Can an individual have an LEI?
As the name suggests, Legal Entity Identifier (LEI) is meant for legal entities, not individuals. To date, a person or a group of people cannot register for an LEI. Whereas having an LEI is a requirement for legal entities worldwide.
What is an LEI?
A Legal Entity Identifier (LEI) is a 20-character code, that allows the identification of any organization or legal entity on a worldwide database. The Global LEI System (GLEIS) was established following the 2008 Global Financial Crisis when the need for a more transparent system became evident.
The GLEIS enables you to identify market participants free of charge on a single, standardized database. On the public LEI database, you’ll find information about a company’s name, address, where they are registered, and whether they’re a branch or owned by another parent company.
The LEI database has greatly simplified dealing with international clients as there’s no longer a need for time-consuming background checks, where previously the only information being relied upon was the company’s own internet presence and local registry listings, often leading to hours of translating and web browsing with little confidence of the authenticity.
Who is eligible for LEI?
As the name suggests, LEIs are required for any legal entity that regularly incorporates financial transactions. This includes buying stocks, bonds, and other securities.
A legal entity is any company or organization with legal rights and responsibilities, including tax filings. It is a business that can enter into contracts either as a vendor or a supplier, as well as sue or be sued in a court of law.
In general, any financial institutions such as banks, investment, and insurance companies, credit unions, and brokerages are eligible or rather required to obtain an LEI code. EU authorities are even instructed to refuse investment trades unless both sides have an up-to-date LEI code.
Can an individual have an LEI?
Individuals, on the other hand, are not yet required to have an LEI. Furthermore, it’s impossible to obtain an LEI without a legal entity.
To put it simply: in customer transactions, where both the remitter and beneficiary are individuals, LEI will not be needed.
In transactions where either one or both parties are non-individuals, an LEI will be required.
Why is LEI code required?
The LEI code was introduced as a critical measure to better the quality and precision of financial data systems for better risk management following the Global Financial Crisis. Essentially it’s a business passport, which identifies your company and makes it possible to check if your counterpart is who they claim to be.
It’ll provide access to the global directory of participants within the financial market. The LEI search interface triumphs former time-consuming background checks, allowing you to systematically browse the GLEIF database, and can be easily integrated into your Know Your Customer (KYC) process.
How to obtain an LEI?
Advanced development of the Global Legal Entity Identifier System, known as GLEIS, is carried out by the Global Legal Entity Identifier Foundation (GLEIF), in partnership with the Local Operating Units (LOUs) – responsible for issuing LEI codes. LOUs such as Ubisecure Oy (RapidLEI) may partner with a Registration Agent such as LEI Register. Our role is to provide support and efficient service to market participants who need an LEI for their organization.
LEI Register is also responsible for authenticating data and managing communication between LOUs. We understand the value of time and have worked tirelessly to become the fastest secure registration service in the world.