By Clare Rowley, Head of Business Operations at the Global Legal Entity Identifier Foundation (GLEIF).

The global economy is wrestling with never-before-seen levels of identity-related fraud. Cybercrime costs in the US reached an estimated $320 billion as of 2023, according to Statista. Between 2017 and 2023, this figure has seen a significant increase of over $300 billion. According to the latest estimates, this dynamic will continue in upcoming years, reaching approximately $1.82 trillion in cybercrime costs by 2028. This increase in digital crime is causing substantial financial damage globally and destroying vital trust between counterparty organisations, particularly those operating across borders and legal jurisdictions.

The Legal Entity Identifier (LEI)

This is where the LEI comes in. The LEI is the only global solution providing organisations with reliable data to unambiguously identify companies and corporate structures worldwide. As a universal ISO identification standard and a code that connects entities to crucial reference information, including ownership structure, the LEI tackles data reconciliation problems across borders and promotes an interoperable identity standard. With more than 2.5 million entities and 400,000 relationships, the openly available LEI dataset provides crucial information about the names, locations, and legal forms of subsidiaries, parents, and company holdings. LEI data helps businesses understand who they’re dealing with.

The Global LEI System creates a never-before-seen level of transparency in party identification. It lays the groundwork for more informed business decisions, fosters growth, encourages collaborations, and deters financial crimes. By addressing inconsistencies in identifying entities, connecting a greater range of datasets, and capturing entity relationships and ownership structures, the LEI can support improved risk management and enable enhanced monitoring, reporting, and analytics.

A deep understanding of corporate legal complexity to identify any challenges

The power of the LEI is underpinned by the quality and precision of its data. A new initiative, the Policy Conformity Flag, designed to encourage all LEI-holding entities to declare and maintain all requested data in the LEI record, is poised to further drive transparency on the completeness and accuracy of reference data within the LEI record. LEIs help businesses identify entities across borders and jurisdictions quickly and easily, making global trade safer and more transparent.

The Policy Conformity Flag is a compelling opportunity to encourage and promote enhanced transparency in transactions via the current and complete reporting by legal entities of open, standardised, and high-quality legal entity reference data available to users and maximising the transparency and trust among market participants.

Entities with current and complete information demonstrate their unwavering commitment to transparency by enabling closer monitoring of transaction data and supporting greater clarity in their ownership structures. Their conforming status also signals to partners and other organisations that their LEI can reliably streamline due diligence checks, onboarding, and other counterparty processes, making them easier to do business with.

An up-to-date LEI helps ensure compliance with international regulations

A legal entity with an LEI also benefits from being fast-tracked to regulatory compliance. A diverse and growing number of regulatory frameworks have already mandated its use globally. Offering a clear-cut and accessible profile of each entity can shortcut myriad due diligence processes, many of which are routinely hampered by basic questions like ‘Who is who?’ and ‘Who owns whom?’

For businesses, simplifying and streamlining risk management, compliance, Know Your Customer and Know Your Business processes and client relationship management will result in a faster and smoother path to growth.

LEI to facilitate faster and simpler transactions and partnerships

The effectiveness of LEI data is dependent on its timeliness and accuracy, making the LEI renewal process crucial. Delayed renewals can lead to many issues, including data reliability concerns and the potential for non-compliance penalties.

The quality of data is the bedrock of trust and compliance in the international business sphere. This call for exemplary quality in organisational data is not merely a play for greater compliance. It is a gateway to untapped global growth. It invites legal entities everywhere to unite for an open, transparent, and trustworthy business environment. Because better data means better business.

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The LSEG solution is based on Thomson Reuters’ 2013 acquisition of GoldTier Technologies, a provider of client onboarding software. Thomson Reuters Financial and Risk business, of which GoldTier was a part, was later rebranded Refinitiv under the majority ownership of Thomson Reuters and Blackstone, and the whole acquired by LSEG in 2021.

Delta Capital will use the acquired client onboarding solution, which provides a KYC and CLM platform, in conjunction with its existing Karbon suite, which consists of KYC client lifecycle compliance services, tools and solutions. Following the mandate, the solution’s existing institutional clients in the UK, Europe, North America, Singapore, Hong Kong and Australia have migrated to Delta Capita. LSEG will remain a client of the service.

Philip Freeborn, co-head of global markets and wholesale banking services at Delta Capita, says: “There is growing demand from our clients for a full managed service offering in KYC and CLM. With our latest acquisition, Delta Capita can provide additional services, including full enterprise grade CLM technology, due diligence and client outreach services. This allows clients to simplify their businesses, achieve a price per file model and reduce compliance risk.”

