The USA v. Huawei and Meng Wanzhou prosecutions were highly controversial internationally, yet they were ultimately the result of confusion over translations produced by an interpreter assigned by a major translation agency. While the facts of the case can be found online, the main point is that the USA and HSBC alleged that Huawei executive Meng Wanzhou fraudulently misled the bank about the nature of an unlawful transaction. Ultimately, the whole issue was revealed to be a translation error. However, the New York district federal government’s commitment to discrimination against Chinese speakers and protection of big banks has resulted in a new loophole in anti-money laundering and terror finance laws: the Chinese translation loophole to anti-money laundering.
The Translation Issue
Many legal disputes arise over mistranslations from Chinese into the English word “cooperation.” In the USA v. Meng Wanzhou case, federal prosecutors alleged that Meng’s description of Huawei’s relationship with Skycom, particularly the word “cooperation,” amounted to serious criminal fraud and resulted in Meng being detained for three years. The US-China interaction around the translation error was highly typical; the US read the English version and was appalled at the criminal conduct, whereas China read the Mandarin version that basically said the opposite, ultimately concluding that the US unlawfully framed Meng. I wrote in 2019 on this blog and elsewhere that translation errors obviously put Meng in jail.
I also conducted a small-scale verification experiment to see if, using objective sources, Chinese lawyers would be able to independently conclude that Meng Wanzhou had been jailed over fraud allegations. More recently, I experimented with a module on the use of Corpus Assisted Discourse Studies techniques for legal translation at a seminar in Shanghai attended by over 100 law students. I had the 100 law students look in the SEC EDGAR database for evidence of what cooperation agreements and cooperation in business means, asked them to identify the legal issues implied by these words, and based on the English understanding, whether the translated “cooperation” meant something radically different than the source English. All participants provided a Computer Assisted Discourse Analysis basis and concluded that the translations were indeed sufficiently misleading to legitimately provoke fraud allegations.
The DOJ took three years for the issue to be investigated and reflected in an official statement on Justice.gov, and even then, the DOJ still insisted that Meng had misled HSBC by presenting these English version documents in translation. From my perspective, the prosecutors’ conduct looked a lot like the documentary Abacus, which is about how federal officials persecuted a Chinese bank while turning a blind eye to big banks. In this case, prosecutors bending over backwards to, yet again, discriminate against Chinese speakers in the Meng case produced an unintended side effect: they created a massive loophole in anti-terrorism laws that would make facilitating financing terror and organized crime extremely easy for unethical bankers.
Prosecutors’ Discriminatory Treatment
Some background on anti-money laundering law is needed to see how federal officials’ anti-Chinese discrimination in banking cases has created a “Chinese translation” loophole in money laundering policy. Just like in the Meng Wanzhou case, federal anti-money laundering regulations go after terrorism, organized crime, and rogue states by prohibiting banks from processing certain transactions. They do not place all of the culpability on the individual because, unlike banks, money launderers can go fugitive and are thus harder to deter. Banks are required to do due diligence and conduct “know your customer” processes on transactions that they have reason to believe may violate laws prohibiting transactions for organized criminal organizations and, in particular, terrorists. USA vs. Meng Wanzhou reversed decades of anti-money laundering policy precedent by casting the bank as a victim of being “misled” by the translation of a Chinese individual, despite HSBC apparently not being misled and relying on a Chinese speaker’s language limitations to avoid criminal liability.
Meng’s lawyers argued that HSBC had several documents, impliedly Chinese-language documents, that accurately described the nature of Huawei’s relationship with affiliate entities kept confidential under bank secrecy laws. The only documents made public were what the Department of Justice described as “English language versions.” To a trained eye, these “English language versions” are obviously word-for-word translations that, as described above, do not take into account whether a reader would be able to understand them accurately. Word-for-word translation also has a very important aspect that applies to regulatory evasion. Specifically, it uses a highly algorithmic, predictable process that produces the same misleading result every time. Since a criminal can easily predict the exact manner in which a document’s meaning will be distorted, white-collar crime groups need only write source language documents in a way that elicits results and present these documents to a bank.
Another piece of evidence was not raised, but I believe it supports the PRC’s claims that HSBC made false statements to law enforcement about Meng Wanzhou. Specifically, there are dozens of documents publicly filed by HSBC where bank staff show familiarity with the “translationese” and, particularly, the “cooperation” language used in the Meng Wanzhou translations. Since HSBC stands for “Hongkong Shanghai Banking Corporation,” it would be unsurprising that HSBC would know how to identify and decode English documents produced by Chinese translators. In a small experiment, I asked law students native in Chinese with credentials similar to HSBC’s in-house attorneys to decode similar algorithmically produced translationese documents using the Loopback method, and they were able to decode it accurately.
The decoding method for Chinese translations asks a native speaker of Chinese to translate the English document into Mandarin and then explain what the document is referring to (indexicality) in English. Loopback is essential when a party puts an English document that was obviously a translation in front of you and, for me, has been a standard operating process for over a decade. I’ve never seen a Chinese company internally produce a legal document in English that does not require a Loopback translation. Other bloggers, such as the China Law Blog, have said similar things for over a decade. How could HSBC, a big bank originally from China, not have access to this sort of common knowledge about the China law practice? An HSBC compliance officer could have just Googled the issue and found dozens of blog posts warning them about their compliance practices.
