FATF compliance get smarter

Global financial crime continues to evolve, prompting regulatory bodies like the Financial Action Task Force (FATF) to strengthen compliance expectations. As complexity increases, effective compliance initiatives such as integrating the Legal Entity Identifier (LEI) have become essential.

FATF’s expanding role

The FATF has long served as the global authority in combating money laundering, terrorist financing, and proliferation financing. In recent years, the organisation has transitioned from providing general recommendations to actively monitoring compliance across jurisdictions. As scrutiny grows, enforcement becomes more stringent, increasing the consequences of falling short.

The responsibility for implementing FATF extends to the private sector. Banks, FinTechs, crypto exchanges, and corporate service providers must demonstrate that their AML and Know Your Business (KYB) processes align with FATF expectations.

From guidelines to enforcement

Once considered advisory, FATF recommendations now carry significant consequences. Jurisdictions that fail to comply risk being placed on FATF’s grey or blacklist, potentially affecting access to markets, investment, and banking relationships.

This shift has prompted regulators to strengthen local enforcement, which in turn drives firms to enhance internal controls. Compliance teams must respond quickly to avoid falling behind.

Key areas of FATF focus include:

Why compliance is becoming more complex

Despite advancements in AML technology and data collection, compliance teams continue to face persistent challenges:

  • Inconsistent identification standards across jurisdictions
  • Manual and document-heavy KYB processes
  • Limited visibility into complex legal ownership structures
  • Difficulty verifying counterparties in cross-border transactions

These obstacles often lead to increased costs, delayed onboarding, and exposure to audit risks.

 

The LEI advantage: enabling efficient compliance

The Legal Entity Identifier (LEI) is a globally recognised Organisation ID that uniquely identifies legal entities. Endorsed by the G20, overseen by the Global Legal Entity Identifier Foundation (GLEIF) and issued by accredited LEI Issuers (like Ubisecure RapidLEI), the LEI enables:

  • Standardised identification across markets
  • Interoperability for cross-border activities
  • Access to transparent ownership data

By integrating the LEI into compliance workflows, organisations can build a more robust and reliable identity framework.

Using LEI to streamline KYB, onboarding, and cross-border entity verification

Compliance teams can incorporate LEIs into their AML and KYB frameworks to:

  • Improve KYB processes through reliable organisation identity verification
  • Increase transparency into legal structures and control relationships
  • Reduce risk of data inaccuracies by using an Organisation ID that’s been validated against trusted sources
  • Avoid duplicated effort across departments and jurisdictions
  • Reduce or consolidate the use of fragmented regional, vertical or proprietary identifiers

LEIs are especially useful in cross-border settings, where language barriers and local registry inconsistencies may complicate onboarding.

Who is using the LEI?

Adoption of the LEI is growing across various sectors:

  • Banks use LEIs in client onboarding, trade finance, beneficiary and recipient identification and more
  • Crypto platforms implement LEIs to support Travel Rule compliance
  • Regulators (e.g., ESMA, SEC) require LEIs in financial reporting
  • 300+ regulations like DORA
  • RegTech platforms integrate LEIs to improve organisation identity standardisation and automation

These examples highlight the LEI’s practical role in supporting regulatory compliance and operational efficiency.

 

Conclusion: turning FATF compliance into a strategic asset

FATF-aligned compliance demands are intensifying, but the LEI provides a scalable solution that simplifies regulatory adherence and reduces operational friction. Compliance leaders who embrace the LEI can improve data quality, accelerate onboarding, and reduce risk.

In a climate of increasing global regulation, adopting open, standardised identifiers like the LEI offers both compliance benefits and operationally-focused competitive advantages.

Next in the series: Understanding Recommendation 16: What Compliance Teams Need to Know.