Adoption of LEI in Payment Messages by the Payments Market Practice Group (PMPG)

In September, the Payments Market Practice Group or PMPG was set up by SWIFT to bring together payment industry practitioners and define market best practice. They published a paper on the Adoption of LEI in September 2019 and we have decided to bring a short summary of the main points in this post.

Current State of LEI and Payments

The regulatory community is seeing the value of LEI and is now taking steps to consider or require the use of an LEI in the payments industry.

The Bank of England, for example, mandates the use of LEI in payments in November 2018. In October 2018, Bank Negara Malaysia and the Financial Market Committee require LEIs to open RENTAS segregated accounts.

Benefits of Legal Entity Identifiers

  • Verified authoritative information about all parties involved in a transaction.
  • Smooth data validation efforts in the payments lifecycle.
  • Create efficiency in transaction chains, reducing costs through interoperability.
  • Improve operational processes by simplifying risk management.
  • Streamline onboarding and Know Your Customer (KYC).
  • Eliminate duplication of processes so full customer due diligence (CDD) is not repeated and KYC and Anti Money Laundering checks are more reliable.
  • Reduce barriers to entry for legal entity identification.
  • Provide insight to who owns whom in a corporate structure.
  • Help firms fight fraud and economic crime.
  • Facilitate information sharing with corresponding banking services by using a standardized format.

When Legal Entity Identifiers are fully adopted, they have the potential to innovate payments in three ways.

  1. Greater Speed – simple use of a 20 digit code.
  2. Better analysis to support compliance and business intelligence – effective cross-linking and consolidation of a diverse range of datasets.
  3. Supporting the digital economy – LEI in digital certificates

Challenges to Adoption

System changes

Changing payment formats to accommodate new fields is costly and difficult and why would the system change when it’s already built for Business Identifier Codes or BIC numbers? Given that BIC and LEI are different, payment messaging actually has a need for both identifiers.

SWIFT and GLEIF already support this requirement via a certified BIC-to-LEI mapping service.

Cost and effort to obtain LEI

Right now, organizations have to obtain their own LEIs and the cost for them is approximately 220USD for first time registration and 68USD for annual renewal. Assuming the business is registered and provides all the right information, an LEI can be received in the same day as ordering. Otherwise, it can take up to several days.

LEI Adoption

While LEI has not yet been mandated for identifying parties in payments, it is recommended that firms consider a more strategic adoption of the LEI as part of the ISO 20022 migration because it has the potential to deliver fundamental changes in financial market operations.

ISO20022 migration

Organizations are requires to review data and wherever possible, add LEIs. They are also recommended to adapt business processes to ensure LEIs are captures whenever a new counterparty or customer record is set-up.

Regulator role

The public and private sectors should work together to promote, educate and create awareness around LEIs.


“The PMPG believes now is the appropriate time for the payment industry to begin its adoption of the LEI. Coupled with the other changes happening around the LEI to make it cheaper and easier to obtain, the migration to ISO 20022 provides the right opportunity for the industry to move to adding the LEI into payments messages, infrastructures and processes in a low cost, efficient manner.”