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The Validation Agent programme has been live for over two years and there are now more than 15 Validation Agents operating around the world. The framework was developed to enable banks and other regulated institutions to use their know-your-customer (KYC) and client onboarding procedures to help clients obtain LEIs.

Goulven Charlès, CDO at BNP Paribas Corporate & Institutional Banking (CIB), says: “Assuming the role of Validation Agent marks our commitment to promoting greater trust and transparency between global businesses. As part of our continuous data efforts, we are deploying the LEI, thereby delivering value for our clients and across BNP Paribas CIB.”

Stephan Wolf, CEO at GLEIF, adds: “The Validation Agent role was designed to offer a multitude of benefits to any financial institution that engages corporate clients. Both BNP Paribas and its clients will benefit from enhanced client onboarding and lifecycle management processes. In addition to the value derived from the role, BNP Paribas has a clear opportunity to evolve how LEIs are used, both in response to compliance mandates, and more broadly to facilitate greater transparency between organisations around the world to support the fight against financial crime.”

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This year’s platinum award winner is Regnology for its Most Innovative Regulatory Reporting Solution. Gold award winners include Interop.io, Quod Financial, S&P Global Market Intelligence, and SmartStream Technologies, with plenty more entrants picking up silver awards.

The Innovation Awards 2024 included over 40 categories across A-Team Group’s Data Management Insight, TradingTech Insight, RegTech Insight and ESG Insight news channels. They ranged from Most Innovative Smart Trader Desktops and Workflows to Most Innovative Data Standards Initiative, Most Innovative ESG Data Solution, Most Innovative AI in Regulatory Compliance Initiative, Most Innovative Data-Driven Transformation Project, Most Innovative Financial Technology Executive, Most Innovative Professional Development Initiative, and more.

A complete list of winners and their solutions can be found in the Innovation Awards 2024 report.

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The vLEI is a digitised organisational identity that meets global need for automated authentication and verification of legal entities. By wrapping new and existing LEIs in digital credentials that can be verified, the vLEI offers a digitally trustworthy version of the LEI that can be used to verify the identities of legal entities and their authorised representatives across a growing number of automated interactions. Examples of known use cases include approving business transactions and contracts, onboarding customers, transacting within import/export and supply chain business networks, and submitting regulatory filings and reports.

Anders Åström, CEO and co-founder of NordLEI, comments: “The strength of the global economy lies in transparency and trust. The vLEI enables functional, reliable and ethical interactions on a scale never seen before and significantly reduces the potential for fraud and inefficiencies.”

Stephan Wolf, CEO of GLEIF, adds: “Welcoming Nord vLEI as a qualified vLEI issuer marks an important step forward for the vLEI ecosystem, reaffirming our ongoing commitment to developing the supporting infrastructure to establish the vLEI as a fundamental enabler of digital trust across the global economy.”

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Kech has experience in finance, infrastructure, blockchain, and standardisation gained through a variety of leadership positions held over the past 25 years. In his role as GLEIF CEO, he will be pivotal in driving further adoption of the LEI and verifiable LEI (vLEI).

Dessa Glasser, chair of the GLEIF board of directors, says: “Alexandre Kech’s mission is clear, to enable GLEIF to realise its full potential and create sustainable value for the whole Global LEI System, including partners, employees, and LEI stakeholders everywhere.”

Paying tribute to GLEIF’s outgoing CEO, Stephan Wolf, she adds: “On behalf of the GLEIF board of directors, I would like to sincerely thank Stephan Wolf for his ten years of dedicated service as CEO. Under his leadership, GLEIF has established a global trust network that enables legal entities and their business partners to demonstrate ownership and relationships transparently. It has also made enormous strides while continuing to innovate fearlessly, particularly in the digital space with the introduction of the vLEI.”

Commenting on his upcoming role at GLEIF, Kech says: “The potential of the LEI to enhance private and public sector efficiencies, strengthen regulatory oversight, and expand economic inclusion increases exponentially with the integration of digital technologies. I look forward to enhancing both the reach and the impact of the LEI and vLEI.”

Prior to joining GLEIF, Kech was executive board member and business head of digital securities at SDX, a SIX company, where he was instrumental in driving growth and implementing strategic initiatives that enhanced business performance. He has specialised in finance at BNY Mellon, payments and securities infrastructure and standards at SWIFT, blockchain and digital assets at Onchain Custodian (ONC), and most recently, at Citi Ventures.

