The National Committee for Macroprudential Oversight (NCMO) adopted, on June 3, 2021, the Recommendation no. R/5/2021 for the implementation of the ESRB/2020/12 Recommendation on identifying legal entities. By the aforementioned, NCMO recommends the National Bank of Romania, to require or, where applicable, continue to require, all legal entities involved in financial transactions under its supervisory remit to have an LEI code, to the extent permitted by the law and paying due regard to the principle of proportionality.
For the purposes of the NCMO Recommendation no. R/5/2021, a LEI code refers to the legal entity identifier and means a 20-character reference code, according to the ISO standard 17442 developed by the International Organization for Standardization. The LEI code allows for the unique identification of entities that engage in financial transactions and provides access to information about their ownership structure.
The LEI code can be a very useful tool for authorities in assessing systemic risk and contagion phenomena, as well as in the process of supervision, prevention and combating money laundering, considering the informational benefits that may result from the integration of existing databases or the development of new databases.
Not only public authorities can benefit from the advantages of adopting the LEI code, but also financial institutions, non-financial companies etc. Thus, these will be able to use new data sources, which allow a more accurate capture of the connection and interdependence relations between the entities with which they have direct contractual relations or which they intend to evaluate for this purpose.
In addition, the use of the LEI code could help financial institutions in the process of client on-boarding (especially for Know-Your-Customer measures related to the legislation on preventing money laundering and combating terrorism financing), as well as over the course of the lifecycle of the business relationship.
Following the NCMO Recommendation no. R/5/2021, the National Bank of Romania assessed the requirements provided by the national legislative framework applicable to the institutions under its supervisory remit, as well as the impact of the recommendation on these institutions and on the competencies of the central bank.
Considering the benefits related to ensuring financial stability, monitoring systemic risks and contagion phenomena, preventing and combating money laundering, which can help strengthen the prerequisites for maintaining a healthy and robust financial-banking system, the National Bank of Romania recommends institutions under its supervisory remit1 to have an LEI code.
In the case of credit institutions set up in the form of credit cooperative organizations, the recommendation is addressed in particular to the central body.