The Global Legal Entity Identifier Foundation (GLEIF) has welcomed the robust support for the Legal Entity Identifier (LEI) within the Bank for International Settlements’ Committee on Payments and Market Infrastructures (CPMI) ‘Harmonized ISO 20022 data requirements for enhancing cross-border payments,’ alongside the updated ‘Payment Transparency Standards’ by the Wolfsberg Group.
The CPMI’s ISO 20022 data requirements, developed in collaboration with the Payment Market Practice Group (PMPG), establish a uniform minimum set of messaging data to streamline cross-border payment processing, aligning with G20 objectives.
Global Legal Entity Identifier Foundation and CPMI
In a groundbreaking move, following extensive industry stakeholder feedback during the consultation phase, CPMI has recognized the LEI as an equivalent identifier to the Business Identifier Code (BIC) for identifying financial institutions and legal entities within payment messages. This recognition stems from the LEI’s ability to provide clear and unique identification of legal entities, adherence to international ISO standards, global accessibility, data quality, and robust international regulatory oversight.
The data structuring requirements now recommend the use of the LEI and/or BIC for identifying all financial institutions involved in cross-border payments in a standardized manner. Furthermore, the LEI and/or BIC can serve as substitutes or complements for name and postal address information, enhancing the identification of legal entities in cross-border payments.
The widespread endorsement of these harmonized ISO 20022 requirements, including support from influential industry stakeholders such as the Bank of England, Chinese Cross-border Interbank Payment System (CIPS), European Central Bank, and the Reserve Bank of Australia, underlines the strong international backing for broader LEI utilization in cross-border payments.
Concurrently, the Wolfsberg Group, comprising 12 global banks focused on managing financial crime risks, has updated its Payment Transparency Standards. These updated standards explore how ISO 20022 capabilities can enhance payment transparency. They recommend that payment service providers (PSPs) use the LEI or similar reference codes, to improve the accuracy of identification information concerning relevant parties, where payment market infrastructure permits. Additionally, policies may specify when a unique identifier code, like the LEI, suffices for debtor identification without requiring full name and address information.
Stephan Wolf, CEO of GLEIF, comments: “Broad industry consensus advocating for the inclusion of the LEI within ISO 20022 payment messages is yet another strong endorsement of the LEI, and further underscores its terrific potential in the cross-border payments space. When the LEI is added as a data attribute in payment messages, any originator or beneficiary legal entity can be precisely, instantly, and automatically identified across borders and jurisdictions. This promises myriad benefits as payment market infrastructures across the world migrate to ISO 20022, helping to enable faster, cheaper, more transparent and inclusive cross-border transactions, while maintaining their safety and security, in support of the G20 roadmap.”
In view of this wide industry support, GLEIF reiterates the CPMI’s encouragement for payment market infrastructure organizations everywhere to take steps to align with the harmonized ISO 20022 data requirements by the end of 2027.
GLEIF also urges banks, financial institutions, and other organizations 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 utilizing ‘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.
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