TALLINN, Estonia - September 19, 2019 - (Newswire.com)
In today’s ever-growing global world, it is easier than ever to conduct business overseas. What once used to be a challenging process can be done at your fingertips, with a click of a button.
But while conducting international business is simpler today than ever, there are still reporting requirements that must be done. When any business, organization or individual conducts an international financial transaction, they must use what’s called a Legal Entity Identifier as part of the transaction.
The identifier, also known as an LEI number, is what is used to report to any and all financial regulation organizations and companies. In essence, the LEI number identifies each individual entity that is involved in an international financial transaction.
The LEI system was established after the collapse of Lehman Brothers back in 2008. The event underscored the need to have a system in place that easily allowed authorities and organizations to quickly identify all parties involved in international financial transactions. While some may see it as an extra step to complete international financial transactions, LEI numbers have many benefits for both the private and public sectors.
In Europe and the United States, an LEI number is required by every party involved in an international financial transaction. The number is used to report the transaction to all the regulatory authorities that are assigned to supervise these types of transactions.
The LEI number has helped to increase transparency in the entire international market, and has helped those who conduct international financial transactions to reduce their costs. It has also made the reporting process easier, which is very much desired by these entities.
An LEI number is an alphanumeric code made up of 20 unique digits. It is a distinct and unique identifier for each person, organization or business that applies for one. Every type of legal entity in the U.S. is able to apply for an LEI number, including LLCs, C Corporations, Sole Proprietorships, Partnerships, S Corporations, etc.
LEI numbers can be obtained through what are known as local operating units. There are fees of roughly $200 to apply, plus annual fees of roughly $100 to maintain the LEI number.
Around the world, there are numerous companies that issue LEI numbers. These companies serve as conduits between the businesses/organizations/individuals and the global directories, such as financial data vendors or financial exchanges. All these LEI number issuing companies must be accredited by the Global Legal Entity Identifier Foundation.
To apply for an LEI number, a business, organization or individual must complete an application with one of these GLEIF-accredited issuers. Once the simple application is complete, the company will validate the data, which typically can take up to one business day.
Once the verification is complete, the LEI number will be issued, and the business, organization or individual will be able to conduct international financial transactions according to the requirements of the U.S. government.
Press Release Service by Newswire.com
Original Source: LEI Register: Why LEI Numbers Are Needed to Conduct International Business
