What is Legal Entity Identifier (LEI) ?

A Legal Entity Identifier (LEI) is a 20-character, alphanumeric code used to uniquely identify legally distinct entities involved in financial transactions. LEIs are part of a global system to improve transparency and reduce risks in financial markets by enabling clear and standardized identification of entities across jurisdictions.

Key Features of the LEI:

  • Global Identification: The LEI is used worldwide, helping regulators, financial institutions, and businesses consistently identify entities in financial transactions across borders.
  • Structured Information: Each LEI is linked to reference data about the entity, such as the legal name, country of formation, and registered address. This makes it easy to verify the identity and ownership structure of participants in the financial market.
  • Managed by the GLEIF: The LEI system is governed by the Global Legal Entity Identifier Foundation (GLEIF), which ensures that all LEI data is standardized and publicly accessible.​

LEI with CBPR+ Context:

In the CBPR+ messaging context, Legal Entity Identifiers (LEIs) are not strictly mandatory within ISO 20022 schemas. Even for identifying Financial Institutions, the LEI is considered an optional element.

However, certain CBPR+ guidelines do indicate preferred use of LEIs for specific elements. For example, in pacs.009 messages—which are commonly used for identifying key entities such as Debtors, Creditors, Debtor Agents, Creditor Agents, and Intermediary Agents—CBPR+ provides the following recommendations:

  1. Using a BICFI (Bank Identifier Code - Financial Institution) with an optional LEI as the preferred option
  2. Allows either a Clearing Code or LEI along with the entity’s name and address (unstructured or structured, with minimum details of town name and country, and the postal code if available).

It’s important to note that these rules are not network-validated but are still an essential part of CBPR+ standards, supporting transparency and improved data quality in cross-border transactions.

While LEIs are typically associated with Financial Institutions, their use extends to other transaction parties as well. In pacs.008 messages, for example, LEIs can be used for identifying non-Financial Institution entities such as Debtors and Creditors. This flexibility makes LEIs a valuable tool for strengthening identification across diverse participants in CBPR+ message flows.

Purpose and Use:

LEIs are widely used by financial institutions and regulators for risk management, compliance, and regulatory reporting. They are essential in markets that require transparency, like derivatives and other financial instruments, by providing a reliable way to trace parties involved in complex financial transactions.

Incorporating LEIs into ISO 20022 messages, for instance, can improve data accuracy in cross-border payments, enabling better compliance and reducing fraud risk.