About LEI
What is an LEI?
A Legal Entity Identifier (LEI) is a unique identifier that is assigned to a legal entity across different jurisdictions. It provides key information about a legal entity such as its legal name, registered address, and ownership structure. It was introduced as a global system to improve transparency, mitigate risks, and enhance regulatory compliance.
Who is GLEIF?
The Global Legal Entity Identifier Foundation (GLEIF) is a not-for-profit organization established in 2014 to support the implementation and use of Legal Entity Identifiers (LEIs).
GLEIF's role is to ensure the accuracy, consistency, and availability of LEIs as well as operate the Global LEI System (GLEIS), a database containing information about legal entities and their associated LEIs. GLEIF works with Local Operating Units (LOUs) around the world that are responsible for assigning LEIs to legal entities.
Why is an LEI necessary?
LEI plays a crucial role in enhancing transparency, risk management, regulatory compliance, and operational efficiency in the global financial ecosystem. It enables better identification, tracking, and monitoring of legal entities, contributing to more stability and transparency.
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1. Global Identification: The LEI provides a standardized and globally recognized identification system for legal entities, eliminating the confusion caused by variations in naming conventions and legal structures.
2. Regulatory Compliance: Many regulatory frameworks require the use of LEIs to improve transparency and facilitate regulatory reporting.
3. Risk Mitigation: The LEI enhances risk management by enabling better assessment and monitoring of counterparty exposure as well as identifying the relationships between legal entities.
4. Data Standardization: The LEI system promotes data standardization by providing a consistent and structured format for entity information.
5. Efficiency and Cost Savings: The use of LEIs streamlines processes such as onboarding, customer identification, and transaction reporting. It reduces the need for manual data entry and reconciliation, leading to operational efficiencies and cost savings for businesses.
Who needs LEI?
Various entities and individuals may need a Legal Entity Identifier (LEI). Here are some examples of who may require an LEI:
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1. Financial Institutions: Banks, investment firms, brokerages, and other financial institutions often need LEIs to comply with regulatory requirements in their jurisdiction. LEIs help identify these entities and monitor their activities in the financial markets.
2. For-profit Entities: Companies, corporations, partnerships, and trusts may need LEIs if they engage in financial transactions such as issuing securities, conducting derivatives trading, or participating in the markets where LEIs are required.
3. Financially Regulated Entities: Entities regulated by financial authorities, such as insurance companies, credit-rating agencies, clearing houses, and exchanges, are often required to obtain LEIs. LEIs aid in regulatory reporting, risk assessment, and monitoring of these entities.
4. Investors: Institutional investors, such as pension funds, hedge funds, and mutual funds, may be required to obtain LEIs for regulatory compliance. LEIs help track their investments, assess exposure to counterparties, and meet reporting obligations.
5. Government Agencies: Government agencies involved in financial oversight, market regulation, and reporting may use LEIs to identify and monitor entities operating in the financial sector.
6. Individuals: Individuals involved in financial transactions, such as directors, beneficial owners, or authorized signatories of legal entities, may be required to obtain LEIs for regulatory compliance or identification.
FAQ
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How long is an LEI valid?
An LEI is valid for 1 year starting from the first date of issuance. Consequently, once an LEI is registered, the applicant must renew their LEI code upon the expiration. This practice primarily serves as a precaution for legal entities, ensuring the continuous accuracy of their LEI data in alignment with their enterprise information.
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What are the benefits of the multi-year packages?
The LEI Register provides the option for multi-year LEI registrations. This not only offers customers more competitive prices but also relieves them from the annual burden of renewing their LEIs. The multi-year packages facilitates automating renewal process, only have to confirm all the legal entity reference data remains the same as last year. Opting for multi-year LEI registration enables customers to realize cost and time savings for each year they register.
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What is the difference between 'Renewal' and 'Transfer'?
