The Bank for International Settlements and the Global Legal Entity Identifier Foundation have successfully tested a prototype system using Legal Entity Identifiers to streamline cross-border banking for small and medium-sized enterprises. The demonstration shows how LEIs can significantly improve KYC, KYB, and AML compliance processes when SMEs use open banking and open finance APIs for international payments and account opening.
The collaboration addresses a critical friction point in cross-border commerce, where SMEs currently face lengthy verification procedures and duplicate compliance checks across different jurisdictions. By embedding standardized LEIs into open finance infrastructure, the prototype enables faster identity verification and risk assessment across borders, potentially reducing onboarding times and operational costs for financial institutions serving business clients.
The successful test signals growing momentum toward standardized digital identity frameworks in international finance, which could reshape how banks and fintechs manage corporate client relationships globally.
FXnCO Insight
Financial institutions serving SMEs in cross-border transactions should monitor LEI integration developments closely, as early adoption could provide competitive advantages in client onboarding speed and compliance efficiency.
Source: Finextra