LEI Codes in Banking
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Banks use LEI codes to identify the companies they trade with, report to regulators, and send payments for. This guide covers how banks use LEIs, which regulations require them, and how to keep LEIs for your group and your clients active.
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How Banks Use LEI Codes
- Counterparty identification. Before a trade or contract, a bank needs to know exactly which legal entity it's dealing with. An LEI links to verified data from the Global LEI Index, so there's no need to rely on company names or local registration numbers that differ from country to country.
- Regulatory reporting. Many transaction and trade reports require an LEI for both the bank and its counterparty. A report with a missing or invalid LEI can fail validation.
- AML and sanctions screening. Matching entities by LEI is more reliable than matching by name, which reduces false positives in monitoring.
- Client onboarding (KYB). During due diligence, a bank can pull the client's legal name, address, and registration details (Level 1 data) and its parent companies (Level 2 data) straight from the Global LEI Index instead of collecting them manually.
- Payments. ISO 20022 payment messages have dedicated fields for the LEI. Adding it to payment instructions improves straight-through processing and helps avoid delays caused by incomplete entity data.
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Regulations That Require an LEI
The LEI is referenced in over 300 regulations worldwide. These are the ones banks come across most often:
- MiFID II / MiFIR (EU). Investment firms must identify legal entity clients by LEI when executing and reporting transactions. In practice, this means no LEI, no trade.
- EMIR (EU). Both counterparties to a reportable derivatives transaction must have a valid LEI, and it must appear in reports sent to the trade repository.
- EU Instant Payments Regulation. Banks offering instant euro transfers must verify the payee before processing. The LEI can be used to identify legal entity payees during this check.
- Bank of England CHAPS (UK). CHAPS now uses ISO 20022 messaging, and banks are expected to include the LEI of the payer and payee whenever they have one.
- FATF Recommendations 16 and 24. These cover originator and beneficiary information in wire transfers and the transparency of company ownership. The LEI is increasingly used to meet both.
- Reserve Bank of India. The RBI requires LEIs for large-value transactions above set thresholds, for both banks and their corporate clients.
Important: A lapsed LEI is treated much like a missing one. Under MiFID II and EMIR, a counterparty with a lapsed LEI can cause a failed report or a refused trade, so check the status in the Global LEI Index before executing reportable transactions. -
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LEIs Across a Banking Group
An LEI identifies one legal entity, so a bank doesn't have a single LEI for the whole group. Each subsidiary or other legal entity that takes part in regulated activity needs its own. For a large international bank, that can mean dozens or even hundreds of LEIs, each with its own renewal date.
Tip: Multi-year registration lets you cover up to five years at once, so group LEIs don't lapse because one renewal was missed. -
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Managing LEIs for Your Clients
When a bank trades or reports on behalf of its clients, those clients need valid LEIs too. Rather than sending clients to register on their own, many banks work with a Registration Agent to register and renew LEIs for them.
GoGetSSL offers an LEI API and reseller program for this. You can register new LEIs, renew existing ones, and track order status in bulk, directly from your own systems.
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