The Global Legal Entity Identifier Foundation has approved Commonwealth Bank as Australia’s first validation agent for the Global Legal Entity Identifier System. LEIs have been around since 2014, when the Financial Stability Board set up the foundation with a mandate to establish identification for legal entities participating in financial transactions that would be recognised globally. An LEI is a 20 character alpha-numeric code based on the International Organisation of Standardisation’s ISO 17442. It links to other reference information that enables legal entities to have a unique identifier. A spokesperson for the Australian Payments Network likened it to a global Australian Business Number. LEIs are required for the reporting of over-the-counter derivative contracts to trade repositories. ASIC has recently updated its reporting requirements for such transactions, and from October LEIs will be the only permitted identifiers for counterparty identification. As a validation agent, CBA can obtain and maintain LEIs for clients. Its move to become a validation agent will allow it to deal efficiently with institutional clients that need an LEI when the ASIC rule change takes effect. Its interest in the LEI system may go beyond this. The Global Legal Entity Identifier Foundation said in a statement that the bank would also be a local champion for broader industry efforts to harmonise the use of standard identifiers to promote greater transparency in financial markets. The foundation’s focus is on measures to fight financial crime. “Strong market traction stems from the support of key stakeholders advocating for the inclusion of the LEI within ISO 20022 payment messages,” it said. The Australian Payments Network detailed some other possible use cases in an information paper on LEIs it published last year.  These include use of LEIs in anti-money laundering sanctions lists as a way of streamlining AML processes; and use by global banks internally for the aggregation and reconciliation of client trade information. They are already being deployed more widely in some jurisdictions. The Bank of England has mandated that LEIs be used for Clearing House Automated Payments System payments between financial institutions from November this year. The Reserve Bank of India requires the use of LEIs for large value payments where one or both parties are non-individuals. And under the Chinese Cross-border Interbank System, users are assigned an LEI which must be used in their business transactions. The AusPayNet paper points out that “the LEI system is not without its limitations”. It says presentation of an LEI does not, in and of itself, provide surety that the representative is authorised to act on behalf of that entity, and this creates a “trust gap”. The foundation has been working on a verifiable credential, a vLEI, that would confirm an entity’s LEI and the bona fides of its authorised officers. AusPayNet says vLEI is a complex model but supports its development and also says it is time for Australia to consider the wider use of LEIs across the economy.