An LEI requires renewal to ensure that the data associated with its legal entity are up to date. An LEI that is not renewed promptly will become inactive and marked as 'LAPSED'. When an LEI lapses, it may damage its legal entity’s reputation and potentially hinder its ability to conduct international transactions or comply with regulatory requirements.
An LEI may be transferred from one local operating unit (LoU) to another. This transferability feature ensures that clients have the flexibility to choose their service providers.
Therefore, If you wish to renew with Finema, but the LEI is not managed by Ubisecure RapidLEI, you will first need to transfer the LEI to RapidLEI management
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How to transfer LEI?
There is a streamlined LEI transfer process that operates within the rules of GLEIF transfers.
1. Creates you a RapidLEI account (or selected LoU).
2. Complete and submit the LEI transfer and renewal application form (a letter of authority for applicants acting on behalf of legal entities to apply for and/or manage renewals and transfers of LEIs on their behalf and a Letter of Authorization (LoA) or Transform Form are required).
Note that all documents must be signed by individuals with signing authority to represent their organization. The signature should follow 'Acceptable Signature types' which would suggest use of Handwritten signatures, Electronic handwritten e-signatures, Advanced Digital Signatures created from a Digital Certificate with an underlying verifiable identity or Qualified Digital Signatures created from a Qualified Digital Certificate
3. Once the LEI is managed by selected LoU, we can automatically verify Legal Entity Reference Data from the appropriate Business Registry and determine if there have been any changes with the Global LEI System (GLEIS) database.
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What are 'Who is who' and 'Who owns whom', level 1 and level 2 data?
There are two levels of LEI data;
Level 1 data connects to key reference data that gives information about a legal entity. The set of attributes or reference data for level 1 data follows the ISO 17442 standard encompassing fundamental identification elements that provide the answer to the question of ‘who is who’.
Level 2 data addresses the inquiry of ownership relationships within corporate structures uncovering parent-subsidiary connections. Entities are qualified to provide Level 2 data only if their parent or ultimate parent consolidates the financial accounts.
NB! Validating parental (Level 2) data costs <fill in your Level 2 surcharge> per parent per year and takes up to 48 hours. Legal entities must provide both Level 1 and Level 2 data. These are seen as fundamental and value-adding elements of the LEI, establishing the LEI as a high-quality entity identifier globally. In case parental (Level 2) data is not available, please deactivate this section and select a proper exception.
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In which cases that does not need to report parent company (Level 2 data)?
There are 3 exception of reporting Level 2 data;
- Non-consolidating, whenever the accounting consolidation definition for parent relationship does not apply. This category includes cases where the entity is controlled by a natural person(s) without any intermediate legal entity (“Natural Person(s)”); the entity is controlled by legal entities not subject to consolidation (“Non-Consolidating”); and where there is no known person(s) controlling the entity (“No Known Person” e.g.; the entity is controlled by diverse shareholders).
- Non-Public, whenever the relationship information is non-public and therefore creates obstacles to releasing this information. This category includes cases where there are obstacles in the laws or regulations of a jurisdiction restricting the reporting (“Binding Legal Constraint”); the existence of other legal constraints such as articles governing the legal entity or a contract (“Legal Obstacles”); where disclosure of the information would be detrimental to the legal entity or the relevant parent (“Disclosure Detrimental” and “Detriment Not Excluded”); and where the consent to disclose the parent LEI was not obtained (“Consent Not Obtained”). An entity is not required to provide non-public relationship information in order to register or renew an LEI.
- No LEI, when the parent does not consent to obtain an LEI or to authorize its “child entity” to obtain an LEI on its behalf.
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Where do I check the validity of an LEI?
You can easily verify the validity of an LEI using the 'LEI search', a search tool by GLEIF. To check an LEI, simply enter either your company name or the LEI number in the search bar.
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Is there any Refund policy? How long does it take?
The refund period as detailed under the GLEIF RA Governance Framework will be honoured appropriately.
