What is The Purpose of an LEI number?

A Legal Entity Identifier (LEI) number is fundamentally a 20-character reference code used by legal entities that want to do business internationally. This identifier was introduced in 2011 when the G20 countries agreed on getting an identifier code that companies can use to transact in global markets. This identifier is unique for every entity globally, which makes it unique to any other identifier used for entities by any country.

For example, Microsoft’s LEI number is INR2EJN1ERAN0W5ZP974. So, this is the code that Microsoft will always have to present while doing business on the international market. Transacting with companies within the EU, UK, or the USA requires having an LEI number as a must. This takes us back to our primary question; “What Is the Purpose of an LEI number?”

The primary purpose of having an LEI number is to prove to your trading partners and regulators that your organization is a legally recognized entity. That is why several countries, especially those part of G20, make it mandatory to have an LEI number before operating or doing business in their country.

The good news is that acquiring the LEI number is not a complex process if you have all the requirements. If you want to have it done fast, you can apply for one on this LEI registration website and have it ready within 24 hours.

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I have a company, do I need LEI number?

Besides being allowed to do business on the international market, you will get numerous other benefits from having an LEI number.

Benefits of LEI number

• Creates confidence among your international clients: If you are running a small business or a startup, having an LEI is one of the ways you can build trust among your customers.
• It is widely used for Know Your Customer (KYC) practices in several countries: So, having it will reduce the validation procedure you will go through while doing business locally and internationally
• It will soon be a requirement to make international payments: Your LEI number will soon be required by Swift when your business is making payments across borders.
• Regulations may mandate having one: Several countries, including the USA, UK, and nations under the EU, will soon make it a requirement for every registered entity to have an LEI number before they start operating. You can consider acquiring your LEI number now to avoid getting into the last-minute panic when such regulations are implemented.

To find out more about LEI number and why you might need it, you can visit the extensive library of articles about LEI on LEI-registrar.com.