At the end of April 2022, the United Nations Commission on International Trade Law (UNCITRAL) released their “Draft Model Law on the Use of Cross-border Recognition of Identity Management (IdM) and Trust Services“. BAFT received a Request for Comment, with a May 27, 2022 submission deadline.
BAFT Endorses UNCITRAL’s Efforts
The need for the establishment of the IdM cuts across numerous facets of international transaction banking including trade finance, supply chain finance, payments, and areas of compliance such as Know Your Customer (KYC) and Anti-Money Laundering (AML). The process of establishing standards in the universal acceptability of the IdM is also at the core of the digitization of trade initiatives. Accordingly, BAFT fully endorses UNCITRAL’s efforts in formulation of the Draft Model Law.
The Draft Model Law confirms that the international dimension is essential to the use of identity management and trust services and more generally, of electronic services. However, the text confirms that there are two obstacles: i) technical incompatibility leading to a lack of interoperability, and ii) legal obstacles to cross boarder recognition.
BAFT Advocates for GLEIF’s LEI
To provide direction on overcoming these two obstacles, BAFT advocates for the implementation of the work already done by the Global Legal Entity Identifier Foundation (GLEIF) in the establishment of the Legal Entity Identifier (LEI). The LEI is a global ISO 17442 standard that connects key reference information and enables clear and unique identification of legal entities.
Digital transformation in global transaction banking is capable of reducing costs, improving efficiency, better regulatory control with less risk and collaborative opportunities for stakeholders in the global economy. The LEI is the only global standard for legal identity identification which is why BAFT has endorsed its inclusion in the Draft Model Law.