What is beneficiary lei code meaning
Having an LEI Legal Entity Identifier is a requirement for many legal entities under a litany of global finacial regulations. Many legal entities requiring an LEI Number include Retirement Funds, Trusts, Pension Schemes and Insurance related schemes and policies. In the event that the beneficiary to any of these legal entities is another legal entity then it will also require an LEI Code for the purpose of legal entity identification in reporting.
This allows regulators, market participants and overseers have full transparency and global identification of which entity is the beneficiary by having access to the global LEI directory.
WHY IS THE BENEFICIARY LEI CODE REQUIRED?
There are over 116 regulations globally mandating the use of an LEI for various reasons. The beneficiary LEI code is required for increasing transparency around legal entities and the persons/entities entitled to receiving the proceeds or assets. This removes confusion around who is who, and which entity of which organisation is the beneficiary.
For example, the beneficiary of a Trust may be another organisation, but this organisation might have more than 5 legal entities. This is why LEI Level 2 Data is so valuable.
In order to enhance transparency in the global markets that span multiple jurisdictions, the LEI is used as it is unique, global, freely accessible, maintains up to date data due to LEI renewals and has a strict quality control vetting system implemented by the GLEIF.
For example, in India the LEI is mandated for use in transactions involving 50 Crore or more (Rupees). This was issued in an RBI LEI Circular recently.
“All single payment transactions of ₹50 crore and above undertaken by entities (non-individuals) should include remitter and beneficiary LEI information. This is applicable to transactions undertaken through the NEFT and RTGS payment systems.
In case of RTGS, both customer payment and inter-bank transactions, meeting the above criterion, should include LEI information.”
– The Reserve Bank of India (RBI) Circular on the LEI
By requesting the LEI of the payee (remitter) and also the counterparty (beneficiary) who is receipt of the funds the RBI now maintain oversight on who is sending money to whom allowing for instant and reliable reconciliation of the movement of large sums of money within its jurisdiction. This has a huge influence on AML (Anti-Money Laundering) and the fight against illicit activities within the country. This approach is also recommended by the European Central Bank for EU countries to adopt a similar stance on the fight against financial crimes.
The distinction should be made between individuals sending moeny to one another, and legal entities sending money. The LEI focuses mainly on legal entities, so it shines a light on corporate financial activities, rather than private, natural persons.
The RBI go on to say “The remitting bank should ensure that LEI information for both sender and beneficiary is captured. However, both the remitting and the beneficiary banks should maintain records of all payment transactions of ₹50 crore and above.”
ESMA (The European Securities Monetary Authority) the watchdog and regulator over corporate AML within the European Union mandate the use of LEIs under the EMIR regulation (European Markets Infrastructure Regulation). Under EMIR, ESMA state that counterparties to derivatives contracts, beneficiaries, as well as brokers and clearing memebers are all required to have a Legal Entity Identifier registered on the global LEI index.
Which regulations require a beneficiary LEI to be present:
- EMIR (European Markets Infrastructure Regulation)
- SFTR (Securities Financing Transacting Regulation)
- Solvency II (Pension Funds & Insurance Companies)
- RBI Reserve Bank of India LEI Requirements
- Financial Transparency Act, USA
- Find a list of global LEI regulations here
How to finD a beneficiary LEI?
Assuming a legal entity has already obtained an LEI from the LEI Registration portal the LEI will be visible by conducting an LEI search in the global LEI Directory. If conducting a transaction with another legal entity online, you can simply search the companies legal name and filter by jurisdiction. Conducting an LEI check of a counterparty, or LEI beneficiary you will see key referenc e data points on that legal entity.
What does an LEI Check show:
- Legal name
- Legal Address/Jurisdiction
- Company type, and activity status
- Date of incorporation
- LEI issuer
- Secondary datas e.g names,parent companiesetc
The LEI search tool will automaticaly show the LEI data, and the beneficiary data through the search results on screen. This can be useful as when you are searching for a beneficiary LEI in India for example, your bank may request “Please enter a valid 20-digit alphanumeric beneficiary LEI” in accordance with the RBI regulations in NEFT and RTGS payment messages. If you do not have the beneficiary LEI to hand it can be found by conducting a simple LEI check in the global LEI directory.
