Many of the labor intensive and time-consuming procedures performed to obtain an LEI are the same as those performed by the FI during onboarding.
GLEIF (Global Legal Entity Identifier Foundation) has introduced a new LEI ‘Validation Agent’ framework, which will enable FIs to simplify and accelerate LEI (legal identity identifier) issuance for their clients.
Until now, the process of obtaining an LEI has usually occurred in the latter stages of client onboarding, requiring the FIs to directly liaise with an LEI issuer (i.e. a Local Operating Unit).
“Depending on the complexity of the entity’s organisational structure, this liaison can require a number of labor intensive and time-consuming legal document and data collection procedures to be performed to validate the entity’s identity before an LEI can be issued,” GLEIF says.
Many of these procedures are the same as those that must also be performed by the FI during onboarding, resulting in “a level of process repetition for both LEI Issuers and FIs, and often an extended, duplicative process for the legal entities themselves.”
In its drive to encourage voluntary adoption and use of LEIs across a broader portfolio of non-regulatory banking business lines, GLEIF has reviewed these procedures and identified an opportunity to introduce efficiencies by creating a new operating role within the Global LEI System – the ‘Validation Agent’.
Under the new framework, FIs can assume a new ‘Validation Agent’ role within the Global LEI System, allowing them to obtain an LEI for their customers by performing KYC and AML checks and other regulated ‘business-as-usual’ onboarding or client refresh processes, including identity verification.
By assuming the ‘Validation Agent’ role, FIs can realise a variety of cost, efficiency and customer experience benefits, including simplifying and accelerating LEI issuance for their clients, reducing time-to-revenue, and future proofing their institutions for digital innovation, GLEIF says.
The new framework will allow FIs to enhance their internal data management capabilities and reduce costs, and paves the way for FIs to expand their usage of the LEI beyond capital markets to encompass all banking business lines – anticipated to save the industry US 2-4 billion in client onboarding costs annually.
“Furthermore, widespread usage of the LEI better prepares the FI for the digitisation of customer onboarding, payments, transactions, and contract signing,” GLEIF says.
GLEIF has published an eBook, available for download here, exploring the Validation Agent framework, defining the new role, and discussing the challenges it addresses, while also highlighting the “far-reaching benefits” it promises to deliver to FIs and their clients.
As a next step, GLEIF is actively engaging with the global banking community to support trials of the Validation Agent framework. FIs are invited to enquire about participating in pilot projects over the next 12 months.
Like to learn more? Contact GLEIF at [email protected].