With mere hours away from the IDENTITY.i Virtual Summit, we grabbed Burcu Mentesoglu Tuncer from GLEIF for a quick virtual tea. She shared her thoughts on how digital acceleration in the current market is driving the need for harmonization of KYC/KYB rules and how incorporating the Legal Entity Identifier in the onboarding process can help the global banking sector save a whopping U.S.$2-4 billion annually.
CGG: With the current COVID 19 crisis, what are the key impacts you have seen on the industry?
BMT: With the current COVID 19 crisis, we see that many financial institutions have accelerated their adoption of digital services such as remote or digital onboarding. There is more demand for new actors, such as FinTech and RegTech companies, who onboard clients in a faster and more efficient way. However, there are also considerations about digitizing such services and whether there are regulatory loopholes in the digital landscape that fraudsters would use. Therefore, at the EU level and in other jurisdictions, we see that harmonization of KYC/KYB rules and mandatory collection of datasets are being discussed heavily. Regulators worldwide acknowledge that data standardization and structured data is crucial for ensuring transparency into the digital landscape, instead of digitizing existing siloed and legacy systems. That is why we believe that there is a bigger role and need for the Legal Entity Identifier (LEI) in the digital finance landscape to bring trust and transparency to entity identification and automation in financial services.
CGG: In your view, what is the greatest threat facing the market and what would be your recommendation to mitigate this?
BMT: Criminals find new loopholes to carry out financial fraud in different ways. These include concealing themselves behind non-existing legal entities, trafficking counterfeit medicines and medical equipment, offering fraudulent investment opportunities, raising funds for organizations that are either fake or non-existing at all. Banks are reporting a sharp rise in cases of fraud perpetrated during the COVID-19 pandemic, also including a dramatic increase of false positives at a time when operational risk resources are already being stretched. Therefore, for building trust and transparency in the market, there is an urgent need for standardized and consistent legal entity identification. Through adopting a data-driven approach, of which the LEI is a building block, financial institutions can spend their precious time for business development and relationship building, instead of manually checking and reconciling different datasets for identifying an entity. The use of the LEI on a standardized and consistent basis in their master data files would help financial institutions to have a single view of the customer and bring efficiencies in their processes. Incorporating the LEI alone in onboarding processes can help the global banking sector to save U.S.$2-4 billion annually. This represents a saving of between 5 percent and 10 percent of the industry's U.S.$40bn annual overall spend on the onboarding practice*.
CGG: Could you please give us a brief overview of your session at IDENTITY.i?
BMT: In my session at IDENTITY.i, I will discuss how the LEI can have a transformative power for streamlining client lifecycle management in financial institutions. Identity identification and verification is needed at every stage of the client lifecycle management such as onboarding, transacting, compliance reporting and risk monitoring. However, the LEI is often obtained at the end of onboarding phase and only for entities that are required to obtaining an LEI due to regulations. By adopting the LEI in the initial steps of client onboarding, financial institutions can streamline their client onboarding processes, increase efficiencies in their data management and ensure better customer satisfaction. I will explain "how" part in my session.
CGG: Why would you recommend delegates attend IDENTITY.i and what are you most looking forward to at the Summit?
BMT: IDENTITY.i provides an excellent opportunity for learning the latest developments and practices from distinguished experts on a rapidly changing landscape in open banking, digital identities, client onboarding and financial crime. It is particularly valuable to virtually connect and exchange ideas with experts from different jurisdictions at a time our travel opportunities are limited. I am looking forward to engaging with other speakers and delegates at the Summit.
*For more information please see GLEIF eBook: LEIs and Client Lifecycle Management in Banking - a U.S.$4 Billion Beginning.
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Joined Global Legal Entity Identifier Foundation (GLEIF) in January 2018, Burcu is Business Relations & Policy Research Manager at GLEIF. In her current capacity, she is responsible for public consultations, doing policy research in areas relevant for the LEI, managing GLEIF’s Globally Important Financial Institutions Relationship Group, certain LEI Issuer Organization accounts and engaging in various business development projects. Prior to joining GLEIF, Burcu has worked at the Ministry of Economy of Turkey as a Senior International Trade Specialist for 8 years. She has briefly served as a Consultant at the Swiss Agency for Development and Cooperation. She has obtained master’s degrees in Asian Studies from the Middle East Technical University (Turkey) and in International Affairs from the Graduate Institute, Geneva (Switzerland)
Established by the Financial Stability Board in June 2014, the Global Legal Entity Identifier Foundation (GLEIF) is a not-for-profit organization created to support the implementation and use of the Legal Entity Identifier (LEI). GLEIF is headquartered in Basel, Switzerland. GLEIF services ensure the operational integrity of the Global LEI System. GLEIF also makes available the technical infrastructure to provide, via an open data license, access to the full global LEI repository free of charge to users. GLEIF is overseen by the LEI Regulatory Oversight Committee, which is made up of representatives of public authorities from across the globe.