The Legal Entity Identifier (LEI) is a unique global identifier of legal entities that participate in financial transactions – whether entities are individuals, companies or government bodies. Used in reporting to financial regulators, LEIs are a requirement for all financial companies.
With almost 1.6 million organisations now with LEIs, the global identifier has become established as the standardised code to identify who is who, and who owns whom.
Below are some of the key reasons your organisation should register an LEI – sooner, rather than later:
Reason 1: International recognition
As your global identifier, the LEI code allows you to be recognised as a legal entity internationally. It is a standardised organisation identifier that is endorsed by the G20 and Financial Stability Board, and regulated by the Global LEI Foundation (GLEIF).
A live reference to your organisation’s identity record (see Ubisecure’s LEI record), the LEI is just as important as other organisation identity attributes, such as your local business registry company number, VAT number, domains, etc.
The LEI is an essential identifier for enabling cross border transactions, and also greatly enhances your organisation’s credibility, both locally and globally.
Already widely supported, with a 1.5 million-strong install base, LEI issuance is growing rapidly.
Reason 2: Compliance
There are many regulations that mandate the use of LEIs (see latest Regulations), with non-compliance inhibiting transactions and leaving organisation’s open to the risk of getting fines.
With new regulations demanding the use of LEIs going live every month, it is to your advantage to be prepared and obtain a LEI in advance.
Reason 3: KYC processes
The LEI code is widely used for Know Your Customer (KYC) processes. Make sure your organisation is recognised as a credible LEI holder.
Extensive vendor networks (see GLEIF vendor stakeholder network) already rely on LEI for KYC, B2B onboarding and to refresh client identity data.
The use of LEIs is well researched as a tool for cost saving in KYC/onboarding in the banking sector (See the GLEIF ebook).
LEI is the primary connector between all regional and private sector identifiers. By connecting multiple sources and formats of identity, it is possible to conclude a more trustworthy identity assertion.
The LEI is formed using a standardised, consistent identity data reference schema that includes Entity Legal Forms (ELF) codes (Ltd, GmbH, etc). The unambiguous ELF data provides an improved user experience by categorising legal entities, providing clear insight into the global marketplace.
Reason 4: Total trust
LEI records contain a powerful set of identity data attributes, helping improve trust in who you are, both in the physical world and in the online world.
Both humans and machines can verify the LEI. The GLEIF database of issued LEIs is open and searchable via its web interface, full dataset download, or API.
The LEI must be renewed annually to remain active, and renewal requires revalidation of corporate details.
The LEI can be readily updated at no cost to the holding organisation and can always represent accurate organisation identity. It is not necessary for a new code to be issued should corporate details change.
The LEI is the only identifier to connect parent and children organisations publicly. Known as Level 2 data, LEIs provide transparency into the “who owns whom” aspect of organisation identity.
LEIs can list multiple “Doing Business As” names and previously incorporated names, giving a historical audit trail to counterparties.
LEIs support multiple languages for names and addresses. Local language support provides a better localised understanding of, and reliance upon, identity data.
The data quality of the LEI system is open and transparent. LEI reference data can be challenged. A defined, publicly accessible process exists within the ecosystem to openly challenge identity data if a counterparty believes it to be inaccurate.
Reason 5: Security & brand protection
Because your LEI code will be used by numerous other applications, you can enhance security and brand protection by obtaining one.
It is becoming commonplace to report your LEI on websites; contained in web pages, press releases, site seals, QR codes, bar codes, and more.
LEIs are already supported by XBRL (the open international standard for digital business reporting). Both human-readable and machine-readable LEIs can be embedded in critical XBRL documents, such as annual reports and financial statements, as the standardised organisation identifier.
LEIs will soon be included in the new ISO payment standards as the organisation identifier in SWIFT transactions.
The implementation of LEIs into digital certificates will soon be standardised through the draft ISO 17442-2 and ETSI TS 119 412-1; delivering digital signing and workflow solutions that embed the LEI into the digital signatures.
If you haven’t already, head over to RapidLEI to get an LEI today. With our automated issuance, you can have a registered LEI code in just a few minutes.
[REFERENCES]
- Wikipedia – Legal Entity Identifier
- Ubisecure – 5 Reasons to get an LEI Number
- Ubisecure – “Now is the appropriate time for the payment industry to begin its adoption of the LEI,” says SWIFT
Source: pbVerify News
