “shin leng”.
In the past, compliance officers would have a tough time carrying out due diligence searches on a new Chinese client unless they had a deep knowledge of the language and its written form.
Know Your Customer, however, has developed a solution that removes such obstacles for Western compliance officers. Thanks to an elegant piece of software built into our client onboarding and compliance solution, our customers in China — and those that do business with Chinese firms — can conduct clearance searches on any Chinese name safe in the knowledge they’ll locate the right target.
Our proprietary context-guided reverse transliteration search enables researchers to find the correct company from its Latin translation by scouring vast datasets of official Chinese company-name conversions.
Using this technology western users can now just type in “Dai Di (Shanghai)” and the system will find the correct company “戴邸（上海）” in the official Chinese company registry and return all the details.
Of course, all names and possibly corporate shareholders are also registered only under their Chinese character names in the corporate details of our sample company Dai Di Shanghai. But our system helps western users here as well by showing both the Chinese characters of a person that is a director or shareholder and the official transliteration. With that, it is easy to distinguish between Mrs Dong (董梨莉 -> transliteration: Dong, Lili) and Mrs Chen (陈裴越-> transliterated: Chen, Pei Yue).
By Maria McDermott, Director of Corporate Affairs and Risk Management, KnowYourCustomer.com