From Fragmented Identifiers to a Global Reference Layer: The Case for the proto-LEI
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“Simplicity is the ultimate sophistication.” Leonardo da Vinci, Italian polymath, (1452-1519 AD)
Pillar II – Identity In Global Trade – Part 3 of 3:
By Stephan Wolf, Chair of the Board of Trustees at Verifiable.Trade Foundation
July 2026
Summary
The digital economy runs on data that machines can process, but not always on identity they can trust. Organizational identity remains fragmented across thousands of local registries, tax IDs, and proprietary identifiers, each valid within its own domain but disconnected from the rest. The LEI proved that a universal identifier was possible, yet coverage remains partial.
This third installment in the Pillar II series introduces the proto-LEI: not a competing identifier, but a global reference layer that connects existing authoritative sources, closes the coverage gap, and gives every organization, not just the regulated few, a consistent way to be identified across borders, systems, and AI-driven commerce.
The Missing Layer of the Digital Economy
The digital economy has a trust problem disguised as a data problem. Every day, billions of records move across payment systems, supply chains, procurement platforms, customs environments, banking networks, accounting applications, tax systems, sustainability reporting frameworks, and digital trade platforms. The data itself is increasingly structured and digital. Yet a surprisingly basic question remains difficult to answer consistently: who is the organization behind the data?
For decades, organizational identity has been fragmented across a patchwork of local identifiers. Company registration numbers, tax IDs, VAT numbers, customs registrations, banking references, procurement identifiers, platform-specific account credentials, and industry-specific codes were each developed to address identification requirements within specific jurisdictions, industries, or operational domains. Individually, they work reasonably well. Collectively, they create fragmentation.
As commerce becomes increasingly digital, this fragmentation is becoming both a strategic and operational constraint. Machines can process documents. Artificial intelligence can analyze contracts. Payment systems can move money in seconds. However, none of these capabilities can operate reliably if they cannot determine whether different identifiers refer to the same legal entity. Organizational identity has become the missing layer of digital transformation.
The world does not need another isolated identity scheme competing for attention. It needs a bridge between existing systems. The emergence of the proto-LEI[1] concept represents an opportunity to rethink the problem. Rather than creating yet another identifier, the proto-LEI points toward a different objective: the creation of a global reference layer capable of connecting fragmented identifiers while remaining anchored to authoritative sources of legal existence. All of this is based on open data principles and barrier free access.
Why Local Identifiers Are No Longer Enough
The importance of authoritative identity cannot be overstated. Organizations do not come into existence because a bank creates a customer record. They do not become legal entities because a platform issues a user account. They do not acquire legal standing because a software vendor assigns a unique identifier.
Legal existence originates elsewhere. It originates in authoritative sources such as business registers, company registries, tax authorities, courts, and other public institutions empowered by law to create and maintain records of legal entities.
Yet this alone is not sufficient for the digital economy. The existence of an authoritative source does not automatically create a reliable mechanism for identifying entities across jurisdictions, verifying their current status, or referencing them consistently in digital transactions. As OpenCorporates[2] has argued, the world relies on thousands of local registries, each operating within its own legal framework, identifier system, and data model. The result is fragmentation rather than interoperability. A company may be perfectly recognizable within its home jurisdiction, yet difficult to identify unambiguously outside of it.
Furthermore, authoritative records are often represented through documents, certificates, or extracts that are merely derivatives of the underlying register. In a digital environment, documents can be copied, altered, fabricated, or generated by AI. What ultimately matters is not the document itself, but the ability to verify claims against the authoritative source and the audit trail behind it.
This creates a fundamental challenge for global digital commerce. Legal entities may be created locally, but trade, finance, compliance, and supply chains operate globally. Without a common reference layer that can bridge authoritative sources across jurisdictions, organizations are forced to maintain costly and potentially error prone mappings between local identifiers, proprietary identifiers, and regulatory identifiers. The consequence is duplication, ambiguity, onboarding friction, and increased risk. Fraudsters will finds ways to exploit unnecessary complexity to their gain.
The question, therefore, is not whether authoritative sources exist. The question is how information originating from those authoritative sources can be transformed into a globally interoperable identity infrastructure that preserves legal authority while enabling digital trust at scale.
Historically, business registers were designed for human consumption. They were not designed machine readable, as the foundation for global machine-to-machine commerce. Their identifiers are typically unique only within a jurisdiction. Formats vary. Governance models vary. Data quality varies. Update frequencies vary. Some identifiers are reused. Others change following legal events. These characteristics create significant interoperability challenges when organizations interact internationally.
Consider a Japanese manufacturer selling goods to a Finnish importer. Both organizations are perfectly legitimate and correctly registered within their respective jurisdictions. However, the Japanese seller is identified through a domestic company registration system unfamiliar to the Finnish buyer, while the Finnish company uses a different identifier issued under an entirely different legal and administrative framework. Neither identifier carries inherent meaning outside its home jurisdiction. Before trade can begin, banks, logistics providers, insurers, customs authorities, and business partners must determine whether they are referring to the same legal entities, whether those entities are still active, and how they relate to other identifiers appearing in contracts, invoices, financing requests, and regulatory filings. An avalanche of information requests can hit exporters and importers, creating efforts and eating into trade margins.
Language adds a further layer of complexity. Company names may be recorded in Japanese script, Finnish, or local transliterations. Addresses are expressed according to different national conventions. Legal forms, corporate statuses, and registry terminology often have no direct equivalents across jurisdictions. Even when authoritative data is publicly available, understanding and interpreting it correctly may require language skills, local knowledge, and specialized expertise. What appears obvious within one jurisdiction can become ambiguous or difficult to verify when viewed from another.
