The Legal Entity Identifier (LEI) or 20-digit unique code or identification code assigned to the organization can be used worldwide for your foreign transactions, business purposes, and control reports.
LEI consists of a 20-digit unique code. In which
The first 1-4 characters are identification of LOU (Local operation unit.
The second 5-18 characters are identification of the legal entity.
& the last 19-20 characters are verification of the identity of the legal entity.
The LEI system was launched in G20 in 2011 and is overseen by the Global Legislative Identification Foundation (GLEIF), which supports the structure, policies, and activities of the system.
If you are in a business that deals in financial trade including forex & you want to do foreign business without any hassle then you need LEI. & if you want to obtain an LEI then click here.
Why do you need to know about LEI?
After the global financial crisis, it became clear that doing business with new entities without the organizations’ online presence and non-standardized global identification methods was a complex order. It was crucial to do business abroad without fear of fraud and money laundering, but also to recognize counterparties in transactions with a clear way to ensure their identity. It was time-consuming and difficult for financial institutions to provide transparency and track suspicious transactions, resulting in more online theft. It was also difficult to incorporate new clients from abroad without a clear way to identify them.
Since the launch of the LEI system in G20 in 2011, it has become much easier for LEI organizations to not only monitor and monitor these transactions but also to glorify their business. Supervisors can easily identify who is doing business and market participants and their partners globally. Conflicts around accounts have been resolved for businesses of all shapes, sizes, and powers.
Entities registering to obtain an LEI benefit from increased reliability, higher standards of compliance with international regulatory requirements, and can obtain an LEI certificate which serves as an international business passport and proof of identity/existence.
Those who own the LEI number can be monitored & tracked by regulatory bodies and are legitimate, which improves transparency between companies. It helps vendors, stakeholders, and businesses to identify their potential customers and examine their real-time data. It saves time by replacing outdated KYC methods.
Benefits of having an LEI
By registering for an LEI, the international recognition and business credibility of your organization are immediately increased. Investors, clients, and potential stakeholders can locate your critical data in real-time, allowing you to prove that you are a real entity and also avoid any identity-based errors. If you are already assigned an LEI number, you may qualify to apply for an LEI certificate.
Similarly, you can benefit from the added layer of security that comes from knowing exactly who you are dealing with.
Organizations with multiple branches can use their LEI to access their various branches around the world. LEI is one of the only identifiers that can show the organizational structure of a corporation or group of companies, and ultimately shows “who is who, and who is what.”
If you are registered on the beach and do business under a different name globally, LEI offers a number of “business” name options and can be flexible to meet your specific needs.
You can also list parent company information to create an ownership map of your organizational structure that includes direct parents, last parents, branches, etc.
“No LEI, no trade” as the maximum says. The possession of LEI is strictly regulated in many parts of the world.