[Important Tips] Why Business Should Get LEI?

Following the global financial crisis, the Legal Entity Identifier (LEI) Code was developed as a key step in improving the quality and accuracy of financial data systems for better risk management.

LEI was created to help control peer risk by allowing parties to identify and link to financial transactions. 

It aims to make systemic risk measurement and monitoring easier and more cost-effective, as well as more cost-effective compliance with regulatory reporting requirements.

More information: https://leiservice.com

1. Trust in Your Identity

Knowing who is the most important person in today’s world. In the global market, you need to be sure who you are working with. 

Your foreign customers, or potential investors, will want to know that you are what you say you are.

Being a legal entity is a surefire way to prove that you are a registered entity and that you stand behind your company.

---

2. Global Recognition

First, we usually refer to the National Companies Registry Search tool when examining a company.

For example, in BVI you can find a company in the Corporate Affairs Registry or the Cayman Islands General Registry. 

Listing on these websites ensures that you are a registered company, although finding the right website, search tool or database can be difficult.

---

3. Accuracy

Since the Panama Papers leak in 2016, these offshore companies have been tarnished. 

LEI is a simple, cost-effective, and reliable dam against this ideology.

If you are offshore registered and do business under a different name internationally, LEI offers several naming options and can be flexible to suit your specific needs.

---

4. Compliance

No LEI, no trade as the saying goes. LEI is highly regulated in many parts of the world.  If you do business internationally you will need LEI, especially for reporting purposes in the EU, US or UK

---

5. Ease of Access

There are very few barriers to entry for LEI. Applying for LEI is a very simple process that only takes 10 minutes.  97% of LEI applications are accepted worldwide.

 Any organization that can be considered a legal entity can get it. This includes limited companies, funds, trusts, charities, associations, government agencies, and banks in every country in the world.

Low Risk and Informed Decision-Making.

The widespread adoption of LEI significantly reduces the risk associated with financial transactions in the global market. 

LEIs are global standards for identification. 

Using the company’s LEI information means you’ll know who you’re dealing with and who owns them. 

Access to this information allows you to reliably measure risk and make informed decisions.

CONCLUSION

LEI should not be applied to individuals or divisions of a company.  If a company’s operating division requires LEI, it should use the LEI obtained from its parent company. 

Separate branches of the legal entity are eligible to receive LEI separately if they are located in different countries. 

Branches in a single country are eligible to receive only one LEI, so careful consideration should be given to which branch receives LEI.

Furthermore, the LEI accuracy of the branch is linked to the central branch. 

As such, it will be considered incorrect in cases where the LEI of the main branch is incorrect (i.e. if the LEI has not been renewed). 

Needless to say, it is not possible for any branch of the company to apply for LEI if the main branch does not have one yet.