Arabic Names Spell Trouble for Banks

posted on: Apr 19, 2011

International banks, acting on government orders to freeze assets from Libya, Egypt and Tunisia, are scouring hundreds of millions of client files for individuals on the new watch lists. But in doing so, bank compliance officers are grappling with a peculiar challenge: the myriad ways of transliterating Arabic names.

The arcane problem is opening the door to niche players, including a unicycling polyglot, who promise to help banks ensure they don’t miss anyone because of misspelled names.

The pressure is high, with banks fearful of falling afoul of justice officials. “While [Arabic transliteration] has always been a concern, it’s become more of a challenge given recent events,” said Vasilios Chrisos, a top U.S.-based compliance officer at Australian bank Macquarie Group Ltd.

For banks, identifying and closing accounts of officials or individuals on sanctions list is, in the best of circumstances, difficult. Accounts can be held via offshore trusts. Individuals can try to conceal links to an account by using a front man.

Compounding things, for individuals with Arabic names, sanctions lists provide only a few alternate spellings. The U.S. Treasury Department offers 12 possible spellings for Moammar Gadhafi, though language experts say there are more than 100 for the family name alone.

Unlike other so-called script languages such as Chinese or Japanese, Arabic has no transliteration standards. Pronunciation of the same names varies by place, and written Arabic contains few vowels, opening the door to a larger range of acceptable translations. Mohamed can also be transliterated as Mahmut, Mehmud or dozens of other variants.

Banks allow clients to transliterate their names as they see fit when they open new accounts. When a government publishes a new watch list, the banks’ software uses so-called fuzzy logic to search for alternative spellings, similar to how Google suggests alternative phrases when it detects a possible typo in a search.

But fuzzy logic goes only a short distance in spotting transliteration errors because of the huge range of Latin spellings of Arabic names. To make sure they aren’t missing anyone, banks have recently resorted to sorting through many client files manually.

Government authorities, such as the U.S. Treasury’s Office of Foreign Asset Control, offer banks some help. If OFAC sees a recurring alternate spelling, it will add it to its lists.

Stepping into the breach are companies such as CJK Dictionary Institute.

CJK founder Jack Halpern says his small team pored over hard copies of phone directories, encyclopedias, student rosters and general-interest books from a slew of Middle Eastern countries to compile a dictionary of seven million variants in all of Arab proper names.

Using this dictionary, Mr. Halpern has ginned up a greatly expanded version of the U.S., United Nations and U.K. sanctions lists. For instance, while the U.S. gives only four alternative spellings for one individual on the sanction list, Hatem Ahmad Barakat, Mr. Halpern says he can potentially supply 130,000 potential variants, given all the possible spellings for each of the three names.

Mr. Halpern, who says he speaks 10 languages and is known for arriving at language conferences on a unicycle, spent three decades compiling transliteration dictionaries of Asian languages for academic use. After undertaking Arabic studies, he realized that a roster of Arabic names would be a boon for anti-terrorist officials and border-control authorities—and, more recently, from anti-money laundering departments at banks.

Mr. Halpern has recently signed deals with Datanomic Inc., a leading client-screening company, as well as Compsec Inc., which sells intelligence services to the U.S. government. “I saw a huge demand for names, so I put a lot of energy into this,” he says.

Meanwhile, Accuity, a compliance-software supplier, has added more Middle Eastern analysts and last month published an expanded list of alternative spellings for many Middle Eastern names, including 110 variations of Gadhafi.

WorldCheck, a leading provider of lists of public officials that are subject to greater scrutiny in the banking world, last year tweaked its systems to allow for the original Arabic spelling. That allows banks to compare it to original documents such as passports or drivers licenses. They also now reverse sanctions lists into the original Arabic.

Compliance expert Bertrand Lisbach founded Switzerland-based Linguistic Search Solutions just three years ago. He has developed a series of search engines for various languages that contain “rules” about how various names could be transliterated into English. Those search engines help banks’ name-matching software detect whether a client might correspond to a name on a watch list, even if the spelling is different. Mr. Lisbach has sold the service to UBS AG as well as to Accuity, which has in turn sold a software package including LSS’s search engine to a number of banks.

“Gadhafi has always been one of our darlings in the name-matching community,” said Mr. Lisbach, who uses the confusion about the Libyan leader’s name to pitch his service.

Deborah Ball, Cassell Bryan-Low
The Wall Street Journal