Jasmine Birtles
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Top 8 reasons to use the Legal Entity Identifier (LEI)
Reading Time: 3 minutesThe Legal Entity Identifier (LEI) is a globally accepted, standardised identification code that can identify legally distinct entities in financial or other business activities. By obtaining LEI, businesses can access global markets, monitor, and assess risk exposure across global operations and improve operational efficiency. As the legal entity identifier system is becoming increasingly important for businesses around the world, here are eight reasons why you should do it:
- 1. Reduced Risk
- 2. Improved Transparency
- 3. Enhanced Compliance
- 4. Improved Efficiency
- 5. Streamlined Processes
- 6. Risk Management
- 7. Global Access
- 8. Improved Data Quality
1. Reduced Risk:
LEI are a reliable and consistent method of identifying legal entities, reducing the risk of errors when dealing with large amounts of data. It is especially relevant when dealing with operations that span multiple jurisdictions or have a high volume of transactions. For instance, banks can use it to accurately identify their clients, reducing the risk of fraud and helping ensure that their transactions comply with regulations.
2. Improved Transparency:
A legal entity identifier code provides businesses, financial institutions, and regulators access to transparent, accurate, and up-to-date information on legal entities and individual participants in the global marketplace. It helps improve transparency in the global financial system and provides businesses with reliable information on their customers and suppliers.
3. Enhanced Compliance:
By obtaining a legal entity identifier, businesses can ensure that all operations comply with relevant regulations. It is crucial for companies operating in multiple jurisdictions, as it enables them to track their activities and identify any areas of non-compliance quickly and easily.
4. Improved Efficiency:
Using legal entity identifiers helps improve operational efficiency as it eliminates the need for manual processes when dealing with large amounts of data. It is especially beneficial for businesses with operations spread across multiple jurisdictions, as it removes the need to manually enter data into various systems. With its use, data transfer can be automated and made more accurate, reducing the risk of errors and saving time.
5. Streamlined Processes:
Legal entity identifiers are globally accepted and standardised; they can streamline all legal entities’ processes, from onboarding customers and suppliers to filing taxes or conducting audits. It helps reduce the time and effort required and ensures accuracy when dealing with multiple legal entities. You can trust that the records are accurate and up-to-date, allowing you to make informed decisions quickly.
6. Risk Management:
A legal entity identifier number helps organisations quickly identify and assess potential risks. It could be anything from third parties to legal entities and financial institutions. With the correct information, companies can make better decisions when engaging in business operations. It also helps ensure that all operations comply with the relevant regulations.
7. Global Access:
Having a legal entity identifier enables businesses to access markets around the world. It eliminates potential barriers and helps companies quickly identify the legal entities they are dealing with, ensuring that all transactions comply with regulations in any jurisdiction. Businesses can quickly identify and assess risks in any country with its use.
8. Improved Data Quality:
With legal entity identifiers, businesses can improve the quality of their data by ensuring that it is accurate and up-to-date. It helps reduce reporting discrepancies and provides a reliable source of information for all stakeholders.
Using LEIs, businesses can reduce risk, improve transparency and compliance, streamline processes, and access global markets. They also provide a reliable source of information for all stakeholders, helping to quickly enhance data quality and identify potential risks. They are an invaluable tool for any business that operates in multiple countries or has a high volume of transactions. It is the ideal solution for organisations looking to reduce the complexity and risk associated with international operations.
Disclaimer: MoneyMagpie is not a licensed financial advisor and therefore information found here including opinions, commentary, suggestions or strategies are for informational, entertainment or educational purposes only. This should not be considered as financial advice. Anyone thinking of investing should conduct their own due diligence.
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