Legal consequences and changes for LEI in Australia, UK, China

Australia sees its first lawsuit for failing to comply with legal entity verification regulations while the UK mulls more LEI legislation. Meanwhile Liminal issues list of top business verification companies.

Australia has launched its first legal action against a company director for failing to sign up for the country’s director ID scheme.

The compulsory program was launched in 2022 in order to crack down on fraud and mandates that all company directors, including small businesses, verify their identity with the Australian Tax Office (ATO) through myGovID and receive a unique 15-digit identifier.

The unnamed director is due to appear at a court in Sydney and will face a fine of up to AU$ 13,320 (US$8,636). And they may not be the only ones: At the end of 2023, around 200,000 company directors have not yet signed up for the scheme despite the Australia Securities and Investment Commission (ASIC) launching an investigation into the matter in September, according to trade publication Innovation Australia.

The Australian Corporations Act includes fines of up to AUD1.38 million (US$24.6 million) or a year of imprisonment for misrepresenting or having multiple IDs.

More legislation for the UK?

The UK is following a similar path. The country is currently rolling out the Economic Crime and Corporate Transparency Act 2023 (ECCTA) which mandates identity verification for company directors, members of limited liability partnerships and other individuals with control over businesses.

The legislation aims to make it harder to register fictitious directors or beneficial orders but critics have highlighted that the identity verification requirements could be burdensome. Secondary legislation could be introduced to improve the process, including a risk-based approach towards identity verification, an analysis from Lewis Silkin law firm notes.

The top dogs of business verification

Experian, Sumsub, IDology and Trulioo are among the top 14 vendors for comprehensive business verification, according to a new list compiled by market intelligence company Liminal.

The annual ranking, titled 2024 Link Index for Business & Entity Verification (BEV), includes top providers working on verifying businesses and entities within the financial industry. The analysis divides the market into two segments: specialized point solution providers and comprehensive KYC and fraud solution companies with business and legal entity verification (BEV) in their offerings.

Other names on the list include Caf, ComplyAdvantage, Detected, Dun & Bradstreet, Kyckr, LexisNexis Risk Solutions, LSEG (London Stock Exchange Group), Middesk, Parallel Markets, and Moody’s Analytics.

A move to promote LEI in China

Hong Kong-based digital identity and digital certificate provider Certizen Technology received approval as a Validation Agent in the Global Legal Entity Identifier (LEI) System.

The move will streamline the issuing of Legal Entity Identifiers (LEI) in support of the People’s Bank of China’s aim to implement the system in China. LEI is a 20-character alpha-numeric code used to identify parties to financial transactions worldwide.

The company received its approval with support from the Beijing National Institute of Financial Standardization (NIFS), the Global Legal Entity Identifier Foundation (GLEIF) says in a press release.

Article Topics

Australia  |  China  |  identity verification  |  KYB  |  KYC  |  Legal Entity Identifier (LEI)  |  Liminal  |  UK