What is an LEI code?
An LEI is a unique 20-digit identification code given to legal entities engaged in cross-border financial transactions. This code is essential to create transparency in the global financial system and to fulfill certain regulatory requirements.
What is international trade?
International trade is trade between different countries. It involves the import and export of goods, services and capital between different countries. International trade is essential for economic growth and prosperity as it gives businesses access to greater opportunities to exploit comparative advantages.
How do LEI codes contribute to transparency in international trade?
LEI codes play an important role in bringing transparency and security to international trade. By assigning a unique identification code to each legal entity, the LEI system enables clear and unambiguous identification of all parties to a financial transaction. This makes it easier to monitor and analyze cross-border transactions and identify potential risks.
Through LEI codes, authorities and other stakeholders can access important information about companies, including their legal structure, ownership and key individuals. This is particularly important in international trade agreements, where there is a need to identify the parties to the transaction and ensure that they comply with legal and regulatory requirements.
LEI codes also help prevent fraud and money laundering in international trade. By having a unique identification code for each legal entity, it can be easier to detect and monitor suspicious activity and identify potential risks or irregularities. This is essential to maintain integrity and credibility.
Legal requirements and regulations
LEI codes are not only important for transparency and security in international trade, but they are also necessary to comply with certain legal requirements and regulations. Several countries and international organizations require legal entities to have an LEI in order to participate in financial transactions.
Who needs an LEI code?
All legal entities that participate in international financial transactions, shares, bonds and other securities need an LEI code. This includes banks, financial institutions, investment funds and insurance companies, as well as companies that trade in securities.
How do you acquire an LEI code?
Acquiring an LEI code is relatively simple. You can apply for an LEI through an approved LEI issuer, which is an organization authorized to issue these codes. The process, in short, looks like this:
- Find an LEI issuer
- Fill out the application form with accurate data
- Review and approve the application before submission
- Wait for approval and assignment of LEI code
- Monitor regularly and renew your LEI code annually.