Unlocking a Simpler Future: How the LEI and vLEI Can Empower Europe’s Digital Age
As the European Commission doubles down on reducing red tape and simplifying the business environment through its Omnibus simplification packages, the Legal Entity Identifier (LEI) and its digital counterpart the verifiable LEI (vLEI) are proving essential to this transformation – cutting costs, boosting efficiency, and building trust in digital transactions.
Author: Alexandre Kech
Date: 2025-04-03
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The European Commission’s Omnibus simplification packages and broader simplification agenda aim to deliver a regulatory framework for the European Union (EU) that is simpler, faster, and more business-friendly. This follows findings from the 'Draghi Report on the Future of EU Competitiveness', which identified excessive regulatory complexity as a key factor hampering Europe’s economic potential.
How LEI and vLEI Can Reduce Regulatory Compliance Burdens Across Europe
The new simplification strategy outlines a range of measures and steps to cut through red tape. These include prioritizing the 'Once-Only Principle' and digital-by-default approaches – as well as pursuing opportunities to ease cross-border transactions and streamline sustainability reporting. More broadly, this is reinforcing the need for seamless digital identity solutions to eliminate redundancies in reporting and compliance, with the LEI and vLEI delivering immediate benefits by simplifying, standardizing, and automating entity identification across jurisdictions and industries:
1. Enabling the Once-Only Principle
The Once-Only Principle is a central tenet of the EU’s simplification agenda, aiming to prevent businesses from providing the same information multiple times to different authorities. The LEI facilitates this aim by serving as a universally recognized, standardized identifier that can be used across regulatory frameworks, financial services, trade, and supply chains. By embedding the LEI into digital reporting systems, authorities can eliminate duplicative processes, ensuring that businesses only need to submit information about themselves once, after which it can be seamlessly shared across government agencies. Automating business registration and reporting also aligns with the European Single Access Point (ESAP) initiative for financial and non-financial data reporting.
The Once-Only Principle is important for our members as it streamlines data exchange and reduces administrative burdens across borders. By providing a unique, universal identifier for legal entities, the LEI is a cornerstone for implementing the Once-Only Principle thereby supporting the realization of a truly integrated Digital Single Market that will boost operational efficiency and cost-effectiveness for companies worldwide.
Andrew Wilson, Global Policy Director, International Chamber of Commerce (ICC)
2. Digital-by-default and automated verification
The EU’s digitalization efforts focus on reducing manual and paper-based processes in compliance reporting. The vLEI, built on self-sovereign identity principles, provides cryptographically verifiable credentials that enable businesses and regulators to automate verification processes securely. This reduces the burden on companies to repeatedly prove their legal identity, their representatives’ identity, and counterparty legitimacy, accelerating regulatory approvals and reducing administrative delays.
GDF’s mission is to promote and underpin greater adoption of market standards, and further implementation of best practice in digital finance. The LEI is an incredible example of the way that firms can implement innovative compliance measures through digital-by-default processes. It reduces both risk and inefficiencies by transforming paper-based, manual, processes. We strongly support the LEI as a way to increase trust and transparency by enabling financial institutions to have a consistent and automated means to verify client identities, assess risks, and ensure compliance with regulatory frameworks.
Elise Soucie Watts, Executive Director, Global Digital Finance (GDF)
3. Simplifying cross-border transactions and KYC compliance
European businesses, especially SMEs, face significant barriers in cross-border trade due to divergent regulatory requirements. The LEI and vLEI offer a standardized method for counterparty identification, simplifying Know-Your-Customer (KYC) and anti-money laundering (AML) processes. By integrating the LEI into digital trade platforms and financial services, businesses can reduce onboarding times, lower compliance costs, and ensure greater accuracy in identity verification across jurisdictions.
Corporate treasurers generally encourage any initiative aimed at regulatory simplification. We believe that the LEI and vLEI, through their many possible uses and standardization, will reduce the complexity of operations, secure exchanges, and payments, and facilitate the on-boarding of suppliers and customers, among other things.
François Masquelier, Chair, European Association of Corporate Treasurers (EACT)
The EU’s Corporate Sustainability Reporting Directive (CSRD) mandates increased transparency in environmental, social, and governance (ESG) disclosures, but the simplification package aims to ease the associated compliance burden. The LEI supports this aim by providing a common identifier that can link corporate sustainability reports across regulatory filings, financial disclosures, and supply chain due diligence. This alignment minimizes duplication and enhances data interoperability, making it easier for businesses to comply with ESG reporting obligations efficiently.
