Australia is entering a critical period for the adoption of the Legal Entity Identifier (LEI), according to APIR Systems CEO Chris Donohoe. The LEI, initially created to boost financial market transparency, is evolving from a regulatory requirement into a fundamental component of corporate and financial activities. The LEI uniquely identifies legal entities and captures ownership structures, thus supporting risk oversight, counterparty identification, and data integrity.
APIR Systems is a utility company that facilitates the identification of entities in the investment and superannuation industry. It assigns identifiers and helps streamline processes for financial institutions. Donohoe suggests viewing the LEI not just as a regulatory tool but as a foundational identifier across various functions, including payments, onboarding, risk management, and digital identity frameworks. APIR Systems has issued over 12,000 LEIs across Australian entities and international subsidiaries, indicating both compliance with mandates and a growing appreciation of the LEI as a strategic business tool.
Regulatory alignment has been a significant catalyst, with ASIC mandating LEIs for over-the-counter derivatives since October 2024. This move aligns Australia with the EU, US, and UK. Donohoe hopes that by 2026, the LEI will transition from a regulatory checkbox to a strategic business standard, with Australia potentially leading the charge.
Broader adoption, including use by SMEs, in cross-border payments, KYC processes, and digital identity verification, could yield operational efficiencies and greater market transparency. However, challenges persist, especially regarding LEI renewal and continuous data maintenance. Addressing these challenges will require regulatory reinforcement and active industry participation to fully realize the framework’s potential.
