LEI Worldwide
  • Home
  • LEI REGISTRATION
    • Update an LEI
    • Transfer an LEI
  • Resources
    • KNOWLEDGE CENTRE
    • LEI INFO
    • LEI Statistics
    • LEI Data Matching
    • LEI Regions Supported
  • Become a Partner
  • News & Insights
  • Contact

LEI News & Insights

Regular news, updates and blog posts including 
regulatory updates and notifications for LEI requirements. 

How LEI adoption can Benefit the Shipping Industry

4/10/2021

1 Comment

 
How LEI adoption can Benefit the Shipping Industry
The Bank of International Settlements (BIS) compare the standardization power of the LEI to that of the standardization of the shipping container and the economic advantages that came with it.

The paper written by Francis Gross alludes to the fact that making basic micro-data freely available on participants in a marketplace would have huge benefits to the wider economy, but must be i) globally standardised, ii) real time and iii) must be granular. These are the three key characteristics which make up the global LEI system.
lei in shipping
It has become quite apparent that the absence in the past of an accurate, comprehensive, and international system for the identification of parties to financial transactions has created a multitude of problems. Incidences of money laundering and corruption continue to cause major issues as highlighted by the recent release of the Pandora Papers, which uncovered evidence of fraud and money-laundering reaching to the highest echelons of society.
​
Couple this with the huge fines’ companies and banks are constantly being hit with and one can see the difficult place many organisations find themselves in. In the modern digital global economy how can an organisation trust that a business partner situated on the other side of the world is who they are claiming to be?
With large corporate bodies wrapped up in an intricate web of faceless subsidiaries it is getting harder and harder to know who you are dealing with. And more over, harder to answer the age old questions of “Who owns Whom?”.

One industry that knows this more than others is the ‘Shipping Sector’. Maritime shipping is the backbone of world trade. It is estimated that some 80 percent of all goods are carried by sea. As of 2019, the total value of the annual world shipping trade had reached more than 14 trillion US Dollars. Shipping offers the cheapest mode of transport per tonne. The shipping industry’s ability to transport goods cheaply and in large volumes, and with a minimal environmental footprint highlights its huge importance in world trade.
​
​In an industry so big it is essential that there is a system in place that enables clear and unique identification of legal entities participating in financial transactions, namely, the Legal Entity Identifier (LEI).
To give you an idea, there are around 5,250 container ships in operation globally. Each container ship can carry up to 22,000 container units (TEUs) each around 20-40ft in length. Each one of these containers may belong to a different company, or some to the same company but different branches of that company.

How do you know who owns what?

Shipping companies around the world have voluntarily adopted the LEI, and simply assign the LEI of the company to its containers. This works very well as the LEI is standardised globally, and machine readable, meaning it can easily be integrated into software systems and management portals, working similar to a barcode in a store. 

​The LEI can be used by a company to track its cargo, and by the ship crew to identify what belongs where using a globally recognised identifier.  
The Legal Entity Identifier has previously been compared to shipping containers in a 2014 Forbes article by Tom Groenfeldt
“When shipping containers were first introduced, they came in a variety of shapes and sizes, so it was difficult to transport and store them. A public-private partnership led to the development of the standard 20- and 40-foot containers.

The Legal Entity Identifier is similar. In 2012 the G20 asked regulators to develop a global system to identify financial firms, at least initially, that would be attractive to users.  Now the LEI has 300,000 registered entities and can answer the question of Who?

​The next step will be to use LEIs to show Who owns Whom — to show at least parent-child corporate relationships, and a third step will be to show Who Owns What, as LEI’s get attached to products.” - Forbes

The introduction of the Legal Entity Identifier (LEI) system offers a global system to identify legal entities.  The primary benefit of the LEI system comes from its KYC (know your customer) applications. The ability to identify and aggregate all the existing and potential clients inside corporate systems that brings big benefits to many entities. This includes when dealing with a customer thousands of Kilometres away such as a supplier of cargo ships or potential client looking to use your services.
“It is the only open, standardized and regulatory-endorsed system capable of establishing digitized trust between all legal entities, everywhere” - GLEI

