Better Knowledge, Better Business
The way we work has been revolutionized by technology. As part of this, the automation and digitization of many manual processes has led to considerable time and cost-saving. However, despite these changes, many organizations continue to use manual methods when it comes to legal entity identification. The use of the Legal Entity Identifier (LEI) as a common and global identifier to combat this issue encompasses a wide range of business use cases that span multiple industries, business activities and functions.
The LEI enables clear and unique identification of legal entities participating in financial transactions by connecting to key reference information. The Global Legal Entity Identifier Foundation (GLEIF) makes available the Global LEI Index, which is the only global online source that provides open, standardized and high-quality legal entity reference data. Each LEI contains information about an entity’s ownership structure, answering the questions of ‘who is who’ and ‘who owns whom’.
Get an LEI and make it work for you: The private sector opportunity
Businesses across the globe are currently grappling with how to develop and implement a common entity identification system that could serve as a linchpin to identify financial market participants and connect data. Entity identification can be a time-consuming, costly and complex task; most organizations do not maintain a single database which collates up-to-date reference data on existing or prospective clients, business partners and counterparties. Gathering and maintaining related data requires replicating efforts across the market, tying up resources that could be spent more productively elsewhere. Up until now, legal entity reference data has been proprietary, siloed and non-standardized.
So, what’s the solution?
The Global LEI Index empowers organizations, regardless of sector, to cut costs, simplify and accelerate operations and gain deeper insight into the global marketplace. Corporate customers, providers and other business partners can all be uniquely, easily and speedily identified with the LEI, providing organizations with cost benefits and new business opportunities. Access to and usage of the LEI data pool supports a multitude of applications in, for example, risk management, compliance and client relationship management.
The benefits that the Global LEI Index generates for the wider business community grow in line with the rate of LEI adoption. So, GLEIF’s message to businesses around the globe is this: Get an LEI and make it work for you.
For more information on how to create business value with the LEI, refer to these sources:
- New update – McKinsey & Company and GLEIF: The power of LEIs to transform client lifecycle management in banking: A U.S.$4 billion beginning. This ebook explores findings from a joint GLEIF and McKinsey study into the benefits banks can realize through expanded LEI usage. Broad adoption of LEIs could save the global banking sector U.S.$2-4 billion annually in client onboarding costs alone. This represents a saving of between 5-10 percent of the industry’s U.S.$40 billion annual overall spend on the practice. It concludes that if banks broaden utilization of LEIs across business lines, resulting efficiencies would generate significant cost and time savings.
- McKinsey & Company and GLEIF white paper: The Legal Entity Identifier – The Value of the Unique Counterparty ID. The white paper estimates that broader, global adoption of LEIs could yield annual savings of over U.S.$150 million within the investment banking industry and up to U.S.$500 million for banks in the issuance of letters of credit. Annual savings in investment banking would include at least 10 percent of total operational costs for onboarding clients and trading processing through the use of the LEI.
- GLEIF research report: A New Future for Legal Entity Identification. The report outlines the results of GLEIF research on the challenges of entity identification in financial services, including know your customer (KYC) due diligence. It also shows how replacing disjointed information with a globally accepted approach, based on broad adoption of the LEI, would remove complexity from business transactions and deliver quantifiable value to financial services firms.
More transparency: Regulatory use of the LEI
To learn more about how the LEI helps to increase transparency in global financial markets, refer to our dedicated website page titled ‘Regulatory Use of the LEI’.
Within any jurisdiction, migration to a standardized entity identification system based on the LEI could be useful anywhere a government-to-business relationship exists. In light of this premise, GLEIF and the U.S.-based Data Foundation have joined forces to explore how LEI adoption by U.S. federal agencies could streamline entity identification and produce benefits within and beyond financial markets. To learn more, read the report ‘Envisioning Comprehensive Entity Identification for the U.S. Federal Government’.
ISO 17442 standard
The International Organization for Standardization (ISO) 17442 standard defines a set of attributes or legal entity reference data that are the most essential elements of identification. The Legal Entity Identifier (LEI) code itself is neutral, with no embedded intelligence or country codes that could create unnecessary complexity for users.
The ISO 17442 standard specifies the minimum reference data, which must be supplied for each LEI. This data is usually referred as Level 1 Data – Who is who:
The official name of the legal entity as recorded in the official registers.
The registered address of that legal entity.
The country of formation.
The codes for the representation of names of countries and their subdivisions.
The date of the first LEI assignment; the date of last update of the LEI information; and the date of expiry, if applicable.
Application for a Legal Entity Identifier (LEI) number
The registration for an LEI number or code is a simple three-step process:
1. Fill in all the blanks in the LEI application form above.
2. Submit your application and pay with a credit card, PayPal or bank link.
3. Your data will be processed and the LEI code sent to you by e-mail.
Your application will be sent for data validation as soon as you have submitted the payment. In 90% of the cases you will receive your LEI within 3-4 hours during weekdays.