Digital identity verification with verifiable LEI
vLEI stands for “Verifiable Legal Entity Identifier.” It is a digital and cryptographic advancement of the traditional Legal Entity Identifier (LEI). vLEI enables decentralized and automated validation of an organization’s identity. It also supports the binding of official roles within an organization to the organization’s LEI. This allows for secure identification in everything from financial transactions to official communication.
As companies, authorities, and consumers increasingly rely on digital platforms for everything from financial transactions to communication, the need for a reliable system for identity verification has become more apparent.
The development of LEI to vLEI
The Legal Entity Identifier (LEI) emerged as a response to the financial crisis of 2007-2008 and aims to enable a global, clear, and unique identifier for legal entities participating in financial transactions. The LEI system has contributed to increased transparency in the financial sector, but the rapid digital transformation calls for further development.
With the introduction of the Verifiable Legal Entity Identifier (vLEI), a digital counterpart to the traditional LEI system, the need for identification in the modern digital ecosystem is met. vLEI not only retains the unique identification properties of the LEI but also introduces verifiability. It ensures that the digital identity presented is both authentic and unchanged.
The global significance of trust and verification
Trust is the cornerstone of all transactions, whether they occur in the physical or digital world. In the online world, where face-to-face meetings are replaced by interactions via screens, creating trust can be challenging. Tools for verifying digital identities, such as vLEI, play a crucial role in bridging this trust gap.
By providing a standardized, globally recognized, and verifiable digital identity, vLEI ensures that organizations can confidently participate in digital transactions, knowing that the individuals and legal entities they interact with are authentic.
About the vLEI Concept
The digital world is vast and constantly changing. Organizations and other legal entities are continually seeking ways to establish their digital presence securely. Against this backdrop, vLEI emerges as an ideal foundation on which to establish a chain of trust for digital identities and as a standardized method for verifying them.
What is a vLEI?
The Verifiable Legal Entity Identifier (vLEI) is an advanced version of the traditional LEI code, but designed to function in the digital world. While LEI enables unique identification for entities, vLEI goes a step further by ensuring that this identification is verifiable. Essentially, vLEI is a type of digital passport for organizations, containing vital identity information in a format that can be electronically verified for authenticity and correctness.
Technical Foundation of vLEI: Self-Sovereign Identity (SSI) & Verifiable Credentials (VC)
At the core of the vLEI system is the concept of Self-Sovereign Identity (SSI). Unlike traditional identity systems where an entity’s identity is managed by a third party, SSI gives entities control over their own digital identities. This means that organizations can own, control, and share their identity data without relying on a centralized authority.
Verifiable Credentials (VC), or verifiable references, are another cornerstone of the vLEI system. VCs are digital certificates confirming that an entity’s information is accurate, issued by a trusted authority. In the vLEI system, these credentials affirm the authenticity of an organization’s digital identity. It ensures that the data presented is both authentic and unchanged.
Together, SSI and VC form the technical foundation for vLEI, enabling a system where digital identities are not only unique but also verifiable. This fosters trust in online interactions.
Read more about Self-Sovereign Identity (SSI).
GLEIF’s Role and Significance in the vLEI Ecosystem
The Global Legal Entity Identifier Foundation (GLEIF) is a central part in the world of digital identity verification. As the driving force behind the vLEI initiative, GLEIF has a multifaceted role and ensures the system’s integrity, reliability, and global acceptance.
On GLEIF’s Initiative
The Financial Stability Board, the council for financial stability, founded GLEIF in 2014. Since then, GLEIF’s mission has been to support the implementation and use of the Legal Entity Identifier, LEI. GLEIF quickly recognized the digital shift and the accompanying need for verifiable digital identities and promoted the development of LEI to vLEI. GLEIF’s initiatives have been crucial in establishing the standards, protocols, and frameworks that underpin the vLEI system.
