GLEIF defines new Validation Agent role for banks
By Robin Amlot
GLEIF defines new Validation Agent role for banks
The Global Legal Entity Identifier Foundation (GLEIF) says financial institutions (FIs) worldwide can realise a variety of cost, efficiency and customer experience benefits by assuming a new ‘Validation Agent’ role within the Global LEI System. FIs acting as Validation Agents simplify LEI issuance for their clients, reduce time-to-revenue, and future proof their institutions for digital innovation.
By leveraging their know-your-customer (KYC), anti-money laundering (AML) and other regulated ‘business-as-usual’ onboarding processes, Validation Agents can now obtain an LEI for their customers when verifying a client’s identity during initial onboarding or during a standard client refresh update. Until now, labour intensive and time consuming legal document and data collection procedures, which are conducted as standard to verify the identity of a client entity within a bank’s onboarding process, have been replicated within the Global LEI System by a Local Operating Unit (LOU), as part of the LEI issuance process.
By becoming Validation Agents, FIs can spare their clients from these duplicative processes and deliver a faster and more convenient customer experience. Validation Agents can also capitalise on additional opportunities to add client value and achieve market differentiation. By expanding their LEI issuance beyond those that require an LEI for financial compliance, a Validation Agent can equip its whole business client base with globally recognised identities, which can be used across borders with any counterparty or supplier around the world.
In addition to these client benefits, the new operating model will allow FIs to enhance their internal data management capabilities and reduce costs. It also paves the way for FIs to expand their usage of the LEI beyond capital markets to encompass all banking business lines, an opportunity anticipated to save the industry U.S.$2-4 billion annually in client onboarding costs alone.
The Validation Agent Framework has been introduced following extensive consultation with GLEIF’s Globally Important Financial Institutions (GIFI) Relationship Group, which comprises representatives of large banks, global asset management firms, insurance companies, and other FIs. The group facilitates communication between GLEIF, banks, FIs and other key LEI stakeholders and has given its full support to the Framework.
“GLEIF is committed to supporting the banking industry’s widespread implementation of the LEI beyond mandated requirements,” said Stephan Wolf, GLEIF CEO. “The Validation Agent role helps financial institutions to improve their operations and enable their customers to more quickly achieve their desired financial transactions. By becoming Validation Agents financial institutions can streamline, accelerate and diversify their use of the LEI, and ensure their autonomy as they look to digitize their business processes. Considering that from a macro level, broader LEI usage and increasing volumes translate into more efficient financial transactions – from digitally signing contracts to financial markets participation. In this way, Validation Agents contribute to growth across the entire ecosystem, which will benefit all financial ecosystem stakeholders, as well as the global economy.”
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