Corona, trade wars, US elections

When the G20 states come together virtually in Saudi Arabia on November 21/22, 2020, this means, among other things heads of state will discuss security in global trade. After all, this system is more vulnerable today than ever before. A special code promises more security, as the ECB, the Federal Ministry of Finance and the Swiss company Gleif agree.

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We live in troubled times, socio-economically, politically and technologically. One of the threatening aspects is the vulnerability of international monetary systems. For cyber criminals manipulate and destabilize them on a grand scale. Corona, trade wars and elections like in the USA reinforce this tendency. "In the context of the COVID-19 pandemic, the Financial Action Taskforce (FATF), the leading international body in the fight against money laundering and the financing of terrorism, has noted an increase in cyber-crime and fraud, particularly with regard to medical devices and state subsidies," explains the Federal Ministry of Finance BMF. But this threat does not stop there. Authorities and financial experts are therefore working flat out to find solutions. One is the so-called Legal Entity Identifier or LEI Code.

Use secure identification

Global economic crime is supported by the latest digital technologies. Even better solutions must therefore be used for prevention. A good example is the clear and secure identification of companies via the LEI code. This enables authorities to combat international and national financial crime more effectively, for example in the area of securities transactions. "The further spread of the Legal Entity Identifier can make a contribution to this, for example by facilitating the secure identification of the companies involved in interbank transactions or in transactions between companies," says the Federal Ministry of Finance. But how exactly does this work?

Who belongs to whom

Around 45,000 companies are registered on the world's largest stock exchanges. Most of them operate internationally and want to do business abroad with possible cooperation partners. Tens of millions of companies worldwide are eligible for this. But which company belongs to whom and who owns what? Without secure information, business can be difficult. There is a solution for this. Every company receives a unique, never changing, certified number - like an internationally valid corporate passport. "Organizations and companies have the greatest advantage," says Stephan Wolf, CEO of GLEIF (Global LEI Foundation), "they can publish their data in a secure and trustworthy form. So everybody can look at this data. This is basically already part of marketing. Banks and public authorities are also very interested in it because it is much easier for them to fill their databases and perform data analyses".

Global commercial register of the future

The idea was developed by the Financial Stability Board FSB, an international committee founded in 2009. It monitors the global financial system. Its statutes are jointly approved by the G20 countries. The new identification system was implemented in 2014 with the LEI Code. The Legal Entity Identifier consists of 20 characters and is ISO certified (17442). The alphanumeric code contains important reference data. Example: Each LEI contains information about the ownership structure of the legal entity (company) and answers questions such as "Who is who" and "Who belongs to whom"? Companies can use this code to identify themselves in a data-based, fast, secure and, above all, clear and unambiguous manner. "LEI is undoubtedly a very important data infrastructure for a secure business relationship in the advancing digital age," says Werner Bier, Deputy Director General for Statistics at the European Central Bank ECB.

Less risk, more transparency

The global "LEI system" is designed to reduce complexity in international trade. This is because companies can improve their data integrity (i.e. the correctness of the data stored about them) and conduct business in a visible and controlled manner. Fraud, market abuse and even financial crises should thus have fewer opportunities in the future. In addition, companies can reduce their costs, accelerate business processes and gain more insight into the global market.

GLEIF is non-profit

The company behind LEI is "Global Legal Entity Identifier Foundation GLEIF" based in Basel, Switzerland. GLEIF is a not-for-profit company that is itself monitored by LEI ROC, a group of public authorities from around the world. GLEIF provides the infrastructure for the use of LEI and informs about the allocation of the code. The database is free of charge. So far, over 1.7 million companies have been registered worldwide. Tendency rising.

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• Infotext "Corona, trade wars, US elections"
• Explanatory film "Gleif Data Quality", 7 min.

Statements (rough cut):

• Werner Bier (ECB)
• Stephan Wolf (GLEIF)
• Prof. Damian Borth (University of St. Gallen)
• Photo motifs

IMPORTANT: Interviews, studio and background discussions are possible! Please contact us to arrange an appointment.

You can find more information at: www.gleif.org/de

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