Legal Entity Identifiers (LEI) for ISO20022 | SWIFT Payments

SWIFT ISO 20022 LEI

SWIFT LEI

“Now is the appropriate time for the payment industry to begin its adoption of the LEI.”
Payments Market Practice Group (PMPG) | SWIFT

With 1.5m organizations around the world now registered with a Legal Entity Identifier (LEI), the LEI has quickly proven its value as the “one identity behind every business”. Regulatory use of LEIs is now expanding out of specific financial reporting and into new payment standards driven by ISO20022 and SWIFT. Get ready, because the number of LEIs in use is about to increase by an order of magnitude.

Banks, payment processing companies, and FinTech solution providers need to have a plan for registering and managing LEIs to avoid disruption to core payment workflows:

BENEFITS OF USING LEIs IN THE PAYMENT PROCESS

“Improved identity data, such as the LEI, should enable simpler and more accurate reference checking against AML and antiterrorist financing databases.” – Bank of England

Identity data validation assured at point of payment processing – sending and receiving banks ensure payment  to the correct entity in a large corporate group.

Efficiencies are created as KYC will not interrupt processing and customer onboarding is streamlined.

A democratisation of organization identity as firms of all sizes, not just the big corporations, can be identified as a true legal entity.

All parties gain insight into who owns whom (LEI level 2 data).

Identify fraud and economic crime can be identified or deterred.

Standardised Customer Due Diligence (CDD) process between all entities.

What’s needed & what RapidLEI delivers

Sending/receiving banks will be at the centre of on-demand LEI issuance.

Payment processing solutions will need to be able to issue LEIs to organizations that don’t have one, in order to avoid delays in transactions.

Provisioning and management of the greatly expanded LEI universe create new business opportunities for all entities involved. LEI issuers with modern systems that provide automation, management tools and APIs will better meet the new set of scaling requirements than LEI issuers that rely on legacy, slow, manual, closed system processes. 

RAPIDLEI INNOVATES TO MEET DEMAND

RapidLEI offers a modern platform designed to meet the needs of issuing LEIs, on-demand and at a global scale:

  • Same session issuance – register the LEI in real time exactly when it’s needed in the process workflow.
  • Low friction, ease of registration through automated systems and integration with the business registries.
  • API to integrate LEI registration into existing workflows and applications.
  • Bulk registration for large scale LEI issuance.
  • Ability for both sending/receiving banks and payment processers to obtain LEIs on behalf of the client, or support the client registering directly.
  • The LEI needs to remain live and accurate, not lapsed – RapidLEI provides multi-year and automated renewal checking.

The major change driver – ISO 20022

ISO 20022 is driving the inclusion of LEIs in payment messages as it becomes the global standard language for financial transactions. Within five years ISO2002 is expected to be the main language for payments, supporting almost all of the value of transactions worldwide. All the entities involved in the transaction need to be verified legal entities. The LEI will fulfil that requirement:

“As part of the adoption of ISO 20022, and with it the LEI, organizations are recommended to adapt their business processes to ensure that LEIs are captured whenever a new counterparty or customer record is set up.” – PMPG