He is also involved in industry and standardisation initiatives as the convenor of ISO TC 68 / SC8 / WG3, which produced the ISO 24165 Digital Token Identifier (DTI) and is a member of the DTI Foundation Product Advisory Committee. He also recently served as co-chair of the Global Digital Finance (GDF) custody working group.

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CBA’s approval as a Validation Agent comes ahead of a regulation update by the Australian Securities & Investments Commission (ASIC) on OTC derivative transaction reporting that will come into force in October 2024 and mandate the LEI as the only permitted entity identifier for counterparty identification. This will phase out use of the dated Avox International Business Entity Identifier (AVID) and the more commonly used Business Identifier Code (BIC) and drive up adoption of the LEI. The aim of the change is to increase alignment with global market practices to reduce costs and complexity, while addressing the challenge of identifying smaller, non-financial counterparties.

There are now 15 Validation Agents globally spanning Africa, Australia, China, Europe, India, the Middle East, and North America. The Validation Agent Framework enables financial institutions and other supervised organisations involved in legal entity identity verification and validation to obtain and maintain LEIs for their clients in cooperation with accredited LEI Issuers.

“The continued expansion of the Validation Agent network demonstrates the value derived by both agent organisations and their clients in helping to deliver trust with increased simplicity, convenience, and expediency,” says Stephan Wolf, CEO of the Global LEI Foundation (GLEIF). “GLEIF endorses and welcomes CBA’s commitment to proactively support its clients in getting ahead of the LEI adoption curve.”

CBA is also championing broader industry efforts to harmonise the use of identifiers to promote greater transparency and contribute to the fight against financial crime across the global economy. Market traction stems from the support of key stakeholders advocating the inclusion of the LEI within ISO 20022 payment messages. These include the Bank for International Settlements’ Committee on Payments and Market Infrastructures’ (CPMI) and its Harmonized ISO 20022 data requirements for enhancing cross-border payments, and the Wolfsberg Group’s updated Payment Transparency Standards.

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Given international support for the broader use of the LEI in cross-border payments, the Validation Agent network, which spans Africa, Australasia, China, Europe, India, the Middle East, and North America, is playing an increasingly important role in facilitating LEI issuance in support of efforts to counter global criminality.

Stephan Wolf, CEO of GLEIF, says: “Adding MNS to the Validation Agent network is another important development for the Global LEI System. Considering industry recognition of the foundational role that the LEI can play in enabling faster, cheaper, more transparent and inclusive cross-border transactions, India’s support for the identifier over recent years offers a compelling precedent, underscoring the potential for jurisdictions around the world to fight global financial crime by driving forward LEI adoption.”

Sustained growth in LEI issuance in India, particularly across its dynamic and thriving small to medium enterprise (SME) population, stems principally from an advanced regulatory agenda. In recent years, bodies such as the Reserve Bank of India, the Securities and Exchange Board of India, the Insurance Regulatory, Development Authority of India, and Income Tax Department have all mandated and recommended LEI usage across various applications. Beyond regulatory mandates, the downstream impact of wider LEI adoption is increasing financial inclusion, as SMEs are more easily able to verify their identities across borders, supporting greater participation in global markets.

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“Going live on AWS Marketplace is a milestone for Fenergo,” says Stella Clarke, chief strategy and marketing officer at Fenergo. “Our partnership with and listing on AWS Marketplace are instrumental in moving towards the future of technology procurement and meeting clients where they are in the marketplace with a solution that many banks already use and trust.”

The availability of Fenergo’s CLM on AWS Marketplace is another step in the company’s journey with AWS, which started in 2019 when Fenergo became an AWS Financial Software Competency Partner providing cloud-based offerings that help accelerate innovation for banks, insurance companies, capital markets firms, and payment processors. In 2022, the company joined AWS Independent Software Vendor (ISV) Accelerate, a co-sell plan for AWS partners that provides software solutions that run on or integrate with AWS.

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“With the emergence of AI-based attacks, the identity verification game has changed,” says Todd Wilkinson, president and CEO at Entrust. “Deepfakes and synthetic identity are driving a global need for a powerful level of identity assurance that facilitates digital journeys. Authentication using biometric-based, AI-driven identity verification will be critical to ensuring security, privacy, and trust in high-value digital-first interactions. Onfido IDV solutions have proven their value in Europe’s high-compliance environment.”

Founded in 2012, Onfido makes it relatively easy for people to access services through digital verification. The company has more than 500 employees and over 1,200 customers globally including leading financial institutions.

Any agreement on the acquisition remains subject to regulatory approval and other steps required in accordance with applicable laws.

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