LEI Data Key for Cross-Border Payments
The Global Legal Entity Identifier Foundation reports that standardized entity data, accessed via LEI codes, is critical for automating and improving
The Global Legal Entity Identifier Foundation (GLEIF) states that inconsistent entity data remains a major barrier to efficient cross-border payments. In a recent industry poll, respondents highlighted a specific need for services that use the Legal Entity Identifier (LEI) to retrieve standardized beneficiary name and address data compliant with the ISO 20022 messaging standard.
Fragmented information on names, addresses, and entity status across different jurisdictions and systems complicates automation and slows down international transactions. Regulatory pushes for better cross-border payments, including the wider adoption of ISO 20022 and rules like the FATF's Recommendation 16, are increasing the demand for trusted, harmonized reference data.
The Challenge of Standardizing Addresses
Incorporating address data into payment messages has historically been difficult, especially across borders. Systems have typically used flexible free-text fields to handle global variations in language and format. This flexibility introduces ambiguity that hinders automation.
The ISO 20022 standard introduced a structured format for beneficiary information to add more detail. However, global differences in address formats make fully structured models hard to implement universally. A hybrid format, which mixes structured and unstructured elements, has been created to offer flexibility during the transition.
Language and script present another hurdle. While native-language names and addresses are essential for accuracy, many payment systems require Latin-based representations. Providing consistent Latin translations and transliterations is therefore critical for interoperability across common ASCII-based systems.
LEI as a Trusted Data Source
The LEI, a globally recognized code linked to verified and updated reference data, provides a trusted foundation for all parties in a payment chain. Instead of relying on fragmented data, organizations can use an LEI to pull corroborated entity information directly into payment messages.
According to GLEIF's poll, the industry sees high value in LEI-based services that enable ISO 20022-compliant retrieval of a beneficiary's name and address. This supports more effective payee verification. The LEI provides consistent legal name information and Latin transliterations, reducing ambiguity. For addresses, the Global LEI System can retrieve data in ISO 20022 formats, either hybrid or fully structured, accommodating global diversity.
GLEIF provides specific data on the readiness of its system for this task. The figures below show the current state of LEI records relevant to ISO 20022 compliance.
| Data Point | Percentage of Valid LEI Records |
|---|---|
| Contain names and addresses in Latin script (as of March 31) | 95.6% |
| Use a standardized ASCII character set | 79.5% |
Low-Cost Implementation and Open Resources
This mapping service can be deployed at low cost by financial institutions and payment providers. The Global LEI System's open API and the free, public availability of LEI reference data enable this.
To further support integration, an open-source code snippet is available. This resource is part of a commitment by an entity called GODIN to implement a practical approach for using Open Data to enhance transparency and risk assessment. The code aims to reduce implementation effort and help organizations operationalize LEI data within their existing systems.
