The European Commission have announced a long-awaited AML Package and new regulatory body to govern its implementation and compliance. The Legal Entity Identifier is chosen as a trusted means to identify counterparties to transactions.
The European Commission have announced the long-awaited AML Package and new regulatory body to govern its implementation and compliance.
The package put forth aims to put in place a new watchdog called the EU AML Authority (AMLA) and draft a new single EU Rulebook for AML/CFT obligations.
A new EU regulatory watchdog has been proposed in order to ensure the private sector correctly and consistently applies EU AML rules.
In a bid to fight money-laundering, so called "dirty money" and counter terrorism financing, the ambitious package of legislative proposals is set to strengthen the existing EU’s AML and countering the financing of terrorism (CFT) rules. The overall aim of this package is to improve detection of suspicious activities and transactions, and tighten up and loose spots in the system.
For example, there is set to be an EU wide limit of €10,000 of large cash payments as this is the single most common way for criminals to launder money.
In addition, the use of crypto-anonymous wallets will be prohibited, similarly to anonymous bank accounts. The Legal Entity Identifier will greatly help reconcile payments between counterparties in transactions and help flag any suspicious trends or activity.
The LEI is quickly becoming the mark of trust in the global financial system.
The proposal put forward on 20th July 2021 is set to include a revision of the 2015 Regulation on Transfers of Funds. Within which is a proposal for a new law which allows authorities combat AML/CFT by tracing sources of funds, or "crypto-assets". In order to achieve this the EU will mandate the use of the Legal Entity Identifier (LEI) for both payer and payees.
The proposal states "(the LEI)could easily be included in existing payment message formats". This could indicate the LEI is set to overtake, or bolster the IBAN as a primary means of identifying the entities behind bank transactions on a corporate, rather than individual level.
To find out more about the new package put forward by the European Commission, check out the link provided to the page on the EC website: Anti-money laundering and countering the financing of terrorism legislative package.
The LEI has been required in India since 2017 in order to increase market transparency and identify fraud in the financial transactions. All financial borrowers and lenders in India have been mandated to obtain an LEI. According to the RBI (Reserve Bank of India) the LEI has been introduced in a phased approach for market participants in the over the counter (OTC) derivative and non-derivative markets as also for large corporate borrowers.
The LEI in India has also been introduced for all payments/transactions of value ₹50 crore and above undertaken by organisations/corporates using Reserve Bank-run Centralised Payment Systems viz. Real Time Gross Settlement (RTGS) and National Electronic Funds Transfer (NEFT).
The RBI states that its members should prepare for the phased rollout of the LEI, in particular those who engage in large value transactions (+₹50 crore) and those who use payment messages such as NEFTS & RTGS.
RTGS: The LEI shall be reported in the ‘Remittance information’ field.
NEFTS: For outward debit messages, LEI information shall be provided in ‘Sender to Receiver Information’ field.
Companies in India may apply for a Legal Entity Identifier through an agent such as LEI Worldwide. Existing LEI codes may be transferred to LEI Worldwide for management and maintenance.
You can find more information from the RBI on their dedicated webpage notification here: https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=12010&Mode=0
Please click Register LEI in India below to obtain a new LEI, or click Transfer LEI to begin to move your existing LEI to LEI Worldwide.
The vital role to be played by Digital identity and the Legal Entity Identifier in the future of global business
Global B2B Identification: Why the LEI is key
We live in an increasingly digital age, digital processes and transactions effect, influence and monitor us on a daily basis. We use digital devices to communicate, transact, authenticate, visualise and record with devices located globally via the Internet.
All of this occurs with limited thought or consideration, except perhaps the authentication of our identity.
Our social standing and the media we create can provide an online identity for us but this has proven or be vulnerable to misrepresentation or straight up fraud.
A proven identity is definitely something we value as we know the implications of having an identity that is considered to be proven.
In order to obtain a National ID or passport, one must pass certain validity checks and when a passport is presented we can be confident this person is who they say they are.
So think about a business, how can they TRUST your digital identity?
Currently for a financial institution, identifying a new user digitally, quickly and correctly is a time consuming process with potential risks. Current KYC methods are considered time consuming, clunky and out dated.
You understand this and you comply or you know that you will not gain access. Therefore digital identity is already everywhere and we use it everyday.
Big Tech firms have identification requirements for all of us, but the issue is when it comes to identifying a business there is no common settled upon global standard, no one access ID, or rule that governs all.
The technology is available but it's not seamless across platforms yet... so we are in a state of identity segregation.
The biggest hurdles seem to be adoption rates and trust.
A Global Solution to business IDs: LEI System
The solution was created after the financial crisis in 2008 when firms and regulators had difficulty tracing and establishing participants in financial transactions in organisations such as AIG and Bear Stearns.
The SOLUTION is called the LEI - Legal Entity Identifier.
Known as the Global LEI System (GLEIS) which has a governance framework in place recognised by the G20 forum which contains the major economies from around the Globe.
The LEI is:
• 20-digit, alpha-numeric code based on the ISO 17442 standard.
• Designed to be used and recognised globally.
• Identifier for legal entities involved in digital transactions.
• Decentralized and used in an open data system that allows its identification data to be accessed by anyone.
• Incorporates in-depth validation services in each part of its process.
The digitisation of all kinds of personal and organizational activities has accelerated, driven in no small part by the pandemic and the pace of technological change required.
