There are over 116 regulations globally mandating the use of an LEI for various reasons. The beneficiary LEI code is required for increasing transparency around legal entities and the persons/entities entitled to receiving the proceeds or assets. This removes confusion around who is who, and which entity of which organisation is the beneficiary. 

For example, the beneficiary of a Trust may be another organisation, but this organisation might have more than 5 legal entities. This is why LEI Level 2 Data is so valuable.

In order to enhance transparency in the global markets that span multiple jurisdictions, the LEI is used as it is unique, global, freely accessible, maintains up to date data due to LEI renewals and has a strict quality control vetting system implemented by the GLEIF. 

For example, in India the LEI is mandated for use in transactions involving 50 Crore or more (Rupees). This was issued in an RBI LEI Circular recently. 

"All single payment transactions of ₹50 crore and above undertaken by entities (non-individuals) should include remitter and beneficiary LEI information. This is applicable to transactions undertaken through the NEFT and RTGS payment systems.

In case of RTGS, both customer payment and inter-bank transactions, meeting the above criterion, should include LEI information."

- The Reserve Bank of India (RBI) Circular on the LEI

By requesting the LEI of the payee (remitter) and also the counterparty (beneficiary) who is receipt of the funds the RBI now maintain oversight on who is sending money to whom allowing for instant and reliable reconciliation of the movement of large sums of money within its jurisdiction. This has a huge influence on AML (Anti-Money Laundering) and the fight against illicit activities within the country. This approach is also recommended by the European Central Bank for EU countries to adopt a similar stance on the fight against financial crimes.

The distinction should be made between individuals sending moeny to one another, and legal entities sending money. The LEI focuses mainly on legal entities, so it shines a light on corporate financial activities, rather than private, natural persons. 

The RBI go on to say "The remitting bank should ensure that LEI information for both sender and beneficiary is captured. However, both the remitting and the beneficiary banks should maintain records of all payment transactions of ₹50 crore and above."

ESMA (The European Securities Monetary Authority) the watchdog and regulator over corporate AML within the European Union mandate the use of LEIs under the EMIR regulation  (European Markets Infrastructure Regulation). Under EMIR, ESMA state that counterparties to derivatives contracts, beneficiaries, as well as brokers and clearing memebers are all required to have a Legal Entity Identifier registered on the global LEI index. 

Which regulations require a beneficiary LEI to be present:

• EMIR (European Markets Infrastructure Regulation)
• SFTR (Securities Financing Transacting Regulation)
• Solvency II (Pension Funds & Insurance Companies)
• RBI Reserve Bank of India LEI Requirements
• Financial Transparency Act, USA
• Find a list of global LEI regulations here