A central harmonized database of relevant information on each company’s degree of sustainability and its exposures to climate risks would be beneficial for supporting the development of sustainable finance and ensuring investor protection by enabling easy access to the financial and environmental, social and governance (ESG) metrics describing the company. Such data would enable supply chains to be tracked (e.g. through the LEIs of suppliers and clients of companies). This would make it possible to estimate emissions across entire supply chains. In turn, it would help monitor the use of the proceeds of green bonds, make green labels more reliable and thus lower the reputational risk of ‘greenwashing’ in green bonds markets.
European System Risk Board (ESRB)
A Strategic Opportunity to Enhance the EU's Regulatory and Digital Infrastructure
The EU’s competitiveness agenda, and its simplification pillar in particular, presents a unique opportunity for continued collaboration with the European Commission to further embed the LEI and vLEI into the EU’s regulatory and digital infrastructure.
Other key areas and opportunities for potential engagement include:
EUID and LEI mapping for interoperability: Establishing a structured mapping between the European Unique Identifier (EUID) and the LEI to enhance interoperability between national, regional, and global entity identification systems, supporting seamless integration for businesses operating within and beyond the EU.
Inclusion in EU digital identity frameworks: As discussions on this topic evolve towards including organizational identity, integrating the LEI / vLEI within the EU Digital Identity Wallet and eIDAS framework can support seamless cross-border transactions.
Adoption in public procurement: Promoting the LEI / EUID in EU public procurement processes to enhance transparency and counterparty verification.
Continued support for regulatory reporting: Supporting bodies including the European Banking Authority (EBA), the European Insurance and Occupational Pensions Authority (EIOPA), the European Central Bank (ECB), and the European Securities and Markets Authority (ESMA) in leveraging the LEI as a standardized entity identifier for regulatory reporting and KYC compliance, ensuring consistency across EU and global financial regulations.
Enabling vLEI for authentication and digital signatures: Enabling the adoption of the vLEI as a digital authentication and signature infrastructure across all regulators, enabling secure and verifiable digital reporting and transactions.
Trade and supply chain efficiency: Collaborating with EU trade and customs authorities to integrate LEI into supply chain verification and trade documentation, as done in other global jurisdictions.
Enabling a Simpler, More Efficient Europe
As the European Commission advances its regulatory simplification agenda, it is clear that the LEI and vLEI are powerful tools to enhance efficiency, reduce costs, and improve trust in digital transactions. By aligning with the EU’s Once-Only and Digital-by-default principles, they can play a central role in shaping a more streamlined, transparent, and competitive European business environment. Now is the time for policymakers, regulators, and industry stakeholders to embrace these globally recognized identifiers as enablers of a simplified and efficient Europe.
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Alexandre Kech is the CEO of the Global Legal Entity Identifier Foundation (GLEIF).
Prior to joining GLEIF, Alexandre Kech was Head of Digital Securities at the SIX Digital Exchange. As a member of the Executive Board, Alex had full executive responsibility for the Digital Securities business vertical, including sales and relationship management, product development, business design, and ecosystem expansion.
Over the past 25 years, Alex has constructed a unique career combining finance at BNY Mellon, payments/securities infrastructure and standards at SWIFT, and blockchain and digital assets at Onchain Custodian (ONC) and, most recently, Citi Ventures. As co-founder and CEO of ONC, Alex led the Singapore and Shanghai-based team that built custody and prime brokerage services for crypto and other digital assets from scratch. As Blockchain & Digital Asset director at Citi Ventures, he built a team to engage the European ecosystem on emerging use cases for blockchain technologies and digital assets.
Alex is also involved in industry and standardization initiatives. As the convenor of the ISO TC 68 / SC8 / WG3, which produced the ISO 24165 Digital Token Identifier (DTI), he is a member of the DTI Foundation Product Advisory Committee. He also recently served as co-chair of the Global Digital Finance (gdf.io) custody working group.
Alex earned a bachelor’s degree in translation and an Executive MBA from the Quantic School of Business and Technology while building Onchain Custodian, putting theory into practice in real-time.