This digital transformation has enabled new business approaches, created new businesses and redefined how organizations connect and engage with one another.
As a result more processes and interactions are also making the switch to digital, and stakeholders are having to work harder than ever to classify, identify and verify their businesses.
As a result, digital identity management has never been more important for business and is vital for their future to perform on a global level.
Businesses without efficient and validated digital identity management encounter business costs in labour and time. This is without mentioning the risk of bad customer interactions, fraud and incorrect data leading to unforeseen costs.
McKinsey have conducted independent research and concluded global adoption of the LEI system would save the global banking sector between $2-4 billion annually.
Why the LEI Code is the Digital Identity Future for Business
Today, different digital ID systems are based on varying certification and technological standards, keys and encryption and the only common link between them is the entity name, which can vary widely and as mentioned can change over time.
The LEI is the solution as it provides the ability to rethink customer relationships by having an inbuilt trust solution that is verified enabling determination of who’s who removing related costs and inconvenience and pure frustration of manual processing.
A universal solution that provides a unique id that does not require the stakeholder to be locked in and can be easily updated.
An LEI provides:
• Regulatory endorsement
• Recognised legal identifier
• Based on open data
As LEI’s are used currently in the public and private sectors, in the digital age its proven to be of great value for regulation and business.
The system is already is improving customer onboarding, communication and verification and this is only the start of its use.
LEI can provide a fast and simple way to ensure the information obtained through digital certificates is suitably reliable, current and verifiable.
The LEI can become an essential building block for the usage of digital certificates and digital signatures.
Quarter 2: 2021
The Global Legal Entity Identifier Foundation (GLEIF) welcomed the first commercial demonstration of LEIs embedded within digital certificates by the China Financial Certification Authority (CFCA).
Stephan Wolf, CEO of GLEIF commented:
This progress by CFCA on both fronts is very welcome as it moves us one step closer to broad LEI usage in digital certificates globally. Realizing the goal of universal LEI usage in digital identity products will be an important step in enhancing trust and creating innovation opportunities across private sector digital identity management applications.
LEI being an ISO 17442 standard, linking back to a datafile in GLEIF that is publicly available answers the question who is who and who owns whom for ALL stakeholders NOW and in the FUTURE.
Establishing your legal identity digitally and it being trustworthy has become a foundational requirement for digital life to enable the determination of 'who's who' within any digital community to validate interactions of any kind social, financial or business.
The VITAL role to be played by Digital identity and the LEI in the future of global business cannot be overstated.
By 2027, GLEIF aims to grow the LEI population to over 20 million thus enabling that the LEI, as a broad public good, will generate most value when reaching a critical mass. - Minutes GLEIF Board of Directors Meeting, Oct 2020
It is clear from the chart below that with the current market growth trajectory this will not be attained, and if current growth rates are continued we will have somewhere around 7 million LEIs by 2021.
Enter the LEI Validation Agent Framework
Until now, legal entities have been going through regular onboarding and due diligence protocols when doing business with a Financial Institution such as an Investment Bank. At some point the Financial Institution anticipates the entity will need an LEI for a particular trade or investment activity and prompts the entity to apply with one of the LOUs or with a registration agent such as LEI Worldwide.
The legal entity then goes through a very similar process when applying for the LEI, and going through a very similar process in order to obtain the LEI.
This duplicate process creates unnecessary work for the LOU and the entity can be validated at source before having an LEI issued to the by a partner LEI provider such as an LOU or a Registration Agent.
So, by effectively minimizing overall workload by streamlining the process, we can reduce the overall cost of the LEI and increase the LEI adoption rate simultaneously by making them cheaper, more accessible and easier to issue.
The GLEIF Validation Agent Framework leverages existing KYC & AML workflows in order to simplify the LEI issuance process and reduce the workload shared between Financial Institutions, their clients requiring LEIs and LEI service providers" - Darragh Hayes, Director, LEI Worldwide
Since the LEI VA Framework was introduced in September 2020 J.P. Morgan have become the first Financial Institution to sign up to the GLEIF Validation Agent program. Find out more here
Working as a validation agent will allow us to improve our client onboarding experience as well as create valuable industry LEI reference data" - George Brandman, Managing Director, J.P Morgan”
How to become an LEI Validation Agent
A Financial Institution that wishes to become a Validation Agent can do so by partnering with LEI Worldwide.
We are currently engaging Financial Institutions in this process and developing our API based system to allow Financial Institutions become Validation Agents with access to LEIs for their clients with global coverage.
There are many benefits in partnering with a Registration Agent for the LEI VA program. Once the LEI issuance is complete, what then? LEI Worldwide’s fit-for-purpose LEI management system is designed for Validation Agents to easily handle large portfolios of LEIs.
Benefits of partnering with a Registration Agent:
Get in touch today to find out how we can help you to take part in the Validation Agent programme and begin offering your clients Compliance-as-a-Service (CaaS) with the help of an experienced and capable LEI partner.
Extra Viewing: GFMA Webinar feat. GLEIF “The Evolution of LEI: Innovation to Support Financial Markets”
The future of global monetary policy, Crypto and how the LEI system can play a major role
The way we conduct business on a global scale is becoming ever more digitised. This intensifies the need for more robust and standardised security around digital identity and transparency when it comes to financial transactions and sending money abroad.
