How the Validation Agent Role Can Help Bring Greater Transparency, Trust and Confidence to the Middle East and Africa

Patrick Lord, Commercial Director at Diligencia discusses the value the LEI can bring to the MEA region and the drivers for assuming the role of Validation Agent.

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In support of broader voluntary Legal Entity Identifier (LEI) adoption outside of mandated use-cases in capital markets, the Validation Agent role has been designed to benefit not only banks and financial institutions but any organization that performs relevant validation and verification practices using accurate data, based exclusively on primary sources. Diligencia is one such organization.

Diligencia helps its base of global users find essential information on organizations registered in the Middle East and Africa (MEA), enabling clients to manage their compliance obligations, market strategies, and counterparty risks in the region. Patrick Lord, Commercial Director, shares his thoughts about the Validation Agent role and its importance for increasing LEI adoption in MEA.

What were the business drivers for Diligencia becoming a Validation Agent?

For organizations like Diligencia that are responsible for the identification of entities in a whole range of jurisdictions, the idea of a single unifying identifier for potentially any and every global business was always going to be appealing. When the LEI first came to prominence and started gaining traction with regulators, financial institutions, and service providers around the world, we at Diligencia knew instinctively that we wanted to participate and contribute to the initiative.

We started our journey with the LEI back in 2019 when businesses began to add it to their entity profiles. Validating information with reliable, primary sources is a core policy at Diligencia. We found integrating profiles with LEIs simple as they could link back to their corresponding records in the Global LEI Index, which we know to be a trusted, verified source of entity data.

At that stage, LEI penetration in the Middle East and Africa was low, with fewer than 10,000 in total across the 70+ countries we cover. This was not surprising, given the lack of corporate registry information available. This resulted in low awareness of how clear registration and ownership information can engender trust, facilitate trade, and strengthen relationships between parties. We felt there was scope for Diligencia to do more to reinforce GLEIF’s efforts and help increase the adoption of LEIs in the MEA region. There is enormous potential for the region to lead the way in terms of LEI issuance growth as global investors seek transparency, trust, and confidence to engage with markets such as Saudi Arabia and Turkey. The Validation Agent role offered us the opportunity to help achieve this.

Can you tell us more about the process of becoming a Validation Agent?

Completing the process to become a Validation Agent for GLEIF was a worthwhile and beneficial experience for all parties. To create an efficient, streamlined, and commercially viable solution for customers seeking an LEI, we mapped two sets of business procedures together. We did need to navigate challenges related to a lack of instantly accessible corporate registries in many of the countries we work in. However, working in close collaboration with GLEIF and our partner Ubisecure, we have struck a balance between rigor and efficiency and created a model that can be rolled out across many emerging markets. Now we hope to streamline the LEI issuance process for thousands of entities in the MEA region.

Does Diligencia have plans beyond the Validation Agent role to promote further adoption of the LEI?

In addition to our role as a Validation Agent, we also believe it is vital for us to be advocates for the LEI. Initially, the directors and shareholders at Diligencia were drawn to the LEI program because it aligned well with our own mission and values as an organization. Namely, to bring clarity to businesses by delivering authentic information, allowing businesses and economies to grow. Therefore, we strongly believe in the LEI’s potential to bring greater transparency and trust to global trade.

We will soon be launching a program designed to enable the organizations listed on our platform to contribute additional details, which we will validate, to be featured as a ‘Diamond Profile’. Once validated, these profiles can be shared with clients, partners, and suppliers to help build the trust and transparency needed for strong trading relationships. Building the idea that information can be declared and exchanged for wider commercial benefits, we see it as the first step towards an organization obtaining its own LEI, something we also hope to offer as part of this program in due course.

What progress has been made since Diligencia assumed the role of Validation Agent?

Since Diligencia began its engagement with GLEIF and Ubisecure, LEI penetration rates in the Middle East and Africa have increased significantly, not least due to the support of regulators in some jurisdictions. In Saudi Arabia, the number of LEIs issued last year was up by 157%, largely thanks to coordinated efforts by the Saudi Credit Bureau (SIMAH) and the Saudi Central Bank to encourage financial sector players to obtain an LEI. We recognize that we are only one small contributor to the overall effort, but we look forward to continuing our LEI journey and being part of its future success.

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