GLEIF as RoT, Root of Trust, QVIs, Legal and Physical Persons
In the vLEI ecosystem, trust is of utmost importance. GLEIF positions itself as RoT, Root of Trust, ensuring that every issued vLEI follows stringent global standards. By maintaining a centralized, updated database of all issued vLEIs and their associated data, GLEIF ensures transparency and traceability. This centralized approach ensures that entities anywhere in the world can confidently verify the authenticity of a vLEI.
QVIs as validators and issuers: QVIs take on the role of validating the authenticity and accuracy of the data provided by organizations seeking vLEIs. They act as a bridge between GLEIF and the organizations, ensuring data integrity. They issue vLEIs, OOR vLEI references, and ECR vLEI references.
Organizations as vLEI holders: After validation by QVIs, organizations receive their unique vLEIs. These vLEIs act as their verifiable digital identities in the global market.
Physical persons representing legal entities: With the vLEI system, individuals representing organizations can be linked to the organization’s vLEI. This ensures that when a person acts on behalf of an organization, their authority and connection to the organization can be verified electronically.
Promotes Global Cooperation and Standardization
GLEIF’s role is not limited to just issuing and managing vLEIs. GLEIF actively collaborates with governments, regulatory bodies, and industry leaders worldwide to promote the adoption of vLEI. By supporting a global dialogue and ensuring that the vLEI system conforms to international standards, GLEIF plays a crucial role in ensuring the system’s universal acceptance and application.
Read more about GLEIF at www.gleif.org.
Practical Applications of vLEI
Although vLEI is based on complex technology and global standards, it gives concrete benefits and straightforward applications across various fields. The ability of vLEI to provide a verifiable digital identity for organizations opens doors to many practical applications, streamlined processes, and increased trust in digital interactions.
Signing and Verifying Documents
In an era where digital documentation is becoming more common, vLEI offers a reliable method for organizations to sign and verify documents electronically. Whether it’s contracts, agreements, or official reports, vLEI ensures that the entity or person signing a document is who they claim to be, and that the content remains unchanged.
KYC/KYB: Streamlining Identity Verification
Both Know Your Customer (KYC) and Know Your Business (KYB) are crucial processes for banks, financial institutions, and other sectors to reduce risk. vLEI simplifies these processes by providing a standardized, verifiable digital identity, reducing the time and resources required for identity verification.
Delegation and Governance of Representation
Organizations often need to delegate authorities or represent themselves in various roles. vLEI, with its associated credentials such as Official Organisation Role (OOR) and Engagement Context Role (ECR), provides a clear, verifiable method to establish and validate such delegations and representations.
Automation of Trusted Business Transactions
vLEI paves the way for the automation of business transactions without compromising trust. Whether it’s interactions in the supply chain, financial exchanges, or collaborations between organizations, vLEI ensures that all involved entities are authentic, promoting a seamless and reliable automation environment.
Enhancing Global Business Interactions
In a globalized business landscape, organizations often interact with entities from different parts of the world. With its universal standard and global acceptance, vLEI ensures that these interactions are based on mutual trust, regardless of geographical boundaries.
Read more about the potential applications of vLEI here or on GLEIF’s website.
More about vLEI’s Chain of Trust
The effectiveness of the vLEI system depends on its ability to create trust in digital interactions. The foundation of this trust is the vLEI’s chain of trust, a robust framework that ensures the authenticity and reliability of each vLEI issued. An overview of the chain of trust provides insights into the complex mechanisms that protect the vLEI ecosystem.
vLEI’s Framework for Trust and Ensuring Credibility
Each vLEI operates within a defined framework of trust. This framework outlines the standards, protocols, and established practices that must be followed when issuing and managing vLEIs. By ensuring that each vLEI complies with this framework, the system guarantees the credibility and reliability of the digital identities it represents.
The Role of the KERI Protocol in vLEI’s Interoperability
The Key Event Receipt Infrastructure (KERI) protocol plays a crucial role in the vLEI system. KERI ensures that vLEIs remain interoperable across different platforms and systems, facilitating seamless global interactions. By providing a standardized approach to identity verification, KERI ensures that vLEIs remain consistent and verifiable, regardless of where or how they are used.