This includes the need for regulators to custody their respective markets and ensure fairplay, and also provide the participants in each market to have sufficient, reliable and standardised data on who they are doing business with.
With the ongoing complications brought on by the COVID-19 pandemic, we have seen how the current global financial system has room for improvement, and how the Legal Entity Identifier can help fill these gaps.
These delays can all be streamlined by access to reliable data such as the Legal Entity Identifier database. The LEI helps identify debtors and creditors in transactions quickly, easily and reliably.
In the physical world we would never consider a SWIFT transaction to an unverified entity. We would have regulatory compliance, KYC protocols, verification processes and credential validation. Perhaps even a custody and clearing service!
Yet Cryptocurrency, with its anonymity focus is now a MAJOR focus of Institutional investors and in order for it to be accepted more broadly as a utility, it needs regulatory clarity, and efficient KYC processes.
Cryptocurrency ‘institutional investor interest is growing at pace.’
Cryptocurrency has the inbuilt advantages of:
Cryptocurrency is a global digital currency that is secured by cryptography. It is also usually not tied to any Government or central authority meaning it has a decentralised control system. This is normally a distributed ledger technology, called a Blockchain.”
Blockchain and the LEI
While the transaction records of cryptocurrencies like Bitcoin can be viewed by anyone with the address details, they do not require a real world identity to be provided. This means that the transactions can be anonymous and untraceable to the participants in the transaction.
Neutral bridge assets such as a blockchain based currency would enable seamless currency movement between various Central Banks without requiring each one to load pre-funded accounts often required in cross-border transactions.
An on-Demand Liquidity service would allow financial institutions to transact in instantly on a global scale, using a digital asset as a bridge currency.
A will create faster, cheaper, and more efficient payment infrastructures with lower failure rates; greater competition and access to global markets; increased access to financial services for unbanked populations; and government sovereignty over monetary policy.
The Bank for International Settlements (BIS) issued a report recommending the use of LEIs to enhance KYC processes.
The LEI solution was created after the financial crisis in 2008 when firms and regulators had difficulty tracing and establishing participants in financial transactions in organisations such as AIG and Bear Stearns.
A 20-digit, alpha-numeric code based on the ISO 17442 standard. The LEI is a unique legal entity reference number enabling identification of legal entities participating in financial transactions GLOBALLY. Providing a standardized framework that enables accuracy and reliability in a global financial system for all the market participants.
The use of the LEI for fully distributed verifiable credentials provides a missing capability in distributed identity. The value extends far beyond financial services to e-commerce, trade services, and governmental reporting. The LEI in this way reinforces the value the ISO 17442 standard as the world of organizational identity in the digital world evolves.”
LEI usage is already providing firms with the ability to improve transparency, risk management and regulatory compliance.
According to a report by McKinsey, the wider use of Legal Entity Identifiers (LEIs) across the global banking sector could save the industry $2-4 billion USD annually.
In April 2019, the Global Legal Entity Identifier Foundation (GLEIF) and the Association of National Numbering Agencies (ANNA) piloted the first daily open-source relationship files that link newly issued International Securities Identification Numbers (ISINs) and Legal Entity Identifiers (LEIs).
With a universally recognized digital identifier, this would further help cater to the demands of exchanges, regulators, service providers, and custodians. The ISIN to LEI would facilitate clearing and settlement of securities and payment processing during the issue of a specific security.
The linking of ISINs and LEIs was endorsed by regulators, including the Financial Stability Board (FSB) and the European Securities and Markets Authority (ESMA). NNA's such as Tokyo Stock Exchange ,London Stock Exchange, CUSIP Global Services continue to join the ISIN to LEI Mapping Initiative. The daily ISIN-to-LEI relationship files, are publicly available on the GLEIF website, and include new ISINs issued by national numbering agencies (NNAs).
Volumes of ISIN-to-LEI coverage have grown to over 5.2m active ISINs linked to almost 72,000 unique LEIs.
Could all this mean that a cryptocurrency based financial system becomes the de facto money transfer system replacing SWIFT? It certainly is a conversation being had within the major financial authorities around the world at the moment.
A digital LEI system would provide the following benefits to such a system:
LEI Worldwide could play a major role in this transition by providing and managing Legal Entity Identifiers to the market participants engaging in these transactions.
LEI Worldwide is seeking partnerships with Globally Important Financial Institutions such as banks to help them become Validation Agents as a part of GLEIFs new VA programme, offering management to their LEI portfolios and ensuring timely renewals, a streamlined registration process through the use of APIs and access to a fit for purpose LEI management system.
The new LEI Conformity Flag will enhance universal trust in LEI data
The new LEI Conformity Flag was introduced during a webinar in April 2020. It is set to be implemented throughout 2021 and is still undergoing testing and prototyping.
The quality of LEI data is of critical importance to the integrity of the global LEI system. It remains the only global legal entity identifier that publicly shows a record of when the data was last updated. The Financial Stability Board (FSB) have stated that the LEI system should promote a “higher quality and accuracy of financial data overall”.
What is an LEI? The LEI is essentially an international business passport, which identifies your company and allows you to know for sure that your counterpart is who they say they are. This is why trust in the system is paramount.
Currently, in order for the LEI data to be deemed trustworthy it requires annual renewal. If an LEI is allowed to ‘Lapse’ it will be marked as lapsed on the public LEI database meaning the data has not been checked in the last 12 months rendering it outdated.
