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What are LEI Codes in Banking?

The LEI Code, or Legal Entity Identifier, is a 20 digit reference code used across global markets to identify counter-party legal entities engaged in financial transactions. Each LEI uniquely references a Legal Entity Reference Data record in the Global LEI System database – a free online resource containing the identities of 2m+ organisations.

Any banks or financial institutions engaged in buying or selling stocks, bonds, swaps or other financial instruments would use LEIs to determine the verified identity of the Legal Entities involved in the transaction. That could be be a company, fund or trust. The LEI reference data also informs the risk manager or regulator the company structures of those entities transacting, making it transparent when an entity is transacting with a parent or child.

Over 116 regulations require the use of LEIs in order to help manage the risk of complex transactions in the post 2008 world. The LEI is endorsed by the G20 and is intended to be “the one identity behind every business”. LEI Codes are mandatory for MiFID II / MiFIR, EMIR, SFTR, Dodd Frank Act, and many other Financial Regulations.

Many global banks partner with RapidLEI for management of their LEI Codes. Citi, Nordea, Santander, ING Bank, and JP Morgan Chase are just a few of RapidLEI’s banking customers.

How do Banks use LEI Codes?

Banks primarily use LEI Code in three use cases:

  1. To meet regulation when transacting within its own group Legal Entities.
  2. To help its clients meet regulation when transacting on global markets.
  3. To streamline KYC/AML processes

RapidLEI offers EnterpriseLEI to help banks manage internal and external LEIs for group companies and clients.

RapidLEI also offers the LEI Everywhere program to allow banks to to take advantage of the LEI as a connector of reference data for KYC / AML and counterparty identification. To use LEI Codes in KYC, the LEI solution needs to be scalable, frictionless, and low cost. This is where RapidLEI can help. We make it easy to not just issue LEI Codes, but also to discover, consolidate and manage both internal LEI Codes and LEI Codes for your banking clients.

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