What is an LEI code?
An LEI code is a unique identification code used to identify companies and financial institutions across different countries. An LEI code ensures transparency and efficiency in commercial transactions and combats financial crime.
The LEI number is 20 characters long and consists of three parts:
- Characters 1-4: Identification of the LOU (Local Operating Unit)
- Characters 5-18: Identification of the legal entity
- Characters 19-20: Verification of their identity
4 reasons why your financial organisation needs an LEI code
1. Global market requirement
One of the most important reasons why your financial organisation needs an LEI is that it is a requirement in the global market. Many countries have implemented regulations that require companies that engage in financial activities to have an LEI. This is due to the need to identify companies across borders and conduct efficient reporting of financial transactions. Without an LEI, your business could face restrictions in trading opportunities and increased risk of penalties.
2. Improved transparency
An LEI code helps to increase transparency in financial transactions and business operations. It allows companies to be identified and tracked across countries. The increased transparency also ensures better compliance with rules and regulations.
3. Effective risk management
An LEI code contributes to more effective risk management in financial transactions. By accurately identifying companies and financial institutions, risks such as financial crime and money laundering can be better identified and managed.
4. Increased credibility and trust
An LEI code increases your company's credibility and trust with customers, investors and business partners in the global market. It shows that your company is registered correctly, creating a positive impression of professionalism and accountability.
How do you get an LEI code for your company?
If you are a financial organisation and want to obtain an LEI code, the process is relatively simple. Follow these steps to get an LEI for your company:
- Choose an LEI issuer: To obtain an LEI, you must first choose an LEI issuer that is authorised by the Global Legal Entity Identifier Foundation (GLEIF).
- Register your business: Once you have chosen an LEI issuer, you need to register your business. This involves submitting necessary documentation and information about your business, such as legal name, address, VAT number and any related information.
- Verification of identity: As part of the registration process, you will be asked to verify the identity of your company. This may involve submitting additional documentation.
- Receipt of LEI code: Once your application has been processed and approved, you will receive your LEI code.
It is important to note that an LEI code has a validity period, usually one year. You should therefore make sure to renew your LEI code in a timely manner.