But if an LEI is active, how can we still be sure the data is accurate?
GLEIF report 99% LEI accuracy which leaves 1% of LEIs as unsure. This is thousands of LEIs. Soon we will have the Conformity Flag to give us a second layer of data quality assurance, along with the existing LEI Status.
For example the European Central Bank constantly evaluate the data quality of the LEI, and will welcome the addition of a conformity flag which will guarantee the data quality of any specific LEI code where a flag is present. If an entity has not been awarded a flag, perhaps the data source was not trusted, maybe there is another LEI for the same entity (duplicate) or the LEI data is not consistent with other records.
LEI data is public, and GLEIF issue monthly data quality reports which are generated based on 11 data quality metrics.
Here is the link to the data quality reports: https://www.gleif.org/en/lei-data/gleif-data-quality-management/about-the-data-quality-reports/download-data-quality-reports/download-global-lei-data-quality-report-october-2020
Here is the most recent October 2020 report:
LEI Worldwide fully support the conformity flag project and I personally believe that when users of the database see it on an LEI record they will have assurance and trust in the system making it the single most trusted identifier for companies globally.
LEI Worldwide work closely with the Ubisecure team to prioritise data quality for our clients so we expect 90%+ conformity on our clients LEIs when they are reviewed, and we will review the remaining LEIs on a continual basis to maximise conformity.
Trustees of UK Pension schemes requiring ESG Template under the direction of the PLSA......what's your LEI?
The United Kingdom Pensions & Lifetime Savings Association (PLSA) have directed that the trustees of UK Pension Schemes are required to complete an ESG Template. First order of business on the template?.....
What is your LEI?
Environmental, Social and Governance (ESG) has become more prominent in recent times with regards to financial services, pension schemes and investments.
ESG policies are concerned with environmental, social and governance factors that may affect the performance of a company or asset.
The PLSA are encouraging responsible investment and market participation by way of ESG reporting duties. This will force pension schemes to at least consider how they factor in the importance of ESG risks in their business decision making policies.
To date, the key focus for trustees of UK Pension Schemes has been to maximise returns. However, recent rules drafted by the Department for Work and Pensions (DWP) require UK pension schemes to clarify and explain their policies surrounding ESG (including climate change) factors.
The PLSA have now issued a template to UK pension scheme trustees which must be completed and filled. One of the requirements is "What is your Legal Entity Identifier?"
If you are a trustee of a UK pension scheme you can find this template below.
UK Pension Schemes also require an LEI for a number of other reporting regulations such as Mifid 2. Click here to find out more about LEIs for pensions schemes. Trustees should also consider the implications of the 2019 changes to the Investment Regulations, which implement the EU’s second Shareholder Rights Directive (SRD II). The second phase of SRD 2 was due in September 2020. SRD is one of many European regulations introduced after the last global recession revealed many weaknesses in the global financial system such as excessive risk taking, lack of transparency with regards to risk analysis, identification of shareholders and complex chains of intermediaries.
These mounting regulatory requirements mean it is becoming increasingly important for firms to have a clear policy around ESG going forward.
Click here to read the PLSA guide on ESG for pension schemes and investment firms.
In a recent interview conducted by the Securities Lending Times, Director of LEI Worldwide spoke with Natalie Turner and took a deeper look the current rate of Lapsed Legal Entity Identifiers globally.
As roughly half a million LEI Codes are now in a state of Lapsed, meaning they have not been renewed in the last year, we discuss how this has happened, and why it is more prominent in some countries rather than others. Some of the primary reasons include LEI which were obtained for regulatory purposes, which regulations which require an LEI, but not necessarily an 'active' LEI. Another reason is management of the LEI and education on the LEI requirement in general.
"Sometimes LEIs lapse because the ownership of the task to renew the LEI changes, people change roles or move on from companies frequently, especially right now in the middle of a pandemic." - Ubisecure's Steve Waite
J.P Morgan has become the first validation agent in the Global LEI system. The validation agent framework which was introduced in September 2020 by The Global Legal Entity Identifier Foundation (GLEIF) in order to increase LEI adoption by accelerating client lifecycle management and reduce LEI registration costs by using existing KYC and AML techniques to replace existing entity validation steps in the LEI issuance process.
J.P Morgan, in partnership with Business Entity Data B.V. (GMEI Utility a service of BED B.V.) have together issued their first LEI. The framework is based on the fact that globally important financial institutions and banks such as J.P Morgan are trusted data sources and are therefore perfectly positioned to verify their customers data to an existing LOU who may then proceed to have an LEI issued, thereby removing a time consuming but necessary step in the LEI issuance process.
Working as a validation agent will allow us to improve our client onboarding experience as well as create valuable industry LEI reference data" - George Brandman, Managing Director, J.P Morgan
New LEI Finder released to reduce LEI Lapsed Rates
LEI Worldwide have released a new LEI Search tool which allows you to navigate the LEI index, access the global LEI database and find any Legal Entity Identifier in real time.
The Securities Lending Times recently spoke with Director at LEI Worldwide about the development and the need for such a tool in the LEI market.
With as much as 30 percent (500,000) of legal entity identifiers globally are out of date and in need of renewal, the LEI Checker now allows you to check the LEI status and renew your LEI instantly.
