Circular Letter No. CC/2021/00000052

Circular Letter No. CC/2021/00000052 Sent to: Credit Institutions, Financial Companies, Shareholding Management Companies, Payment Institutions, and Electronic Money Institutions. Form. 40000375/T – 01/14 Subject: Recommendation of the European Systemic Risk Board regarding the identification of legal entities (ESRB/2020/12)

The European Systemic Risk Board (ESRB) issued, on 24 September 2020, Recommendation ESRB/2020/12 regarding the identification of legal entities (legal entity identifier, LEI)1, with the aim of promoting the systematic use of the LEI by entities involved in financial transactions.

The adoption and widespread use of a unique worldwide identifier, which allows for the unequivocal identification of entities involved in financial transactions and facilitates the task of identifying and managing financial risk by market participants and relevant authorities, is of paramount importance to strengthen the reliability of financial stability analyses, thereby contributing to the prevention and mitigation of systemic risks.

Under this Recommendation, the legislative framework of the European Union should evolve in the future towards establishing a legal framework that allows for the unique identification, via LEIs, of legal entities participating in financial transactions and makes the use of the LEI more systematic in reporting for supervisory purposes and in public disclosure.

While awaiting these legislative developments at the European Union level, with a medium-term time horizon, the relevant authorities, as defined in point (a) of paragraph 1, of Section 2 of the aforementioned Recommendation – including the national competent authorities under the European Union acts referred to in Article 1(2) of Regulation (EU) No 1093/2010 of the European Parliament and of the Council establishing a European Banking Authority2 (EBA),

1 Published in the Official Journal of the European Union on 26 November 2020: https://eur-lex.europa.eu/legal-content/PT/TXT/PDF/?uri=OJ:C:2020:403:FULL. 2 Directive 2008/48/EC of the European Parliament and of the Council of 23 April 2008 on credit agreements for consumers. Directive 2002/65/EC of the European Parliament and of the Council of 23 September 2002 concerning the distance marketing of financial services to consumers. Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions. Directive 2013/36/EU of the European Parliament and of the Council of 26 June 2013 on access to the activity of credit institutions and the prudential supervision of credit institutions and investment firms. Directive 2014/49/EU of the European Parliament and of the Council of 16 April 2014 on deposit guarantee schemes.

Form. 40000375/T – 01/14 as well as macroprudential authorities and resolution authorities – must, within the scope of their respective responsibilities, strengthen their efforts to promote the adoption of the LEI and its systematic use by entities involved in financial transactions.

In this regard, it is emphasized that, following the publication, on 29 January 2014, by the EBA, of Recommendation EBA/REC/2014/01, according to which national competent authorities must ensure that supervised institutions subject to reporting obligations to the EBA obtain a pre-LEI code3, the Bank of Portugal issued, on 14 March 2014, Circular Letter No. 3/2014/DSP to implement that Recommendation4.

The Bank of Portugal has been and will continue to adapt data collection systems to receive the LEI codes of reporting entities and those of their counterparty entities.

In this context, the Bank of Portugal, within the scope of the responsibilities entrusted to it by its Organic Law, approved by Law No. 5/98 of 31 January, and other applicable legislation, recommends to institutions that, in addition to having an LEI code, they include, whenever applicable, the LEI code in their identification when reporting information to the Bank of Portugal and indicate the LEI of any legal entity on which they report information, if it is applicable to the reporting in question and that entity has an LEI.

Directive 2014/92/EU of the European Parliament and of the Council of 23 July 2014 on the comparability of fees related to payment accounts, the change of payment accounts and access to payment accounts with basic features. Directive (EU) 2015/2366 of the European Parliament and of the Council of 25 November 2015 on payment services in the internal market. Council Regulation (EU) 1024/2013 of 15 October 2013 conferring specific tasks to the European Central Bank concerning policies relating to the prudential supervision of credit institutions. Directive (EU) 2015/849 of the European Parliament and of the Council of 20 May 2015 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing. Regulation (EU) 2015/847 of the European Parliament and of the Council of 20 May 2015 on information accompanying fund transfers.

3 https://www.eba.europa.eu/sites/default/documents/files/documents/10180/561173/b8af0dfe-f70c-48f8-b7db-65b91cb67a07/EBA-REC-2014-01%20%28Recommendation%20on%20the%20use%20of%20the%20Legal%20Entity%20Identifier%29.pdf?retry=1 4 https://www.bportugal.pt/sites/default/files/anexos/cartas-circulares/3-2014-dsp.pdf.