Wednesday, 21 February 2024

GLEIF welcomes MNS to growing validation network in India

5 min read

The Global Legal Entity Identifier Foundation (GLEIF) announced that MNS Credit Management Group  (MNS) has become the latest credit management company to be approved as a validation agent in the Global Legal Entity Identifier (LEI) System.

It will work as a validation agent to Legal Entity Identifier India (LEIL), a GLEIF accredited LEI issuer and a wholly owned subsidiary of the Clearing Corporation of India.

MNS is a leading business-to-business (B2B) debt management and business information company based in New Delhi, India. By becoming the second validation agent operating in the region, it will bolster support for LEI issuance amid increasing demand — helping to realise a simpler, faster, and more convenient experience both for its clients and internally.

Given the strong level of international support for the broader utilisation of the LEI in cross-border payments use-cases, the validation agent framework network is playing an increasingly important role in facilitating LEI issuance in support of efforts to counter global criminality. The ongoing expansion of the validation agent network — which now stands at more than 10 organisations globally, spanning Africa, Australasia, China, Europe, India, the Middle East, and North America — reinforces the tremendous advantages participants gain in their relentless battle against financial crime, striving for enhanced transparency, efficiency, and security in payment processes.

GLEIF encourages banks, financial institutions, and other organisations to consider taking a proactive approach to supporting voluntary customer adoption of the LEI by becoming a validation agent in the Global LEI System. In addition to easing the process of LEI implementation by making LEI issuance more convenient and accessible for customers, becoming a validation agent can deliver significant advantages for financial institutions themselves. By utilising ‘business-as-usual’ onboarding processes to obtain LEIs for clients, financial institutions can improve customer experience, facilitate digital transformation, and reduce client lifecycle management costs.

Fresh worldwide impetus for the LEI follows support from key stakeholders advocating for its inclusion within ISO 20022 payment messages to enable more transparent cross-border payments. This includes the Bank for International Settlements' Committee on Payments and Market Infrastructures' (CPMI) 'Harmonised ISO 20022 data requirements for enhancing cross-border payments', alongside the Wolfsberg Group's updated 'Payment Transparency Standards'.

In addition, the Swift Payment Market Practice Group (PMPG) has outlined how global adoption of the LEI in ISO 20022 payment messages can support key cross-border use-cases including: sanctions and watch-list screening; KYC and client onboarding; fraud detection and the fight against vendor scams; e-invoice reconciliation; and account-to-account validation.

Stephan Wolf, CEO of GLEIF, said: "Welcoming MNS to the validation agent network marks another important development for the Global LEI System. Given widespread industry recognition of the foundational role that the LEI can play in enabling faster, cheaper, more transparent and inclusive cross-border transactions, India’s drumbeat of support for the LEI over recent years offers a compelling precedent—underscoring the potential for jurisdictions around the world to take the fight to global financial crime by driving forward LEI adoption."

Sustained growth in LEI issuance in India, particularly across its dynamic and thriving small to medium enterprise (SME) population, stems principally from an advanced regulatory agenda. In recent years, bodies such as the Reserve Bank of India, the Securities and Exchange Board of India, the Insurance Regulatory, Development Authority of India, and Income Tax Department have all mandated and recommended LEI usage across various applications. These include over-the-counter (OTC) derivatives, credit borrowing, large value payments, insurance, cross-border transactions and income tax regulation beyond certain amount. Beyond regulatory mandates, the downstream impact of wider LEI adoption is also increasing financial inclusion, as SMEs are more easily able to verify their identities across borders, supporting greater participation in global markets.

Seema Kumar, director of MNS Credit, said: "As a validation agent, we are committed to leveraging over two decades of local expertise to engage and educate legal entities on the significant opportunities afforded by the LEI, while streamlining the LEI issuance process and reducing onboarding time. This will play a crucial role in mitigating systemic risks, while helping to realise the promise of digital transformation across the Indian marketplace and beyond."

Wolf added: “The LEI has become embedded within the fabric of the Indian economy as a critical business enabler, with its unique capabilities as a universal identifier delivering the trust and transparency needed to not only ensure regulatory compliance, but also open the door to global markets. This is particularly true for India's myriad SMEs, who have traditionally been inhibited and constrained by an inability to prove and verify their identity.”

Re-disseminated by The Asian Banker

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Finance Vietnam 2024
18 July 2024