The SLT article continues to say "Last week, the Commodity Futures Trading Commission fined Morgan Stanley $5 million for a range of swaps reporting failures between 2013 and 2018, including incomplete LEIs. “Upon further investigation, we realised that Morgan Stanley Capital Services had a lapsed LEI between 2013 and 2018. It is quite simple to renew the LEI, and it is possible they did not realise it had lapsed,” says Hayes.
Need for security
During the COVID-19 pandemic we have seen a number of developments within the LEI and identity industry. Firstly, the importance of the industry has not only been increased, but the comprehensive need for a more secure digital identity became more apparent.
Fraud cases have risen exponentially since the beginning of March. Online hackers are looking to take advantage of companies working from home as they struggle to adapt to lockdown and seek to implement new processes and payment procedures.
Over £16m has been lost in the UK due to online shopping fraud since the onset of COVID-19. There has also been a 33% surge in attempted cases of financial fraud. The bulk of these were in the asset financing sector, an area which has already been identifier as one that can benefit greatly from adopting an LEI check as a part of their customer onboarding KYC processes.
Banking is another area which can benefit greatly, as has been highlighted in recent research conducted by McKinsey. Fraudulent credit card and loan applications can be easily detected by linking the applicant to an LEI, or if one has not been yet obtained it can raise a question mark.
This greater need for security can be clearly seen in the below chart. The only FinTech clusters which benefitted during lockdown were security related.
IRDAI asked not to sanction loans without an LEI
In light of the above developments, some regulators and financial institutions are turning to the LEI to add an extra layer of security to their internal validation processes.
The Insurance Regulatory and Development Authority (IRDAI) of India has asked insurers not to grant loan renewals or amendments if the borrowers have not been identifier by way of a Legal Entity Identifier before 30th June 2020.
The IRDAI also asked the insurers to advise their corporate borrowers with a large exposure score to obtain an LEI number by mid-Summer.
In a circular released by the IRDAI, the LEI Code is to be stored in their records and specify the same while reporting the transactions executed with such corporate borrowers.
You can find the circular here.
ING Banks develops method of identifying transactions using LEIs
In October 2018 the Financial Action Task Force expanded its AML Mandate to include VASPs. This mandate is known as the Travel Rule Protocol.
The Netherlands based lender ING Bank, developed a protocol to assist with the Financial Action Task Force (FATF)'s Travel Rule, as a part of its AML mandate. This will now allow VASP (virtual asset service providers e.g Coinbase) members a way to query for the existence of address entries which will be defined by a PKI (Public Key Infrastructure) and Legal Entity Identifier (PKI). This will allow the secure tracking of digital asset transfers such as cryptocurrency.
The solution has already been supported by large corporations such as Standard Chartered Bank and Fidelity Digital Assets.
Malcolm Wright, head of the AML working group at Global Digital Finance suggests that the LEI (which could be used in conjunction with Mifid II) could be used when issuing a VASP code to all market participants.
Please see CoinDesk for more information.
GLEIF open US based office
According to the press release issued, they have made the move across the pond in order to increase their 'on the ground' engagement in operations in the USA, the country with 13% of all LEIs and the lions share of issued Legal Entity Identifiers.
This will serve to enhance their main goal of educating industry members on the importance of the LEI System and increasing voluntary adoption rates of the Legal Entity Identifier.
The initiative will be headed by Karla McKenna of GLEIF and will be joined by Peter Warms, formerly of Bloomberg.
GLEIF’s new US office brings us closer to our stakeholders in this important market at this critical time. LEI issuance in the US is the highest across all countries globally, and we recognise the importance of accessible and engaged GLEIF resources on the ground to help drive LEI issuance beyond regulation. This is especially important as we seek financial institutions globally to partner with us on pilot programs, to trial wider LEI adoption and to work with us in exploring how financial services firms can become active participants in LEI management. Our move into North America sends a clear message to our banking industry stakeholders in the region: GLEIF is here to help the sector benefit from broader LEI integration across business banking lines. We are here to assist you.” - GLEIF
If you would like to add an extra layer of security to your KYC process, start using the LEI search tool today. It is the perfect addition to any internal organisational process which involves identity checks. The tool is free to use and the data is global, reliable and up to date!
Below, we outline why you should start using it today, and how to make the most of it.
The global LEI system has innumerous benefits to the global economy. The Legal Entity Identifier provides unique, standardized data on companies trading all around the world. The most important feature of the LEI data is that it is stored in an easily accessible, public database that you can begin using, today!
The GLEIF search tool is not just used by regulators, or financial institutions for reporting and compliance obligations. The beauty of the LEI is that any company can easily integrate an LEI check as part of its KYC processes.
The beauty of the LEI is that your company can easily integrate an LEI check as part of its KYC processes, pretty much straight away.
With over 1.7 million entities on the LEI database, you can navigate the GLEIF search tool and discover valuable information about potential clients, investors or customers.
Now, when dealing with another company, checking if they have an LEI is a sure way to know they exist and are who they say they are.
In many instances, the LEI can provide an organizational structure or parent information. For example, by looking at the LEI of Alphabet Inc, you can easily see that it owns Google and the family tree and all subsidiary entities associated with the global corporation.
How can you begin using the LEI Search tool?
GLEIF have made freely accessible the LEI search tool. This tool allows you to search LEI data in depth using ‘Expert Mode’.
An LEI record will provide you with basic information on any given entity such as:
To begin your search visit the GLEIF Look Up tool (link at the bottom of this page). Think of a company you have in mind, or simply navigate the database freestyle to check it out.
