Global Financial Integrity

 

Getting a Global Legal Entity Identifier Number is as Easy as L-E-I

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The global community recently began implementing a system of transparent, open source ID numbers—Legal Entity Identifiers (LEI)—to help companies, regulators, investors, and the public see how parent and subsidiary companies are related. Global Financial Integrity has been supportive of this corporate transparency tool, and I participated in the early stages of creating the new global LEI system. To test out and demystify the new system, I decided to have GFI register to get its own LEI number. Ten minutes and US$219 later we were done, and now I’m going to explain just how easy the process was.

An LEI is a new global system of unique identifying numbers for corporations that was conceived of by the G20 in response to the global financial crisis. As the crisis unfolded it became clear that many banks that were conducting derivatives trades were unaware of the identity of the firm on the other side of the transaction. This caused significant problems when attempts were made to untangle the trades since determining the identities of many firms was extremely difficult, which stymied and delayed efforts to halt the financial crisis.

The benefits of LEI’s are far wider than that, however. The system gives a company a globally unique number that it can use (or that it might be required to use) for various transactions that firm engages in anywhere in the world, including entering into a contract, shipping goods, making a wire transfer, bidding on a government contract, and more. The LEI system is run by a non-profit organization, the Global LEI Foundation, which is responsible for administering the system, safeguarding its operational integrity, and ensuring that LEI information is freely available in an open data format to anyone who wants to look for a company’s LEI number. As of October 2015, over 390,000 legal entities from 195 different countries had obtained LEI numbers, and forty different jurisdictions had regulatory requirements in place that referenced LEIs.

To test the ease of getting an LEI, I decided to see how it would go asking one of our interns to get us an LEI number if I gave him very little background information. I recruited Sam Lucas, an undergraduate student from Exeter University in England, for the mission, and I intentionally gave him very little background information. The following are the written instructions I gave him:

Sam,

We would like you to register GFI for a Legal Entity Identifier (LEI) number. You can register us for an LEI online from any of the LEI system’s Local Operating Units (LOUs), and we’ll give you a credit card to pay the fee.

I expect that you will probably need GFI’s legal name, place of registration, local registration number, address, telephone number, and maybe an internal contact person. Those details are:

Legal name: Global Financial Integrity
Place of Registration: Washington, DC, USA
Registration/File Number: N0000001492
Address: 1100 17th St. NW, Washington, DC 20036
Telephone: +1 202-293-0740
Contact: Heather Lowe, Legal Counsel

You may ask me any questions you may have during the process of registration.

Thank you,
Heather

After Sam was done, I interviewed him about how it went.

Heather: About how long did it take you to register for an LEI?

Sam: About 10 minutes.

Heather: Did you find anything challenging?

Sam: I wasn’t always clear about what exactly they were asking for, for instance in the business registration field, but even that allows you to say “N/A”, and everything else the system asked for were exceptionally basic details about the company. I had to know that GFI’s legal address and its headquarters address were the same, which I had to ask you, but other than that it was just the address, knowing what type of organization we are, etc. I didn’t even need all of the information you gave me!

Heather: Did you actually get the number when you registered?

Sam: No. They provided information to say that they would review it against publicly held records, and that we would hear back from them after their validation team has looked through it.

Heather: Did it say how long it would take to get verified?

Sam: 24-72 hours, but it said if you paid by wire transfer it would take up to five days for them to get that transfer. We paid by credit card, so that shouldn’t be an issue.

Heather: How much did it cost?

Sam: US$219.00

Heather: Is there anything else you would note about the process?

Sam: It was so easy to do, and I basically only needed information about GFI that was publicly available anyway. There was also an option to add information about the “ultimate parent company.” It was [just] a button that you clicked on.

We applied for the LEI number on a Friday in the U.S., and not just any Friday but Good Friday, which is a holiday in many countries like the Netherlands where it appears we applied for the LEI. Easter Monday is a holiday in many places as well, so we weren’t sure whether the 24-72 hour verification process would indeed be 24-72 hours, but we received our LEI number on Tuesday, March 29 at 10:06 pm.

There are currently 30 different LOUs that you can use to register for your own LEI number, and a list of those entities can be found here.

Sam and I concluded that the system is exceptionally quick and easy to use, GFI is now the proud holder of LEI number 549300MPDLK0B4X28896, and we’re going to start using it.