J.P. Morgan has become the first validation agent in the Global LEI System, signalling early interest in the scheme as a means of improving client onboarding and Know Your Customer (KYC) .
The validation agent framework was introduced by GLEIF in September 2020 and is designed to help financial institutions improve customer experience, accelerate client lifecycle management and reduce costs by using business-as-usual KYC and anti-money laundering (AML) onboarding procedures to facilitate LEI issuance for their clients.
Essentially, banks assuming the role of validation agents can obtain an LEI for clients as they are onboarded or during a client refresh, avoiding the manual and time consuming task of data collection banks must undertake to verify the identity of a client.
J.P. Morgan and LEI issuer Business Entity Data, a subsidiary of DTCC, issued the first LEI under the validation agent model using Business Entity Data’s GMEI Utility service.
George Brandman, managing director, reference data strategy, at J.P. Morgan says: “Working as a validation agent will allow us to improve our client onboarding experience as well as create valuable industry LEI reference data. If a majority of financial institutions implement this service, it would greatly multiply the number of LEIs in production to the benefit of all.”
Stephan Wolf, CEO at GLEIF, adds: “By becoming a validation agent, J.P. Morgan can not only streamline its client onboarding and lifecycle management processes, thereby improving its customer experience, but also use LEIs in innovative service offerings.”
GLEIF suggests validation agents can capitalise on new opportunities to add client value and achieve market differentiation. For example, by expanding LEI issuance beyond clients that require an LEI for financial compliance, a validation agent can equip its whole client base with globally recognised identifiers that can be used in new services and across borders with counterparties or suppliers.
“Increasing LEI volumes and broadening their usage will solve the issue of trust in financial transactions globally,” says Wolf. “Validation agents like J.P. Morgan will play a key part in making this vision a reality. They contribute to growth across the entire financial ecosystem and ultimately will benefit all stakeholders and the broader global economy.”