Saturday, September 15, 2018


There are some New Accounts customer identification tasks that present special problems for compliance. What do compliance officers do when the new affluent client is a Chinese national using a second passport ? He asserts that he is a wealthy business owner, but you must be able to confirm his true identity.

A substantial number of the individuals obtaining Citizenship by Investment (CBI) passports from European and Caribbean jurisdictions have been Chinese nationals. Indeed, in some CBI countries, investors from the Peoples' Republic have represented the majority of CBI clients.

How does a compliance officer at an international bank confirm the identity of a new affluent Chinese client, to the exclusion of a reasonable doubt, when he chooses to present only an obvious CBI passport ?  The transliteration of the client's name, from Simplified or Traditional Chinese, into English, results in a Western style name, which is acceptable for commercial purposes, but that is not the issue.

The problem is how to rule out the client as a possible corrupt government or military officer, Politically Exposed Person (PEP), career criminal, common tax evader, intelligence agent, individual engaged in industrial espionage, or individual who is badly wanted by Chinese authorities, under his true Chinese name.  Not only are there no available commercial-off-the-shelf resources available, as China is perhaps the most opaque jursidiction for reliable open-source data in the world, the language issue precludes your ability to examine the information that is out there. Even if you have linguists on staff, who also are trained investigators, you have no reliable data sets to assist you.

We therefore must resort to the only effective method that technology offers us; facial recognition software. We musat rely upon FR platforms that have access to social media/social networking resources, news articles, visa photographs, Internet images, newsreel footage, CCTV film, and any other images that might tell you whether the new client is really not exactly what he professes to be, a private citizen with no ties to China's government.

One indication that you must take such measures to properly identify Chinese CBI passport holders is the fact that the US State Department, in an announcement about visa renewal waiver procedures, stated that it does not allow Caribbean CBI passport holders to remotely renew their US Visaa. They want the individual to present himself in person to the US Embassy in Barbados. That should tell you that the United States regards CBI passport holders from the East Caribbean states, most of whom are Chinese, as high risk.

Increasingly, facial recognition software systems are being regarded as essential to accurate identification of clients, customers, and customers' customers, by compliance officers at financial institutions, non-banks, and Fortune 500 companies. Any other methods employed have a high risk of error, false positives, and in a world where compliance officers are becoming individually responsible for their professional negligence and investigative failures, personal liability, on a civil as well as a criminal scale.

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