If your initial search does not provide your desired result, try filtering by switching on the 'Expert Mode' button in the top right corner.
Using 'Expert Mode'
Use expert mode to conduct a search by combining multiple search filters. We suggest playing around with this for a while until you get the hang of it.
Expert Mode filters include the below (all can be used in combination):
To use a random example, we will search for Limited Companies in registered since 2019 in the USA, who have the word 'services' in their name.
Understanding LEI Status
You can also view the status of the LEI code. This will tell you whether the information contained within the record is likely to be valid or up to date. If the LEI code has not been renewed recently, it may contain inaccurate data.
ISSUED: The LEI is active, and the information on the LEI record has been updated within the last 12 months.
LAPSED: The LEI has expired and the data has not been renewed. It needs to be updated.
It is estimated that by adopting searches such as this, the global banking industry could save up to $2-4 Billion in KYC checks annually.
The LEI Search adds a quick, and reliable extra layer of security to your current KYC processes.
In summary, the LEI Search tool is a very reliable and useful database that can be introduced to your team in a matter of minutes. You can include the LEI as a requirement for customers to fill out on your forms for example. If they provide an LEI, and the data is accurate, you can have peace of mind knowing that they have accountability, are who they say they are and are a company that stand behind their brand.
"No LEI, No Trade"
If you have an LEI Code, we recommend that you maintain it. It should not Lapse or it could interfere with your ability to conduct business. If a potential investor sees that you have an expired LEI, it may discourage them from engaging in business with you. It could also result in your banking or financial institution blocking trades, or your regulator preventing the settlement of securities.
We are here to help...
LEI Search Tool Link
The GLEIF LEI checker is the official, fastest, & most accurate way to check on the current status of any LEI.
Global financial markets are in turmoil with the closing of businesses brought on by the COVID-19 crisis. Usually, a terrible situation such as this would inevitably lead to a severe economic downturn.
This is the case during and after this pandemic, moreover, we are now made confront another fact; global monetary policy over the last decade and how this effect by an economic downturn.
Since the Global Financial Crisis of 2008, central banks throughout the world such as the Federal Reserve, the European Central Bank (ECB) and the Bank of England utilised ever-increasing Quantitative Easing (QE) systems as a means to securing the the global economy against threats.
These systems brought about an upturn in the global money supply, a huge reduction in interest rates and protected financial institutions from the looming threat they would otherwise be facing due to becoming over-leveraged.
At a glance, the global economy recovered as businesses picked up the broken parts and began again, boosted by increased access to low interest rates and cheaper money.
At a policy level the central banks, reduced interest rates to almost zero. This resulted in basically disarming themselves of the weapons they would require as a means to protect against oncoming economic volatility.
Moreover, the problem that was caused by over-leveraging financial institutions led to the 2008 disaster not only remained unpacked, but was enhanced.
The main problem which remained underlying therefore grew in the background, awaiting a trigger to unleash its wrath.
That trigger is COVID-19.
COVID-19, also known as Coronavirus, is an infectious disease caused by a new type of corona virus originating in animals. The disease causes respiratory illness (like the flu) with symptoms such as a cough, fever, and in more severe cases, difficulty breathing.
At present, the world is still reeling from the direct effects of the last economic crisis. The real economy and has not yet come to terms with the economic storm that will be unleashed hereafter.
There is however, a silver lining.
Following the collapse of Lehman Bros in 2008, the G20 initiated a global ISO standard that increased transparency in global financial markets; the Legal Entity Identifier (LEI).
This identifier serves as a passport number for companies operating internationally, identifying the exact legal entity and its ownership structure, thus avoiding the confusion that reigned in 2008 when financial institutions had difficulty ascertaining their counterparty exposure in a time of economic volatility.
Regulators throughout the world have recognised the utility of the LEI as the pre-eminent identifier and a multitude of regulatory reporting mechanisms throughout the world now require an LEI. Indeed under MiFID II, the EU mandate has been described as "No LEI, No Trade".
Today, LEIs are also being matched with International Securities Identification Numbers (ISINs), rendering increased transparency for market participants by identifying the financial instruments issued by individual companies.
The world is currently facing unprecedented challenges. While peoples' health must be at the forefront of these, the financial well-being of the global system remains a critical priority.
At this time, the real utility of the LEI in delivering transparency to opaque markets will undoubtedly come to the fore.
Order your LEI now or contact us today to find out more.
There have been a number of developments across the global financial landscape in terms of regulations in recent months. With the dawn of a new decade, brings about a new era in terms financial regulations and compliance in the global market.
Below are a few of the most recent and notable developments watch as we move into Spring 2020.
Reserve Bank of India (RBI) LEI Requirements
RBI LEI Deadline - 31st March 2020
The RBI has now mandated that eligible participants are required to obtain Legal Entity Identifier by March 31, 2020.
In case of failure to obtain LEI within due date, the Bank shall not honour any kind of banking transactions of defaulting eligible participant.
This requirement refers to having an LEI in its ACTIVE state. Therefore, if you already have an LEI, you can ensure it never expires by subscribing to automatic renewals here.
LEI Requirement for SFTR Reporting
SFTR LEI Deadline - 13th April 2020
There has been a huge demand for measures to be taken to reduce risk and increase compliance requirements in this area. This stems from the need of transparency from the global financial crisis.
