Why is there a need for the LEI?
What is LEI Code?
LEI (Legal Entity Identifier) was designed as a key to improving the quality and accuracy of financial data systems for better risk management in the event of a global financial crisis. LEI (Legal Entity Identifier) is a unique 20-digit code to identify those involved in financial transactions around the world.
If you would like a more detailed explanation of the legal entity identification system or LEI code, you can read on our website What is the LEI number?
Who needs an LEI Code?
To answer who needs a Legal Entity Identifier, we must first answer why an LEI is needed first. There has been a global need for criminals like him for decades. The international impact on the world is 1900, like the transparency of transactions in the world, and for the sake of as much transparency as possible and the spirit of the world, there are many lines.
There is no common identifier that applies to all legal entities by various industries, from companies, funds, and even Governments. This is why the LEI code is needed.
Digital information and digital information cannot be used. This causes a lot of complexity involved in regulating the business world and financial markets. the company owns a company that is owned by another company and that causes a lot of confusion about who owns whom, and in that case it’s very difficult to know who you’ll be alerting to. Currently there are only a handful of peninsulas and a limited number of items in the organization.
This also made it difficult for banks and institutions, it can be assumed that you have no KYC training. Files of information that may be difficult to access and need to be collected in a single data set.
Lacking reliable and trusted identifiers, it can be difficult and expensive to enter new clients ensuring identities (it is now estimated in research conducted by McKinsey that LEIs can save up to 2-4 to 2-4 setga 2-4 banks up to 2-4 K
History of LEI
Following the market crash in 2008, many problems arose in identifying counterparties due to market transparency issues. When the stock market fails, thousands of funds and funds cannot be identified and their collapse creates great confusion. Lack of transparency puts financial institutions and banks in a vulnerable position.
This was discussed at the G20 Summit in June 2011, which created the LEI concept. The idea is to create a digital database, for all legal entities, which is accessible, reliable and updated.
Why are LEI numbers used? The LEI is used only to identify global legal entities. This presupposes greater transparency of the financial market, greater standardization and risk control.
According to LEI ROC, LEI No. is designed to be used by the private sector to support better risk management, greater operational efficiency, more accurate risk calculation and other requirements. A central source of information, containing a large amount of high quality recoverable data.