Other benefits of the Legal Entity Identifier System Include:

1. It is Unique: The Legal Entity Identifier system architecture assumes that only one LEI can be assigned to a legal entity. It assumes LEIs cannot be reused, duplicated and are annually renewed.
2. Reduce Risk: The LEI system can reduce risk associated with financial transactions because you are more able to assess the situation and make informed decisions.
3. Reduce Onboarding Costs: LEIs can reduce onboarding costs by 10%, resulting in an overall reduction in capital market operating costs. McKinsey recently published a study claiming that broader adoption of the LEI would save the global banking sector between 2-4 billion USD annually.
4. Promote Transparency in the Marketplace: By registering for an LEI, you’re making a commitment to promoting transparency within the global marketplace and improving your own credibility. The LEI system is destined to become the global standard for the unique identification of legal entities across the global financial sector and beyond.

How to get an LEI Code:

LEI Worldwide have been providing LEIs globally since 2017. With global coverage, LEI Worldwide can have an LEI code issued to you within hours regardless of your jurisdiction or entity type.
​

LEI Worldwide allow you to get your LEI Number hassle free and no need to even register an account. To receive confirmation of your new LEI number in the fastest, most secure way possible complete the 5 minute LEI application form here.
Picture
1 Comment
John Carston link
16/12/2021 17:45:56

I like how you mentioned that it is important to consider what will reduce the risk. My uncle mentioned to me last night that he and his friend are planning to hire a shipping container for business purposes and asked if I have any idea what is the best option to do. Thanks to this informative article and I'll be sure to tell him that they can consult a trusted shipping container provider as they can answer all their inquiries and will provide their desired size of the container.

Reply

Your comment will be posted after it is approved.


Leave a Reply.

    LEI Worldwide

    The views expressed in this blog belong to LEI Worldwide.

    Archives

    April 2022
    January 2022
    December 2021
    November 2021
    October 2021
    July 2021
    June 2021
    March 2021
    January 2021
    December 2020
    November 2020
    October 2020
    July 2020
    June 2020
    May 2020
    March 2020
    February 2020
    January 2020
    December 2019
    November 2019
    September 2019
    July 2019
    June 2019
    March 2019
    February 2019
    May 2018
    March 2018
    January 2018
    July 2017

    Categories

    All
    Crypto
    KYC

    RSS Feed

​Facilitating the global allocation of LEI numbers.

​​LEI Worldwide facilitate entity identification in the global financial system, capital markets and private sector. We make the process accessible and simple for Legal Entities to obtain Legal Entity Identifier numbers. By doing this we help facilitate the global allocation of LEI numbers. It is our mission to be the one point of contact globally between Legal Entities & LOU’s and ensuring the LEI becomes the Worlds most important identifier.

Services

Register New LEI
Renew LEI
Transfer LEI
gleif partner

Company

About
Blog
FAQ
lei partners

Support

Contact
Terms & Conditions
Data Protection Policy​
stripe logo
irish funds logo
lei legal entity identifier
                                        © COPYRIGHT 2020. ALL RIGHTS RESERVED.
trustpilot logo
lei registration
lei registration
lei registration
lei registration

 UNITED STATES | DUBAI | GERMANY | NETHERLANDS | UNITED KINGDOM | AUSTRALIA |  BRAZIL | CANADA | FRANCE | SPAIN | HONG KONG | CHINA | INDIA | ITALY | SWEDEN | BVI | MALTA | UNITED ARAB EMIRATES | MEXICO  LUXEMBOURG | SOUTH AFRICA | BELGIUM | SINGAPORE | JAPAN | MAURITIUS | CAYMAN ISLANDS | TURKEY | PORTUGAL | PANAMA | DENMARK | CYPRUS | KENYA | IRELAND | NEW ZEALAND | GREECE | SEYCHELLES
  • Home
  • LEI REGISTRATION
    • Update an LEI
    • Transfer an LEI
  • Resources
    • KNOWLEDGE CENTRE
    • LEI INFO
    • LEI Statistics
    • LEI Data Matching
    • LEI Regions Supported
  • Become a Partner
  • News & Insights
  • Contact