The Financial Stability Board (FSB) has released a report evaluating progress on Legal Entity Identifier (LEI) adoption and options to encourage future LEI take up in cross-border payments.
This study lays down a series of recommendations for promoting the use of LEIs in cross-border payments and outlines the potential advantages of using LEIs in improving straight-through processing (STP) rates and Know Your Customer (KYC) evaluation.
It was published in collaboration with the Global Legal Entity Foundation (GLEIF), the Legal Entity Identifier Regulatory Oversight Committee (ROC) and a number of national authorities.
Building on work to encourage LEI adoption in securities and over-the-counter derivatives markets, this report forms part of a broader G20 roadmap to enhance efficiency, reduce cost and improve speed and transparency in cross-border payments.
The report, Options to Improve Adoption of the LEI, in particular for use in Cross-border Payments, reflects on the constraints imposed by poor data quality, fragmentation across data sources, and inadequate standardisation of data exchanges. The G20 roadmap includes steps to address these inefficiencies, promoting common message formats, data exchange protocols, and standardised conversation and mapping methodologies from legacy formats.
LEIs were developed by the FSB to provide a unique counterparty identifier that will improve efficiency and reduce risk in financial transactions across borders. The FSB released a Thematic Review on Implementation of the LEI in May 2019.
The FSB intends to review progress in achieving these objectives through a report that will appear before the end of 2024.
Earlier this week, GLEIF announced the launch of a vLEI issuer qualification programme, setting in place an accreditation programme through which qualified parties can issue digital identity credentials, through the verifiable LEI, to a wide range of business entities to support their domestic and cross-border transactions.
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