ESRB Recommends Framework for Identification of Legal Entities in EU

The recommendation is intended to contribute to the prevention and mitigation of systemic risks to financial stability through the establishment of systematic use of the LEI by entities engaged in financial transactions. Toward the introduction of a framework on the use of the legal entity identifier, EC is recommended to propose that EU legislation:

• Incorporate a common Union legal framework governing the identification of legal entities established in the Union that are involved in financial transactions by way of a LEI, paying due regard to the principle of proportionality
• Impose an obligation on legal entities to report financial information include the obligation to identify by way of an LEI the legal entity subject to the reporting obligation and any other legal entity about which information must be reported and which has an LEI.
• Incorporate an obligation on authorities to identify by way of its LEI any legal entity about which they publicly disclose information and which has an LEI, paying due regard to the principle of proportionality

For the use of LEI until the possible introduction of EU legislation, the recommendation is for the relevant authorities to:

• Require or, where applicable, continue to require, all legal entities involved in financial transactions under their supervisory remit to have an LEI
• Continue to include, an obligation (when drafting, imposing, or amending financial reporting obligations, or where applicable) to identify by way of a LEI the legal entity subject to the reporting obligation and any other legal entity about which information must be reported and which has an LEI
• Identify or, where applicable, continue to identify, by way of its LEI, any legal entity about which they publicly disclose information and which has an LEI

Related Link: Recommendation (PDF)

Keywords: Europe, EU, Banking, Insurance, Securities, PMI, LEI, Legal Framework, Reporting Disclosure, Systemic Risk, ESRB