IGTA Journal - Winter 2020/2021

Delivered by Ingenta IP: 193.129.26.79 On: Tue, 28 Jan 2020 14:32:43 Copyright: Henry Stewart Publications Page 328 Stage Impacted participant Initiate payment End users Payment system Processing operator payment Payment service Financial crime provider investigatory checks End users Funds credited to beneficiary Without LEIs With LEIs Problem without LEIs Payment sender creates payment with limited information on payment receiver. Can be defrauded into sending payment to different recipient. Inconsistent use of identity data included in fields and can vary in quality. Challenging to perform data analysis. Payment service provider perform resource intensive due diligence, with further manual checks on suspicious activity. Difficulty for payment receiver to match payment to legal entity. Solution offered by Benefit to the LEI participant Payment sender adds Enables assurance of own LEI and recipients correct recipient LEI to payment reducing the potential for information. fraud or error. Access to richer data on LEI of sending and the economic activity receiving corporates driving payments and on transferred in ISO20022 payment system usage payments message. patterns. LEI used as reference to Enables efficient access access other sources of to due diligence records due diligence data. across multiple sources. LEI of payment sender Enables reconciliation of provided to support payments to individual reconciliation by payment invoices in an automated receiver. and efficient way. Figure 2: Potential benefits in using the LEI as a unique identifier when processing a domestic high-value wholesale payment The value of the LEI for the payments industry IGTA eJournal | Winter 2020/21 | 44