Once you have found the correct entity from the LEI search results then you may proceed to enter to you payment form with the bank. If an LEI is not present, please consider asing the beneficiary for their LEI. If they have not yet obtained an LEI one can easily be obtained here: Register a beneficiary LEI
Legal Entity Identifier Limit
The use of the Legal Entity Identifier is mandatory for legal entities engaging in financial transactions above 5 Crore. This number is known as the Legal Entity Identifier Limit in India.
Just last year the Reserve Bank of India (RBI) requires entities engagin in transactions to use the Legal Entity Identifier (LEI) as part of its efforts to enhance transparency within their financial system. The LEI is being used to identify counterparties participating in high value, or large financial transactions (e.g 50 million euro +) in India. This to enables regulators to monitor and assess systemic risk across the financial system, when siuch large amounts are involved.
India, or the RBI have implemented the LEI system in phases, with the largest financial institutions with massive transaction value on a international scare required to obtain an LEI first, followed by smaller regulated financial institution which may require an LEI under a litany of global, Asian, or Indian regulations.
The RBI has released a circular specifying that the LEI must be used for the purpose of reporting and record keeping in financial transactions and to improve the transparency and stability of the financial markets.
Frequently Asked Questions
What is the cost of an LEI?
There are different pricing packages. An LEI for one year costs €89, and more than one year includes discounts. Contact support for more information or see here.
What is RAMP 2.0
RAMP is an LEI management system, that allows firms centralise LEI management, register, renew and maintain all of their LEIs in a single place.
Can I cancel my LEI subscription at anytime?
Sure. Your paid subscription can be cancelled anytime by contacting support.
Can I change my plan later on?
Absolutely! You can upgrade or downgrade your plan to multi-year, or add an LEI Certificate anytime.
How to get an LEI number?
An LEI can be obtained from LEI Worldwide by completing the global LEI application form. This is powered by RAMP 2.0 which can issue LEI codes to all entity types globally.
Will you renew my LEI automatically?
Yes, your LEI Number will be automatically renewed according to your pay period. Please be sure to select the auto-renew LEI feature at checkout.
Do you offer any discounts?
Yes! We offer discounts on bulk LEI orders and multi-year LEIs. You can register an LEI for up to 5 years.
Can I request a refund?
Sure, you will be welcome to request your refund. However LEI applications begin immediately after purchase. Once the LEI has been issued a refund becomes unavailable.
What is an LEI Number?
A Legal Entity Identifier (LEI) is a uniquely verifiable 20 digit code assigned to companies on an individual basis. The LEI is an ISO Standard (17442) and mandated for transparency in financial markets by over 116+ pieces of LEI regulation.
How to download LEI Certificate?
The PDF LEI Certificate is downloaded separately to the LEI Code. Only an already existing LEI may obtain an LEI Certificate. You can download your PDF LEI Certificate here.
What is the purpose of a Legal Entity Identifier (LEI)?
The global LEI system (GLEIS) is the first global database providing unique identification information of legal entities participating in financial transactions all across the globe. Each LEI number provides reference data on a company, providing greater transparency to financial markets.
What is vLEI?
The Verifiable LEI or vLEI is a form of verifiable credential based on W3C and KERI protocols. vLEI allows for an individual to be verified with rights to represent an organisation identified via the LEI.
How long does it take to get an LEI Number?
The LEI registration process takes minutes. Once complete, the LEI data will enter the verification process. This varies by jurisdiction. It can take between 5 minutes and a few hours.
How to find an LEI?
You can access the global LEI index through the LEI Search Tool 2.0. This LEI LookUp tool is connected to the GLEIF LEI Search via API and provides real time company data. Click here to check any LEI.
Do I need a Legal Entity Identifier?
There are over 116 regulations globally mandating the use of the LEI code. In EU it is regulated by ESMA, the SEC in the US and FCA in the UK. The LEI is required by firms engaging in most regulated financial transactions.
How to renew any LEI?
An LEI code required annual renewal in order to maintain high quality and current data within the system. You can renew your LEI here, or if you LEI is with another provider you can transfer your LEI here.
More questions?
Contact our 24/7 LEI Customer Support team. We also have a live chat function during business hours.
Can you unregister an LEI?
No, you cannot de-register an LEI. LEI Codes, once issued are immutable in that they cannot be removed. Their status can however be changed to reflect the entity status e.g RETIRED