Market participants will be required to provide an LEI in their reports from 13th April 2020.
Currently the European Securities and Markets Authority (ESMA) is allowing a grace period of 12 months for third country issuers, but for those in the EU must ensure their LEIs are active by April 13th.
BE-10A LEI Requirement
LEI Requirement for HMDA Reporting
The LEI is a G20 endorsed globally verifiable unique identity code. The LEI exists to confirm the identity, and existence of a company and its structure on an international level.
The objective of the LEI system is to deliver transparency to the global financial system, although the benefits are far greater. The LEI improves KYC workflows and increases trust in transactions on a global scale and is even predicted to save the banking industry between 2-4 Billion USD annually!
LEI Worldwide are currently managing a large portfolio of client LEIs, including some big name brands. Darragh Hayes, Director at LEI Worldwide stated;
We help by providing these usually large corporations with a single LEI management solution.
This allows the whole organisation to use LEI Worldwide as a single point of contact to monitor, renew or access their LEI data, without the use of passwords or multiple accounts."
Thanks for Registering and Renewing our LEIs. We are extremely satisfied with your service and response to our queries.
Q: Why is the LEI important, and why should I get one?
Currently, LEIs are required by all firms conducting transactions within the global financial system. However, the benefits of having an LEI are greater than the necessity and that is why many companies are applying for their LEI codes in greater numbers than ever.
Immediate benefits include providing you with an instant credibility boost, and an internationally recognised identity card. The LEI is the most modern and trusted way to protect your online identity and build trust in your company. You can also benefit from the added layer of identity security and prevent any such related errors.
It is the mission of LEI Worldwide to facilitate this global mass adoption to the Legal Entity Identifier, by making them as accessible as possible to entities all over the world." – Robert O’ Reilly, Senior Partner, LEI Worldwide
Obtaining a Legal Entity Identifier is a very simple process. LEI Worldwide provide the platform to easily:
• Register a new LEI for a legal entity
• Renew an existing LEI
• Transfer an existing LEI to LEI Worldwide for free
• Make bulk orders, renewals or transfers in one go
• Register an LEI for up to 3 or 5 years which includes large discounts
• LEI Reselling: If you are interested in re-selling LEIs to your client base LEI Worldwide can set you up with the architecture to do so on your own website or to do so on the RapidLEI platform.
To find out more simply contact email@example.com
Article by: TechCompanyNews.com
If you are are currently managing or own a fund or a trust, you will more than likely be required to obtain a Legal Entity Identifier (LEI).
A Legal Entity Identifier (LEI) is a 20 digit code that is unique to a legal entity and provides basic information about the entity such as name, address and entity type e.g Limited Company. We explore this further in our recent post What is the Legal Entity Identifier?
LEIs are required by any legal entity that is involved with financial transactions or operating within today's financial system. This applies in particular with regard the EU and the US. There are a number of mandates currently in existence which state "no LEI, no trade" meaning both reporting parties and traders require an LEI such as Mifid II. To see a comprehensive outline of the regulatory use of the LEI please see our recent post on the matter.
Funds and Trusts are examples of legal entities which generally require an LEI for reporting and regulatory purposes.
LEIs for Funds
LEIs for Trusts
When it comes to applying for the LEI you may be requested to provide proof of existence by providing a deed, unless it is a discretionary trust. To find out what other documents may be requested please see our guide to LEI documentation here.
In order to apply for a Legal Entity Identifier please click here: Register New LEI
If you are transacting in the global financial system, you will more than likely be required to obtain a Legal Entity Identifier (LEI).
Applying for an LEI number is simple, and can be completed in a matter of minutes regardless of the entity type. Having an LEI is recommended especially in the UK due to the ongoing BREXIT.
Our registration system is connected to the Companies House via our partners at Ubisecure & RapidLEI, meaning you can obtain your LEI in just minutes!
Who needs an LEI in the UK?
How to get an LEI in the UK?
Obtaining a Legal Entity Identifier code is a simple process. The LEI application form only takes a few minutes and any representative of the company may apply on behalf of the entity.
1. Click on the 'Register New LEI' button here or visit the homepage of this website. To begin, fill out your contact details as the applicant. This information will be used to contact you in case any additional information is required.
2. Next, begin filling out the details of the entity which requires an LEI. This will include information such as the address, name of Director or person legally responsible for the entity such as CEO, or Owner.
3. The next section 'Level 2 Data' gives you the opportunity to report parent company information.
For example, if your company is a branch of a larger organisation, or is owned by another company you may have that information appear on the LEI record. However, this is not a legal obligation. If you wish to report a legal parent company, please note that you will be requested to provide evidence of this relationship by way of Consolidated Accounts (i.e an annual report).
You may only report parent information if the parent company consolidates the accounts and the subsidiary is listed there.
4. The final section allows you to upload documentation relevant to your application. When an LEI application is submitted, the data is cross matched with what is on the relevant local companies registry.
If however the company cannot be found, or the data does not match the registry, we may request that you provide supporting documentation. Some good examples include a Companies House extract.
Once the application is submitted, simply choose your preferred payment method and complete the application. LEI Worldwide use our payments provider STRIPE and PayPal. We also offer the ability to complete a bank transfer or swift payment in any currency.
A member of the LEI Worldwide team will review the submission upon submission and you will receive your LEI code within a few hours.
