The Legal Entity Identifier (LEI) is a globally unique code that identifies an organization in financial transactions. An LEI ensures greater transparency, security, and reliability in the financial markets.
The Legal Entity Identifier is an internationally recognized identification code for ‘legal entities’ such as companies, banks, foundations, and governments. Each LEI consists of a 20-character alphanumeric code linked to basic data such as:
official name of the organization
country of establishment
legal form
ownership structure (if available)
LEIs were developed after the 2008 financial crisis, on the initiative of the Financial Stability Board (FSB), and are managed by the Global Legal Entity Identifier Foundation (GLEIF). The aim is to create a global system that identifies organizations in a uniform and reliable manner.
Why is an LEI important?
Transparency: Parties know for sure who they are doing business with, which strengthens the integrity of markets.
Security: Helps regulators to better detect risks, fraud, and money laundering practices.
Enforcement: A valid LEI is required by law for various financial transactions, such as derivatives trading.
Efficiency: A single global standard prevents errors caused by differing local identification systems.
For financial institutions, LEIs are essential for reliable transaction processing and risk management.
Use of LEIs worldwide
LEIs are used worldwide for:
reporting securities and derivatives transactions to regulators
transactions between banks and companies
supervision, risk analysis, and market monitoring by central banks and financial authorities
More and more sectors are switching to LEI use to prevent identity confusion and administrative errors.
LEI in the Netherlands
In the Netherlands, banks and financial institutions require their business customers to have a valid LEI for transactions where this is mandatory. LEIs are requested and managed through Local Operating Units (LOUs) recognized by GLEIF. Dutch organizations can easily request or renew their LEI through one of these providers.
