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Legal Entity Identifier (LEI)

Overview

A Legal Entity Identifier (LEI) is a unique 20-character code that identifies legal entities participating in financial transactions. Established by the Global LEI System (GLEIS) after the financial crisis, LEIs improve transparency by standardizing who is who (entity identity) and who owns whom (Level 2 relationship data). In compliance, LEIs streamline KYB, reduce ambiguous matches, and enhance cross-border reporting (e.g., derivatives, securities).

Institutions validate LEIs via Local Operating Units (LOUs) and monitor status (issued, lapsed) to ensure freshness. Mapping LEIs to registry data, UBO structures structures, and sanctions screening sharpens risk assessments and reduces false positives. LEIs also facilitate interoperability across systems, counterparties, and jurisdictions, supporting accurate settlement, risk aggregation, and resolution planning.

Maintaining up-to-date LEIs, especially for complex groups, strengthens controls, speeds onboarding, and supports regulators’ push for standardized, high-quality reference data.

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Related Terms

Business Registry Search

Know Your Business (KYB)

Beneficial Ownership (UBO)

FAQ

What problems do LEIs solve?

They disambiguate entities with similar names, unify records across systems, and improve reporting accuracy reducing false positives and delays in KYB and surveillance processes.

How are LEIs maintained?

Entities renew annually through LOUs; status becomes “lapsed” if not updated. Compliance teams should monitor expiries and trigger refreshes during KYB reviews.

How do LEIs aid screening?

By anchoring screening to a stable identifier, they cut name-variation noise and improve linkage to ownership, sanctions, and adverse media data.

Are LEIs mandatory?

Required in many markets for reporting (e.g., derivatives); even where optional, they’re best practice for high-value counterparties and complex groups.