If you have any questions please contact firstname.lastname@example.org
This post provides a brief educational overview of the LEI, its origins, current usage and future speculations. The LEI is currently being adopted globally and quickly becoming the single most important identifier in the global financial ecosystem. The LEI has far reaching benefits, not only increasing transparency in capital markets, but also in banking, KYC processes, client onboarding and even anti-money laundering!
What is a Legal Entity Identifier?
A Legal Entity Identifier (LEI), is a code that is unique to a legal entity such as a Limited Company or Fund. This code consists of a combination of 20 letters and numbers. The LEI is an ISO standard, which is now a legal requirement for many companies within the global financial system.
The LEI offers accurate data about a company by searching for them on the LEI index. A companies LEI record will contain public data such as their name, address, where they are registered, and whether they are a branch, or owned by another 'parent' company.
Why is the LEI so important?
Previously it was very difficult to find out about a counterparty if they had no digital presence. This became problematic in the global financial crisis a decade ago.
The lack of transparency put financial institutions in a vulnerable position as vast numbers of entities and funds were unidentifiable. Also, this created complications relating to risk assessment and transparency.
The G20 launched the LEI system in 2011 in order to ensure this would never happen again. The idea was to create a digital database, of all legal entities which was easily accessible, accurate and up to date. One centralized source of information, that contains vast amounts of attainable, high quality data.
Where do LEI numbers come from?
After the G20 formed the concept of the LEI, the Financial Stability Board (FSB) appointed a new overseeing body to implement it. This organisation is known as the Global Legal Entity Identifier Foundation (GLEIF). GLEIF were given the role of accrediting and monitoring financial institutions with the ability to issue Legal Entity Identifiers. These institutions, known as Local Operating Units (LOUs) and are the only institutions with the ability to issue LEIs.
LOUs may issue LEIs themselves or partner with various Registration Agents who help facilitate mass adoption to the LEI by providing channels through which legal entities can easily obtain an LEI code. This makes the LEI very easy to obtain, and promotes healthy competition between service providers.
Who needs an LEI?
LEIs are required by any legal entity who is involved with financial transactions or operating within todays global financial ecosystem. There are a number of mandates currently in existence which state "no LEI, no trade" meaning both reporting parties and traders require an LEI. The LEI is mandated by a number of EU directives such as EMIR , MiFIR & MIFID II. The US also have similar requirements such as the Dodd Frank Act, the OFR, the Federal Reserve and the Securities & Exchange commission (SEC).
To see a list of laws in your country visit: https://www.gleif.org/en/lei-solutions/regulatory-use-of-the-lei
Given that the LEI is becoming more popular, and even more benefits are being realised such as streamlining banking processes and making them more efficient, you will probably end up requiring an LEI in the not so distant future if you don't already.
What benefits are there to having an LEI?
Your international recognition and trading credibility is increased immediately. Investors, customers and potential stakeholders can locate your essential data in real time. Likewise, you can benefit from the added layer of security that comes from knowing exactly who you are dealing with.
How to get an LEI
Wether you are a financial institution acting on behalf of your clients, or require an LEI for your personal company you can obtain an LEI at www.lei-worldwide.com or by clicking the register button below.
The process is very simple and if you require any advice, please do not hesitate to get in touch with our support team who can talk you through the process, and recommend LEI solutions specific to your needs. In order to contact out team of experienced professionals please click the Contact button below.
In another step towards standardised global regulation, the ASIC (The Australian Securities and Investments Commission) extended its April deadline to September 30th 2019.
The deadline is aimed at financial service entities registered in Australia, pre-dominantly SMSF (Self Managed Superannuation Funds) traders and trustees, but can include other entities within the financial services realm.
Initially, the deadline was set for April 1st 2019, but this was later extended by ASIC. It has been stated that it is highly unlikely that the upcoming deadline set for October 1st will be extended again.
This is a right step in the direction of having one global standardised identifier. This will facilitate cross-border investing and trading and increased transparency across international markets.
The LEI has been a preferred identifier of ASIC since 2013 when they first introduced the ASIC Derivative Transaction (Reporting) Rules. In the rules it is mandated that counterparties to OTC derivatives are recognised by way of an LEI identifier.
Now, Australia follows in the footsteps of many other countries adopting a similar hard line and broader approach to the use of the LEI as its benefits become more apparent as the concept matures.
In the future, all businesses who trade internationally will move towards the LEI as it provides a centralised, reliable source of data improving not just security, but also speeding up current techniques of KYC and client onboarding.
What is an LEI?
An LEI is 20 digit alpha numerical code unique to each company that is registered on the global LEI database. The LEI listing will contain basic company information such as the registered address, and affiliations with other businesses such as parent companies or subsidiaries or branches.
How do I get an LEI quickly?
It is easy to apply for an LEI code if you have not already got one. Simply head to our registration page and fill in the LEI registration form. Contact email@example.com for any questions.
How much does an LEI Code cost?
There are a number of different pricing options. A new LEI for one year is €89, but if you subscribe to automatic renewals it is just €75 per annum.
What happens if I miss the ASIC October 1st deadline?
As soon as you receive your LEI you should contact your Trade Repository to inform them. Corporate clients who have not provided an LEI to their brokers before 1st October may no longer be able to trade with them.
Click here to Register an LEI
The views expressed in this blog belong to LEI Worldwide.