The word 'wag' means 'comic' 'put on' which I picked up from old movies /media.

Also since 'Wanking' is a place in China, Wank must be nearer.

A Wanky, then, is an American person who cannot say 'y'. Or in comic circles, a Yanky with a speech impediment is a Wanky, which all makes perfect sense when you know that America is half way to China if you are in Iceland.