A Legal Entity Identifier (LEI) is a 20-digit alpha-numeric code representing a unique business entity participating in financial transactions. LEI Numbers are issued and validated by Local Operating Units (LOUs), characterised by an ISO 17442 standard and represented in an open database managed by the Global Legal Entity Identifier Foundation (GLEIF).
LEIs were introduced after the 2008 financial crash when the need for more transparency on the financial market was realised as a way to reduce the likelihood of a similar outcome in the future. Members of the G20 set-up the GLEIF to facilitate the creation and adoption of LEIs worldwide and since then, regulators all over the world have begun requiring or requesting LEIs to comply. Examples of some regulations include MiFID II, EMIR, MiFIR, Solvency II and SFTR.
LEIs also have an important role to play in digital transactions. As the world becomes increasingly digitised, verifiable and trustworthy digital identities are vital to counter fraud and financing of terrorism. LEIs have been recognised as a potential solution to business entity verification; for example, in client onboarding and KYC, B2B digital signing and B2B payments industries.
In client onboarding alone, the McKinsey institute discovered that global adoption of Legal Entity Identifiers (LEIs) could save the banking industry between $2-4 billion USD annually in onboarding costs.
The global LEI system or GLEIS is made up of various stakeholders and governance bodies who make up the global LEI infrastructure. This includes the Global Legal Entity Foundation (GLEF), the LEI Regulatory Oversight Committee (LEI ROC), the Financial Stability Board (FSB), Local Operating Units (LOUs).
If an individual is acting in a business capacity, they are eligible to obtain an LEI. LEI ROC have issued a statement to clarify the exact circumstances in which an individual may want to obtain an LEI here.
Currently, Legal Entity Identifier numbers are required for organisations trading on the financial market. This could include; investment companies, funds or trusts, government bodies, non-profit and charitable organisations, insurance companies, credit unions, brokerages, banks and any business entity trading on the financial market in or with the EU and UK but also in or with regions such as India, Canada, Malaysia, China and the U.S.A. For a list of regulations requiring or requesting the use of LEI and their jurisdiction, visit the GLEIF website.
Where LEIs are not required, they may still be useful in providing transparency or reducing risk; for example, in B2B KYC processes or in online document signing between government entities. The fast adoption of Legal Entity Identifiers has meant that they’re quickly becoming the global de facto standard for business entity identification.
Local Operating Units vary in how they price LEIs, with some offering monthly subscriptions as an additional option to yearly pricing. We believe monthly subscriptions are too cumbersome. Instead, we offer yearly subscriptions with higher discounts for the longer you subscribe. Transfers are also cheaper as they require less verification.
Find out how much we charge here.
To obtain an LEI, you must give some information about your entity for us to verify. These include, legal name, registered address, headquarter address, registration authority number, entity type and legal form. Not all fields are required for every entity type. For example, trusts and funds may not have a company registration number so they can leave this field blank. In addition, the “company name” field becomes the name of the trust or fund as described in the deed or official documents.
Business entities will be asked to provide information on parent or child entities as well as parent relationship information such as parent LEI, relationship periods and accounting standards. This also applied to branch entity applicants who are asked to provide information on their branch parent.
A user may provide any documents that they believe will assist us in verifying the validity of their request. This includes, but is not limited to:
An LEI must be renewed every year. This can be an additional burden for organisation, entities, fund managers or investment companies who must manage a large portfolio of LEI numbers. To help reduce the burden, ManagedLEI offer portfolio management and multi-year discounts. We renew all LEIs for you after verifying your business information hasn’t changed. For customers wishing to manage their own LEIs, our system sends out renewal reminders which give you plenty of time to renew your LEI without risking a lapse.
If your LEI shows as lapsed, this could affect your ability to trade.
As of May 1st, 2017 the LEI ROC and GLEIF have mandated the collection of Level 2 relationship data to answer the question “who owns whom”. Level 2 data will identify the accounting consolidating ultimate parent, defined as the highest level legal entity preparing consolidated financial statements, as well as the direct accounting consolidating parent. In both cases, the identification of the parent would be based on the accounting definition of consolidation applying to this parent.
If the parent does not have an LEI, the following data elements will need to be provided:
You can choose to not disclose your parent information, in which case you will be required to provide an “Exception Reason” as to why you are not providing parent information. Exception reasons include:
Otherwise you should provide the information on your parent or child entities as required.
An “authorised party” can request changes to an LEI record with their Local Operating Unit (LOU) at any time. Upkeep of the LEI record is required on an annual basis, upon renewal, and any LEI which has not been renewed will be marked with a “lapsed” status on their LEI record. The information will be reviewed for data accuracy, formatting, and to ensure that no duplicate records exist. A fee is required for the annual renewal of the LEI.
Users may request that management of their existing LEI record(s) be transferred to another LOU. This request can be submitted on the new LOU’s website in the transfer tab. While the LEI number and representation in the database will not change, the ongoing maintenance and administration of the LEI will be transferred to your new chosen provider. There is no fee to transfer unless the current registration status of your LEI is lapsed.
If your LEI has lapsed, you will only be charged the fee for renewal at the time you transfer. As transfer requests involves the coordination of two different LOUs, this process can take longer than the other action requests; however, you can rest assured that GLEIF regulations state that your existing LOU cannot deny your request to transfer.
Want to transfer to ManagedLEI? Click here.
All registered LEIs are available on a public database managed by the Global Legal Entity Identifier Foundation (aka the GLEIF). Click this link and search for LEI by number, company name or other data fields.
The first section gives you detailed information on the LEI itself including the code number, the name of the company registering, the legal form, jurisdiction and the registration status as well as the validity of the LEI itself. Here’s ours:
In the second section, the LEI provides details on the registered address of the company as well as the company headquarters. The third section provides details on the registration and validation of the business entity itself such as the length of validity of the LEI and the issuer.
The final section is Level 2 data on “who owns whom” and gives corresponding LEI numbers for parent or child entities of the business in question. We do not have any child or parent companies so these are blank on our page.
In addition, there is a button here for anyone who feels that the data in the LEI record is inaccurate and they wish to challenge it.
Trusted Identity Ltd. LEI: 98450054NFCE7A67C172Managed LEI © 2022. All Rights Reserved. Freelance Developer in Kent