GLEIF as the Central Pillar of Trust
As previously mentioned, GLEIF stands as the central pillar of trust in the vLEI ecosystem. By providing a centralized database of all issued vLEIs and ensuring compliance with the trust framework, GLEIF establishes itself as the ultimate authority in the vLEI system. This centralization ensures transparency, traceability, and trust in every issued vLEI.
Decentralized Verification and the Strength of Distributed Ledgers
While GLEIF centralizes the issuance and management of vLEIs, the verification process is inherently decentralized. By leveraging the potential of distributed ledger technology, the vLEI system enables entities anywhere in the world to independently verify the authenticity of a vLEI. This decentralized approach enhances the robustness and reliability of the system.
Read more about the Chain of Trust.
vLEI References: Beyond the Organization
While the primary function of vLEI is to provide a verifiable digital identity for organizations, its scope extends beyond just the organizational entity. The vLEI system encompasses references that link individuals to organizations, offering an integrated approach for the verification of digital identities.
Official Organisation Role (OOR) Credential
The OOR Credential is a central component of the vLEI system. It is used to link individuals to organizations in specific official roles. Whether it’s a CEO or any other official role, the OOR Credential provides a verifiable digital confirmation of an individual’s association with an organization. It ensures that a person’s authority can be electronically verified when they represent an organization or make decisions on its behalf. This enables trust in digital interactions.
Engagement Context Role (ECR) Credential
While the OOR Credential focuses on official roles, the ECR Credential offers more flexible applications. Organizations can define custom roles based on specific contexts or engagements. For example, roles such as “customer to”, “supplier to”, or “partner with” can be created using the ECR Credential. This flexibility allows organizations to tailor their digital identities based on specific interactions, ensuring clarity and trust in various business scenarios.
Increased Security and Reduced Fraud
By providing a clear, verifiable link between individuals and organizations, vLEI credentials significantly enhance security in digital interactions. Whether it involves signing agreements, making financial decisions, or establishing partnerships, the risk of fraud and unauthorized actions is reduced if the authority and authenticity of individuals can be verified.
Streamlining Business Processes
With vLEI’s clear definitions and verifiability, various business processes can be streamlined. The vLEI system offers efficiency and reliability from onboarding new partners to automating transactions based on predefined roles. Organizations can confidently engage in digital interactions, knowing that the entities and individuals they interact with are authentic and authorized.
Read more about vLEI references.
The Future of vLEI
While vLEI is revolutionary in its current form, it is poised for further development and expansion. As the digital sphere continues to grow and evolve, the vLEI system will play an even more critical role in shaping the future of digital identity verification and global business interactions.
Upcoming Developments and Innovations
The vLEI system is constantly evolving with new features, protocols, and integrations on the horizon. Collaborative efforts between GLEIF, technology providers, and industry leaders are driving innovations that will make vLEI even more robust, versatile, and user-friendly.
Global Impact and Potential of vLEI
As more organizations and entities recognize the value of vLEI, its usage is set to soar. The potential for vLEI to become a global standard for digital identity verification is enormous. From financial institutions to supply chains, and from governments to small and medium-sized enterprises, the universal applicability of vLEI promises a future where digital interactions are seamless, reliable, and efficient.
Integration with Emerging Technologies
The vLEI system is not isolated but is designed to integrate with emerging technologies. Whether it involves integration with blockchain for enhanced security and decentralization, or with artificial intelligence for smarter verification processes, vLEI is set to remain at the forefront of technological advancement.
Promoting a More Inclusive Digital Ecosystem
One of the key visions for the future of vLEI is to promote inclusivity. By providing a standardized, affordable, and accessible way to verify digital identities, vLEI aims to ensure that even smaller entities and organizations from developing regions can participate in the global digital economy.