About the Global Legal Entity Identifier Foundation (GLEIF): Established by the Financial Stability Board in June 2014, the Global Legal Entity Identifier Foundation (GLEIF) is a not-for-profit organization created to support the implementation and use of the Legal Entity Identifier (LEI). GLEIF is headquartered in Basel, Switzerland. GLEIF makes available the full global LEI repository free of cost to users on www.gleif.org. GLEIF is subject to the oversight of the LEI Regulatory Oversight Committee, which is made up of representatives of public authorities from across the globe. For more information, visit the GLEIF website at www.gleif.org.
About the Legal Entity Identifier (LEI): The LEI is a 20-digit, alpha-numeric code based on the ISO 17442 standard developed by the International Organization for Standardization. It connects to key reference information that enables clear and unique identification of legal entities participating in financial transactions and/or in global financial markets. Many regulators around the world have implemented the LEI for financial market transactions and regulatory reporting or are considering doing so. Details are available on GLEIF’s website: https://www.gleif.org/en/lei-focus/rulemaking.
History of the Global LEI System: In 2011, the Group of Twenty (G20) called on the Financial Stability Board (FSB) to provide recommendations for a global Legal Entity Identifier (LEI) and a supporting governance structure. This led to the development of the Global LEI System which,
through the issuance of LEIs, now provides unique identification of legal entities participating in
financial transactions across the globe.
LEI Regulatory Oversight Committee (LEI ROC): The LEI Regulatory Oversight Committee (LEI ROC) is a group of 71 public authorities with full membership and 19 observers from more than
50 countries established in January 2013 to coordinate and oversee a worldwide framework of legal entity identification, the Global LEI System. For more information, visit the LEI ROC website: http://www.leiroc.org/.
LEI issuing organizations – also referenced as Local Operating Units (LOUs): Organizations authorized to issue LEIs to legal entities engaging in financial transactions. For more information, visit the GLEIF website: https://www.gleif.org/en/lei-focus/how-to-get-an-lei. LEI in Trade Finance Throughout the commercial transaction lifecycle, several manual, time consuming activities are required to complete the transaction. This is especially true of international transactions. In articular, verifying the identities of counterparties often involves a great deal of manual processing. For example, the process of acquiring and using letters of credit is particularly time-consuming and typically involves multiple steps, many of which require identity checks and reconciliation.
To mitigate risks and comply with anti-money-laundering (AML) and sanctions regulations, both the importer and importer’s bank and the exporter and exporter’s bank must conduct several counterparty checks. The use of the LEI could automate identity verification and enable the digitization of such processes. These efficiencies would be compounded by reducing the incidence of false positives based on AML, sanctions and other compliance lists. Rather than searching by name, institutions could simply search the relevant databases using each entity’s unique LEI.
Essentially, the LEI makes two key activities in a complicated process – verification of the data of legal entities (inclusive its direct parent and ultimate accounting consolidation parents) and tracking an entity’s history – far simpler. According to a Joint McKinsey & Company and GLEIF white paper, on an annual basis, banks could potentially collectively save between U.S.$250 million to U.S.$500 million per annum if LEIs were used to identify legal entities globally and to automate the tracing of their history for the issuance of letters of credit. At its maximum potential, these savings could represent four percent of the current global trade operations cost base.
Why should all businesses have a LEI? Integrating the LEI into entity verification methods for supply chain, trade finance and KYC business processes will allow anyone to easily connect all records associated with an business and identify who owns whom. By becoming the common link, the LEI will provide certainty of identity in any online interaction, making it easier for everyone to articipate in the global digital marketplace. Ensuring a common link is especially important for emerging technologies, like blockchain, to ensure interoperability across applications.
What services does GLEIF deliver relevant for trade finance partners (and their IT providers)?
- Who is Who: Global LEI Index with over 1.3 million legal entities
- Who owns Whom: Information on the direct and ultimate accounting consolidation parents
- All LEI data are free of charge for any user
- Export of LEI data in several technical formats as well as access by API
- Website available in all 14 languages of the G20
- Overview of LEI issuers: businesses may choose their preferred LEI Issuer or egistration Agent and coordinate registration for all related entities via top down registration (e.g. through the corporate secretary)
- LEI statistics
- Monthly data quality report for each LEI Issuer to ensure transparacy
- Registration Authorities List: overview of more than 650 business registers and other relevant authorities cross referenced to the legal entity data
- Entity Legal Forms Code List (ISO 20275): standardized code list referenced in the LEI record allowing for deeper insight and classification of legal entities
Global Legal Entity Identifier Foundation, St. Alban-Vorstadt 5, PO Box, 4002 Basel, Switzerland
Chairman of the Board: Gerard Hartsink, CEO: Stephan Wolf
Commercial-Register-No.: CHE-200.595.965, LEI: 506700GE1G29325QX363