I’ve often spent my blog article energy on deep diving into topics surrounding the payments and identity industry but that occasionally means I miss out on some of the smaller stories around Legal Entity Identifiers. It’s a great opportunity to highlight the updates which will pave the way for more regular use and global adoption of the LEI as a verifiable credential and entity identifier.
“It has now been decided to introduce the LEI system for all payment transactions of value ₹50 crore and above undertaken by entities (non-individuals) using Reserve Bank-run Centralised Payment Systems viz. Real Time Gross Settlement (RTGS) and National Electronic Funds Transfer (NEFT).”
In a move which will increase transparency on the Indian financial market, the RBI have introduced regulation that requires entities to obtain a Legal Entity Identifier and include remitter and beneficiary LEI information in RTGS and NEFT payment messages. This also includes a separate mandate to obtain an LEI when borrowing more than ₹50 crore. Borrowers who fails to get an LEI will not be granted renewal or enhancement of credit facilities.
The CFCA is using LEIs to link PDF digital certificates to entity reference data in the central GLEIF database. CFCA has become the first to demonstrate a commercial use case of LEIs embedded in a digital certificate using the digital certificate issuance process for PDF documents.
Naijin Lu, from CFCA’s Strategic Development Department, comments:
“Incorporating LEI into our digital identity products brings many benefits to certificate users, while being very helpful in constructing a digital identity ecosystem. By using GLEIF API for real-time online verification of LEI-related legal entity information, the advantages of digital certificate and LEI can be well integrated in the practice of digital identity to create a better digital identity authentication experience. We are excited to bring forward the first market-based demo of its kind, which proves that the combination of LEI and digital identity products has a bright future. In the future, we will actively explore other application scenarios of LEI in digital identification field, such as vLEI. “
“Although some regional initiatives enable mutual recognition of electronic ID schemes, such as eIDAS in the European Union, mutual recognition of different schemes at the political/legislative level does not help if different identifiers are used in digitally enabled machine-readable platforms. The lack of interoperability across these platforms limits the benefits obtained from private sector applications such as online banking or open finance. Therefore, GLEIF suggests that the LEI, a global standard, as opposed to regional or local ones, for entity identification can maximize the cross-border interoperability and benefits for all users.”
Similar to individuals, legal entities also need a way to identify themselves and each business worldwide should only have one digital identity. More standardisation of these identities for machines would make it easier to cooperate on a global level.
The UK Department for Digital, Culture, Media & Sport’s suggested to add the LEI among the accepted information that a relying party might request to check if a business is eligible to do something; however, the GLEIF have suggested that the LEI does not compare to other identifiers mentioned in this list (such as VAT number or DUNS). The LEI is the only open standard, globally adopted unique identification backed by 71 members in it’s regulatory oversight committee. The U.S. will stop uniquely identifying business using the DUNS number since the DUNS is issued by a private enterprise on a proprietary system. The GLIEF suggested to the UK government that the LEI, along with Companies House number are the ONLY accepted identifiers used for UK and foreign businesses.
“The Association of National Numbering Agencies (ANNA), a global member association seeking to foster standardisation within the financial industry by upholding the ISO principles and by promoting International Securities identification Numbers (ISINs), Classification of Financial Instrument codes (CFIs), and Financial Instrument Short Names (FISN), for financial and referential instruments, announced today that additional jurisdictions have been added to the open-source relationship files provided through the certified ISIN-to-LEI mapping service. This certified initiative, which ANNA has undertaken with the Global Legal Entity Identifier Foundation (GLEIF), maps ISINs to their corresponding Legal Entity Identifiers (LEIs).”
22 National Numbering Agencies have joined the ISIN-to-LEI Mapping initiative with ISIN coverage across 41 jurisdictions. Expansion has recently moved into:
More jurisdictions are in the pipeline.
The final report on the review of transaction and reference data reporting obligations under MiFIR includes:
Within the report itself, ESMA is also considering the necessary legislative changes required to accommodate the inclusion of the LEI of the fund manager in the reporting requirements as specified in RTS 23.
It appears this consultation will bring MiFIR reporting requirements in line with other regimes such as MAR, EMIR and the Benchmark Regulation.
“The vLEI is a fully digitized LEI service capable of enabling automated identity verification between counterparties operating across all industry sectors, globally, supported by a credential governance framework and technical supporting infrastructure.”
Taking the LEI one step further from entity identification to individuals is a huge development for the digital identity industry and one that has been supported by our partners at RapidLEI. We wrote a full blog on the story to explain why vLEIs are important and how we expect they can add value to the industry with some solid examples such as mobile driving licenses and healthcare service delivery.
There’s a lot of good work happening globally to ensure that high value transactions and cross-border payments can become more transparent and less fraudulent while enabling a digital business to succeed in the future. The speed at which LEIs are being adopted show there has been a clear gap in this area and a need for an open standard recognised all over the world.
Register a new LEI or transfer an existing LEI to ManagedLEI today for low cost LEI renewals.Buy or Transfer an LEI
Trusted Identity Ltd. LEI: 98450054NFCE7A67C172Managed LEI © 2021. All Rights Reserved.