How LEIs Streamline KYC

RapidLEI has been a fast growing organisation identity service since being launched by Ubisecure in 2018. RapidLEI was designed from the ground-up to utilise automation, a global partner network and close business registry relationships to better support the broad range of Legal Entity Identifier (LEI) use cases. The goal, to dramatically grow LEI usage by organisations and improve how businesses identify each other in cross-border transactions.

With the significant growth in the uptake of LEIs, over 2 million of these organisation identifier codes have been registered to date. The Global LEI Foundation (GLEIF) has predicted that 20 million LEIs will be in use by 2027. The challenge is to encourage every organisation to have an LEI – whether voluntarily or led by regulatory mandates. This will be down to education, but also is where our simple and quick LEI issuance platform can help to increase the number of companies with LEIs. Once all organisations have LEIs this will improve transactions and onboarding processes, eliminating the delay of applying for an LEI.

What is an LEI?

An LEI is a 20-digit alphanumeric code, which acts as a global identifier to represent an organisation’s identity. It was created to better identify companies in cross border transactions, as different countries have historically used different identifiers. After the 2008 financial crisis, the G20 agreed that the introduction of LEIs could solve the global lack of corporate transparency and answer the critical questions of “who is who” and “who owns whom”. Organisations must complete an annual verification process, which is globally standardised, to gain their LEI, providing a greater level of transparency about the organisation. There are over 116 different regulations that either require or recommend the use of LEIs.

KYC, KYB and LEIs

Know Your Customer (KYC) is the process of verifying the identity of a customer (or client) and is usually undertaken by organisations that require a highly-assured level of trust about who they are doing business with (such as banks). KYC covers both individuals and businesses, also known as KYB (Know Your Business).

Ubisecure believes that the LEI should be central to KYC/KYB. LEI in KYC provides the ideal technology to streamline KYC/KYB and onboarding. LEIs are verified organisation identities, that represent important KYC data points such as historical legal names, incorporation jurisdictions, entity status and much, much more. As the LEI issuer we also maintain verified information on parental and child structure, company officers etc. To make the LEI provide benefits in the KYC/KYB use case, we built the technology and commercial solution to allow for LEI registrations to be built directly in KYC workflows and applications.

The GLEIF is also a vocal advocate of the benefits that the LEI brings to KYC/KYB, and reported that:

“Today, the global banking sector spends around U.S.$40 billion on client onboarding annually. That’s an estimated U.S.$54m per bank, U.S.$31m of which is ‘people’ cost. Productivity improvements gained through LEI usage could generate cross-sector cost reductions of between 5-10% annually.”

We see the LEI adding a lot of value to KYC/KYB . It is a standardised identifier, centrally maintained in the Global LEI System, a free-to-use database of organisation identities. The LEI maintains historical changes in organisation data and attributes, and acts as a live record, so information is always up to date.

The Global LEI Foundation and McKinsey published a report stating that in banking alone, senior salespeople can spend up to 1.5 days of their week onboarding new clients. This can lead to serious economic impact. Without LEIs, banks use many different identifiers. This can lead to inconsistencies alongside there being a considerable admin overhead and customer service impact.

LEI Everywhere from Ubisecure is a programme designed for Banks and other financial institutions, which democratises availability of LEIs by lowering costs and allowing LEIs to be issued within existing onboarding or transaction processes to avoid interrupted of service. LEI Everywhere provides an API for fully integrated LEI lookup, registration, and renewal into KYC applications. Reduced fees also make it feasible for Banks to register LEIs on behalf of clients. Both aiding the KYC and KYB process and reducing the risk of regulatory non-compliance when transacting on behalf of clients.

Why RapidLEI?

Ubisecure gained its LEI issuance accreditation from GLEIF in 2018, allowing us to become an LEI Issuer through our RapidLEI brand. Becoming an LEI issuer has complemented the Ubisecure solution portfolio, proving us as a leading provider of strong organisation identities, and supporting our greater mission within the Identity & Access Management space.

Ubisecure brought innovation to the LEI market by automating LEI issuance. Revolutionising how quickly and effectively an LEI can be registered. While improving data accuracy along the way by connecting directly to business registries globally. This innovation has helped RapidLEI to become the #1 LEI Issuer globally, issuing about 1 in 4 new LEIs monthly, in just 3 short years.

Ubisecure will continue to work towards the challenge of ensuring that every organisation has an LEI. To achieve this, along with the GLIEF and other LEI ecosystem stakeholders, we believe LEIs should be closely tied to KYC to both streamline and support existing KYC and KYB processes. To find out more or to discuss how RapidLEI can help you use LEIs in KYC and KYB, contact our expert team today!