Global Legal Entity Identifier Foundation (GLEIF)

Trust LEI Pass: Global identification scheme for business’ economic inclusion

Lead Organization

Global Legal Entity Identifier Foundation (GLEIF)

Basel, Kanton Basel-Stadt, Switzerland

http://www.gleif.org

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To learn more about – or provide significant funding to – this project, please contact Lever for Change.

Project Summary

One barrier for economic growth is heavily understated: The lack of a trusted identity for businesses to know who you are doing business with. Even more important in a digital world: No one knows what companies exist, nor how they are related. That is a big problem for regulation, research, resolution, transparency, and basic business efficiency.  Many legal entities in developing countries conduct business unregistered, lacking any formalized identity. They are cut off from services and supply chains vulnerable to corruption creating economic decline.Initiated by the G-20, the non-profit Global Legal Entity Identifier System delivers a unique ID scheme as a public good representing the only global initiative that has been set up in the public interest by cooperating governments. Its data is accessible for everyone, anytime, anywhere.  Every business has the right for identity – a truly public-private-partnership rolled out on scale to achieve prosperity in developing countries.

Problem Statement

Micro, small and medium-sized business owners and their employees without trusted identities face problems to participate in economic activities at regional and global levels. Administrative and legal frameworks for providing identity and trust do not exist to a degree acceptable by trading counterparties in developed countries. Anti-money laundering regulation increasingly has led banks to curtail correspondent banking relationships and remittance corridors, due to lack of trust in unknown legal entities. To participate in any cross-border trade businesses must be known and trusted. China recently introduced regulation mandating LEI as key identifier in customs declarations for 25 developing countries.An effective global ID solution that delivers fast and trusted identity fit for the digital age does not exist. Risks are immense: Businesses cannot participate in economic activities or become dependent on commercial providers. Neither Facebook nor Amazon ID is helpful in creating new business opportunities without developing vast dependencies from commercial interest. The alternative of a foreign government system taking over would also not be appealing. We believe only the unique structure of the Global LEI System solves this problem. We can confer identity transparent to everybody. The LEI system is in place and comes with a global regulatory oversight. LEI registration operates under cost recovery principles. Costs range between 50-120 US$. These costs are mainly driven by validation and verification of the information about the legal entity. We would use the grant to subsidize the process on a per LEI basis allowing companies to obtain an LEI for free.

Solution Overview

If more developing countries participate in the Global LEI System, more businesses get a trusted ID and get access to regional and global markets. Our impact assessment is evidenced by:-LEI adoption numbers which we assess in each of the 222 participating jurisdictions; -the increase in registration of companies shown in our open registry will be benchmarked to how many legal entities could be reached.Over a period of 5 years, we want to confer internationally recognized identity to businesses, free of charge. This identity should include a digital component. Foundational work has been completed such as developing the necessary standards with ISO, ETSI, XBRL International, and the CA/B Forum. For that five-year grant period, businesses in 20+ Sub-Saharan countries will receive LEIs free of charge. We believe that this could result in registering up to 2,5 million legal entities.•Encourage the formalization and growth of micro, small and medium-sized enterprises through access to financial services (credit, insurances) and their integration into value chains and markets•Support productive activities, decent job creation, entrepreneurship, creativity, and innovation•Reduce inefficient economic activity and corruption through formalization, thereby enhancing tax revenue

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