Under the DOJ’s enforcement policy, even if a bank knows or should know that a translation is unreliable and that bank finances terrorism or narcotics crime, the DOJ will assert that the bank was “misled.” The DOJ will even go to extraordinary lengths to pull the wool over its own eyes to say that the bank had been misled in the interest of selectively prosecuting Chinese nationals. However, I believe no reasonable person could look at Meng Wanzhou’s Skycom presentation and believe the meaning was being communicated competently. I showed the document to translators in China, and most of them said it looked like the incompetent work of an intern or even a machine translation. Google Translate generates results so similar that it would be impossible for a typical native English speaker to tell the documents apart. More importantly, the incompetent translation
More importantly, like machine translations, incompetent translations are fundamentally wrong and will be quickly mistaken for meaning the opposite of what they actually say if put before someone who is not an expert in translation. In the full context of the USA v. Meng Wanzhou case, based on the allegations from prosecutors that Huawei took steps to conceal its connection to Skycom, even if Meng was attempting to conceal the Skycom links as alleged, the language used is simply the least specific and most ambiguous way that corporate law in China describes this sort of relationship. In particular, certain China State Administration of Market Regulation forms have a check box item that is intended to describe partnerships where no separate entity is created to apply joint and several liability. A bank receiving this kind of ambiguous information in China under its more recent (post-Wultz) KYC policy would be expected to obtain additional information on the nature of the partnership. Since the word “partnership” was deformed to “cooperation,” a fact that the DOJ used to selectively prosecute Meng Wanzhou despite the obvious incompetence of the English communication.
Allowing a bank to circumvent due diligence requirements simply because a translation is incompetent creates a big loophole for banks to skirt sanctions and anti-terrorism finance law in pursuit of big profits. A technique for doing so would not require a great deal of sophistication: a party wishing to process an unlawful transaction would simply need to go out and hire a translation company and request it be done very fast and very cheap. That almost guarantees the Chinese business translator will either be highly incompetent or, even if very competent, forced to use machine translation because there is no time to research the correct terminology for entity structures. The translation describing the nature of the business, parties’ business, and entity structure will all be predictably deformed.
The ease with which a financial institution and client could produce false documentation using translation is not immediately apparent without considering the nature of anti-money laundering regulations. Since individual account holders laundering money tend to have small pockets and are usually capable of evading arrest by leaving the jurisdiction, anti-money laundering legislation has placed a great deal of the burden on banks to ensure that they understand the transactions submitted to them are lawful. The DOJ’s decision effectively reverses decades of legislative intent in the anti-money laundering sphere the minute a client provides a translated document because prosecutors will twist the facts to deem a bank relying on obviously mistranslated, pidgin English documents to have simply been “misled.”
This may raise some questions as to whether Meng Wanzhou had some sort of under-the-table agreement to evade sanctions by misleading New York-based compliance officers using a sham translation, and I think the answer is no. The lawyers representing Meng and those at the Department of Justice took about three years of brutal fighting to even realize that Meng was detained over a run-of-the-mill legal translation error. References to the error only appear very late in the case records.
Most managers and lawyers presented with a translation will generally assume it’s correct, even if there are obvious problems and flaws with the translation and the manner in which it was procured. During its international listings rulemaking, even the SEC found that companies really do not like to pay for translations, and mistranslating themselves into disaster is pretty common.
Meng’s legal team argued that HSBC’s staff knew, and I agree that the facts indicate that not only did HSBC know, but several other banks’ staff are also approving unlawful transactions based on translations they know are inaccurate. The translations presented by Meng were obviously written in a sort of pidgin English where the legal concepts about the entities don’t match up with anything known to the English language spoken by the staff receiving the documents. No reasonable person could take a document written in pidgin English and conclude that there is no way the translation is possibly defective in any way. Moreover, several in-house translators working in the banking sector told me that banks and even their law firms are putting pressure on them to pass machine translations off as human translations, despite knowledge among these staff that the translation is misleading. Translators working for translation agencies report that, for these banks, their timelines are much shorter than for any other companies, often having deadlines for complex projects measured in hours, not days, and being unable to research the complex terminology applicable to the matter, along with having to rely on machine translation or dictionaries produced by machine translation companies (such as Baidu or Youdao). In HSBC’s industry, the use of Chinese translations to circumvent regulations on terrorism finance and sanctions is extremely commonplace.
Conclusion
How long will it be before the federal government closes the Chinese translation loophole for money laundering and terrorism finance? I think that will require the Biden administration to implement two steps that could take several years to accomplish. First, end the discrimination against the Chinese community investigated by the Abacus documentary. That includes recognizing that a translation error or language mistake by a Chinese person should not automatically constitute criminal fraud; linguistic due diligence is just as necessary as financial due diligence. Second, linguistic due diligence needs to have standards defined by the governing jurisdiction’s professional translators’ association, which in the US is the ATA and the UK is CIOL. Currently, linguistic due diligence under the Anti-Terrorism Act has no standards or certification being done, to the point that the UK and US have wound up arresting a number of translation project managers in the industry for deliberately staffing unqualified people to the job who whistleblowers argue were giving terror finance a free hand to do as it pleases.
