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Legal Entity Identification Data Mapping

Business is globalising and a consequence of this globalisation is the need for a common language for transacting across borders. Up until now, we’ve built computer systems that only understand a regional language but if we want to connect apps and services while complying with global regulations, we need to find a common language. Here is where, LEI Data Mapping comes in.

LEI Mapping: The Perfect Business Language from Global LEI FDN (GLEIF) on Vimeo.

What is LEI Data Mapping?

LEI Mapping is less about translating communications and more about making connectivity, interactions and identification more seamless. An example of where this can really benefit is a bank’s Know Your Customer due diligence process. It’s important for a bank to do KYC on new clients in order to reduce fraud but as we know, fraud is actually on the rise as banks struggle to make concrete identifications of their clients and customers.

At the moment, one single business can be identified in a number of ways, such as:

  • Legal Entity Identifier
  • Employer Identification Number
  • Business Identifier Code

Every business regardless of region or industry that performs entity identification finds it hard to perform the checks because of the number of different ways a business can be identified. Identifier mapping is like a translation service from various different identification services to a single identity service. But translation services aren’t always accurate and businesses have spent a lot of money on backend processes to make this mapping more accurate.

Legal Entity Identifiers can solve this problem with the LEI Mapping service. It ensures a quick painless way to map identifiers from your business onto an LEI. LEIs have the extra benefit that they contain information about the ownership structure of a business, which creates more transparency and as such, a less costly and more efficient KYC process.

The added benefit is that the Global Legal Entity Identifier Foundation (GLEIF) has made their LEI Mapping service Open Source. Not only does that make it free but it also means organisations can connect and collaborate more efficiently and effectively. This enables data vendors who want a quality assured mapping process, the tools to do just that. In turn this creates enhanced functionality and smoother frictionless experience for their customers.

Unlike language translating itself, LEI Mapping means that a future where entity identification will be without ambiguity or misunderstanding. Businesses around the world can use Legal Entity Identifiers to identify themselves to their partners and vice versa so decisions can be made with certainty on trusted data. Confusion around entity identification will disappear and organisations will be able to trust each other, no matter which identifier they use.

BIC to LEI

In February 2018, the GLEIF and the global provider of secure financial messaging services (SWIFT) introduced the first open source relationship file that matches a Business Identifier Code (BIC) to an LEI.

BIC is an ISO standard (9362) for the identifications of institutions on the financial services industry. SWIFT is the registration authority for the BIC standard appointed by ISO. The BIC to LEI relationship file is published in CSV files available on the GLEIF website and updated regularly.

The GLEIF state on their website:

“Availability of the open source BIC-to-LEI relationship file will ease the process of gathering, aggregating and reconciling counterparty information based on interoperability across parallel ID platforms. This is particularly relevant to service providers active in the payments and over the counter (OTC) derivatives markets concerned with client relationship management, or due diligence relevant to know your customer (KYC) and know your supplier (KYS).”

The BIC to LEI relationship mapping will significantly reduce the cost associated with entity verification given that it consolidates information and reduces admin times.

ISIN to LEI

In April 2019, the GLEIF and Association of National Numbering Agencies (ANNA) piloted the first open source relationship file to map LEIs to International Securities Identification Numbers (ISINs). ISINs are issued by National Numbering Agencies (NNAs), of which there are 116. It is expected that NNAs will join the programme going forward. The GLEIF website states:

“This cooperation between GLEIF and ANNA was created to improve the transparency of exposure by linking the issuer and issuance of securities. This enables firms to aggregate data which clearly shows their securities exposure in relation to an individual issuer and its related entities.”

The ANNA website states:

“This global project will map new and legacy ISINs to their corresponding LEIs, of those NNAs who have joined the initiative. By linking the two ISO standards together, firms will be able to aggregate the data required to gain a clear view of their securities exposure within a given issuer and its related entities. The ISIN-to-LEI mapping table is freely available to all without restriction on both the GLEIF and ANNA websites.”

Use of Legal Entity Identifiers

I’ve talked about the use of LEIs in digital certificates in another blog. It’s important to realise the work that the GLEIF is doing to create a homogeneous environment where LEIs can be used for entity identification. Business transactions take place in many forms and through many devices, mediums and methods; LEIs can make the entity identification in all these cases coherent and consistent.

When we think about the use of LEI Data Mapping in the future, we can imagine scenarios where banking apps are talking with servers or online applications (which will be common after the open banking transformations happening in the finance sector today). Each of these applications will be able to confidently identify the business they are transacting with, without the need for a human to do manual checks and without the need to convert the information into another system. It also brings together ISO standards like ISO 20022 in line with entity identification so that organisations are not only speeding up their KYC and onboarding processes but staying compliant with the most current regulations.

If you’d like to know more about Legal Entity Identifiers and their use, contact us today. Or if you’d like to get an LEI for your organisation, visit our shop.

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Legal Entity Identification Data Mapping
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Legal Entity Identification Data Mapping
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LEI Mapping is less about translating communications and more about making connectivity, interactions and identification more seamless. An example of where this can really benefit is a bank’s Know Your Customer due diligence process. It’s important for a bank to do KYC on new clients in order to reduce fraud but as we know, fraud is actually on the rise as banks struggle to make concrete identifications of their clients and customers.
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ManagedLEI
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