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 practices. 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, mandated the use of LEI in payments in November 2018. In October 2018, Bank Negara Malaysia and the Financial Market Committee required 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 into ‘who owns whom’ in a corporate structure.
  • Help firms fight fraud and economic crime.
  • Facilitate information sharing with corresponding banking services by using a standardised 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 diverse 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, organisations have to obtain their LEIs, and the cost for them is approximately 220 USD for first-time registration and 68 USD for annual renewal. Assuming the business is registered and provides all the right information, an LEI can be received on 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 can deliver fundamental changes in financial market operations.

ISO20022 migration

Organisations are required to review data and, wherever possible, add LEIs. They are also recommended to adapt business processes to capture LEIs 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.”

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