Legal Entity Identifiers (LEIs) and payments
As we stand today, there is no single Legal Entity Identifier (LEI) that can be used around the world to identify an individual or business. Here are some of the issues presented by its absence:
• A UK company registered at Companies House has a unique company number but a company registered in another country could easily have the same number; and
• UK citizen holds a unique National Insurance number but a citizen in another country could easily have the same number.
Therefore, when trying to identify an entity or individual cross-border there is a very real risk of confusion and here is the problem.
When thinking about a company receiving payments from its customers, the absence a unique LEI makes it hard to precisely identify cross border transactions in the joined up global trading environment.
An LEI from the payer included in the payment message would really help in at least identifying who the payment came from in the world; if it’s unique then you get the certainty you need. We are all in favour of enriching payment messages with such standardised data to provide this additional certainty for those on the receiving end and increase STP rates. Doesn’t solve “the remittance issue” (or absence of it) but would be a step forward.
However, outside of the banking world I suspect corporates (such as ourselves) we be relatively un-interested in LEIs since there is much more to life than a common reference number. A common tax reference number globally – now you are talking!
