The Global Legal Entity Identification Foundation (GLEIF) has welcomed the Bank of International Settlements’ Committee on Payments and Market Infrastructures’ (CPMI) advocation for use of the Legal Entity Identifier within ISO 20022 payments.
During the consultation process for ‘Harmonised ISO 20022 data requirements for enhancing cross-border payments’, developed in collaboration with the Payment Market Practice Group, the CPMI affirmed that the LEI is an equivalent identifier to the Business Identifier Code (BIC) for the identification of financial institutions and legal entities within a payment message.
The committee recognises that the LEI enables clear and unique legal entity identification, is based on an ISO standard, is globally open and accessible and offers high quality data. It also benefits from the support of a system accustomed to strong, international regulatory oversight.
Alongside the GLEIF report, the Wolfsberg Group has published an updated version of its Payment Transparency Standards, which aim to identify points in the ISO 20022 structure that can be used to improve payment transparency.
The report states that the payment service provider or the payer (also known as the ‘debtor agent’) should use the LEI or an equivalent reference code to improve identification information accuracy in ISO 20022 messaging. It adds that policies may emerge to make LEIs sufficient identifiers without the need for full name and address information.
Industry stakeholders across the world shared their endorsement for the GLEIF report, including the Bank of England, the Reserve Bank of Australia, and the European Central Bank. As such, the CPMI reaffirms GLEIF’s encouragement to payment market infrastructures to align themselves with harmonised ISO 20022 data requirements by the end of 2027.
Stephan Wolf, CEO of GLEIF, says: “GLEIF also urges banks, financial institutions, and other organisations to consider taking a proactive approach to supporting voluntary customer adoption of the LEI by becoming a validation agent in the Global LEI System.
“In addition to easing the process of LEI implementation by making LEI issuance more convenient and accessible for customers, becoming a validation agent can deliver significant advantages for financial institutions themselves. By utilising ‘business-as-usual’ onboarding processes to obtain LEIs for clients, financial institutions can improve customer experience, facilitate digital transformation and reduce client lifecycle management costs."
