LEI code, the identifier to improve bank control

In the midst of the rapid technological advances of this century, business transactions seem to be unlimited. But what about the level of security? The new regulations have been presented, regarding the LEI (Legal Entity Identifier-Legal Entity) code, establishing that legal persons (companies) that have a presence in the financial markets of fixed income, equities, derivatives OTC, structured financial liabilities and structured notes, must have said code in order to continue operating. We are faced with a scenario of high banking professionalization, and proof of this is the introduction of greater control at all levels, both internal (internal management at the banking level) and external (control of all customers and their operations).

The LEI code is unique, non-transferable, permanent, consistent, portable and international; and it is independent of the number of banks, platforms and financial intermediaries in which it operates. This identifier is based on the ISO 17442 standard, which dictates the basic information that must appear (official name of the entity, date on which the LEI code was assigned โ€ฆ), as well as the structure of 20 alphanumeric digits.

The importance of this code is that financial institutions will not allow companies that have not obtained it to operate, having designated the Global Legal Entity Identifier Foundation (GLEIF) as a supranational body in charge of keeping records of these identifications. This implies that they must be in force at the time of performing a financial operation of the aforementioned typology. Basically, this code is to ensure security given the law violations in modern business transactions are increasingly sophisticated and difficult to detect. Financial operations have been known to be very vulnerable for a long time, especially those carried out between countries. Money laundering cases are increasingly being discovered and embodied in increasingly sophisticated methods.

The LEI code is indispensable for those companies that operate in derivatives or exchange insurance markets, whether in regulated or extra-stock markets. In the event that companies do not develop this activity directly and leave these operations (investment services companies or credit institutions), they must provide them the identification to be able to carry out this work. Identification is very important to prevent dangerous transactions that have the potential to bring large financial losses. No identification means the transaction is not safe, that is what the initiators of the LEI code mean.

To obtain the LEI code it is necessary to go to the Mercantile Registry in which the applicant company is registered, in the case of a simple process that can be carried out electronically, having an approximate cost of 100 dollars, with the obligation of annual renewal.

The introduction of the LEI code is aimed at increasing transparency, protecting investors, attracting more companies to regulated markets and increasing control of companies that carry out their activity in the securities markets. In short, a policy of regularization of the financial markets and the companies that operate in them is being followed, reducing fraud and facilitating the identification of companies in the event that any fraud is committed.

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