Today, this process is often handled through manual checks, translations, proprietary reference databases, intermediary services, and repeated onboarding procedures. The problem is not that authoritative information is unavailable. The problem is that authoritative information remains fragmented across thousands of local systems that were never designed to interoperate globally. As a result, every cross-border transaction requires participants to bridge differences in identifiers, languages, legal frameworks, and data structures before trust can be established.
What is missing is not another local identifier. What is missing is a globally interoperable reference layer that allows a Japanese seller, a Finnish buyer, and every participant in between to reference the same legal entities with certainty, regardless of which authoritative source originally created their legal existence. Such a reference layer would not replace national business registers. Rather, it would connect them, providing a common digital language for legal entities and enabling trust, interoperability, and automation across borders while preserving the authority of the underlying sources.
The LEI Changed the Conversation
The Legal Entity Identifier emerged after the global financial crisis as one of the most ambitious attempts to solve this problem. Based on ISO 17442, the LEI introduced a globally unique identifier governed through an international framework. It demonstrated that a universal organizational identifier was technically feasible and operationally valuable.
The LEI's contribution should not be underestimated. It introduced a common language for identifying legal entities across regulatory reporting environments. It established governance mechanisms. It created quality standards. It linked identifiers to reference data. Most importantly, it proved that global coordination around organizational identity was possible.
Yet the LEI also revealed a structural challenge. Adoption was primarily driven through regulation and entity-initiated registration. As a result, coverage expanded steadily but not universally. Millions of entities acquired LEIs, while hundreds of millions remained outside the system. The consequence is a familiar network-effect problem. A universal identifier creates maximum value when it covers nearly everyone. Partial coverage limits its usefulness in many operational environments.
The challenge facing the organizational identity community is therefore not whether the LEI was the right idea. The challenge is how the underlying vision can achieve global scale.
Beyond the LEI: Introducing the proto-LEI
This is where the proto-LEI becomes strategically significant. The proto-LEI concept starts from a simple observation. The overwhelming majority of legal entities already exist within authoritative registries. It is not the absence of source data that causes an obstacle. The absence of a globally consistent reference framework connecting that data poses the problem.
Instead of relying exclusively on organizations to request identifiers, proto-LEIs can be assigned systematically using authoritative registry information. Every organization can therefore be represented within a common identity framework even before obtaining a formal LEI.
Example:
A small exporter in Thailand registers its company locally. A proto-LEI is automatically assigned based on the official business register. The company begins selling natural rubber internationally. Its invoices reference the proto-LEI. The buyer in Switzerland can immediately discover
official company registration
current legal status
ownership
Later the exporter opens a relationship with an international bank. The bank requests a full LEI. The existing proto-LEI simply upgrades with the global LEI system.
Nothing else changes. All previous references remain intact.
Open infrastructure creating network effects, driving adoption
One of the defining characteristics of the proto-LEI initiative is its commitment to open, barrier-free access. Both identifier assignment and the associated reference data are intended to be freely available. Organizations should not require commercial licenses simply to determine who their counterparties are. Removing these barriers fundamentally changes adoption dynamics. Software vendors can embed organizational identity directly into their products. Governments can reference the identifiers without procurement hurdles. SMEs gain access to the same identity infrastructure as multinational corporations. Researchers, AI developers, financial institutions and public authorities can innovate on a common foundation without creating new licensing dependencies. In this respect, the proto-LEI follows the same philosophy that enabled the success of the Internet itself: open infrastructure creates network effects, and network effects drive adoption.
Proto-LEI complementing the LEI
Critically, the proto-LEI does not seek to replace the LEI. It complements it. Official LEIs remain official LEIs. Regulatory mandates remain unchanged. Governance structures remain intact. The proto-LEI simply extends coverage to the broader population of organizations that currently operate outside the LEI ecosystem. In fact, the proto-LEI offers an upgrade path to fully endorsed LEIs.
Importantly, the proto-LEI does not introduce a competing data model. It follows the established LEI reference data structure, enabling existing software, APIs, compliance systems and analytical tools to operate with minimal modification. Compatibility rather than disruption is one of the initiative's principal design objectives.
This distinction is essential because the objective is not identifier competition. The objective is ecosystem expansion. The success of the approach should be measured not by how many identifiers are created, but by how effectively organizational identity becomes interoperable across the global economy.
A Global Reference Layer
The deeper value of the proto-LEI lies in its role as a reference layer. Most discussions about identity focus on identifiers themselves. Yet identifiers are merely tools. What organizations truly need is a stable reference point capable of linking multiple identifiers to a single organizational reality.
From an information systems perspective, the proto-LEI can be understood as the global primary key for organizational identity. Every modern database relies on a unique identifier that allows information from different tables to be connected consistently. The global economy, however, has evolved without such a common organizational reference. Payments, tax systems, customs authorities, procurement platforms, banks, logistics providers, and software applications have each created their own identifiers, forcing organizations to maintain complex mappings between them. A globally recognized reference identifier does not replace these operational identifiers. Rather, it provides the common key through which they can all be connected to the same legal entity.
Building a trusted reference layer also requires continuous de-duplication, quality assurance and reconciliation across authoritative sources. Organizations may appear under different names, languages or historical registrations. Maintaining uniqueness therefore becomes an ongoing governance process rather than a one-time assignment exercise. This continuous reconciliation is essential for preserving trust in the reference layer.
Consider a typical multinational supplier. It possesses a company registration number in its home jurisdiction. It may have multiple tax identifiers, customs registrations, VAT numbers, banking references, procurement IDs, logistics identifiers, and digital certificates. None of these identifiers is inherently wrong. Each serves a valid operational purpose.
The challenge arises when systems attempt to connect information originating from different domains. Without a common reference layer, organizations must continuously reconcile records, maintain mappings, and manage duplicates. Significant resources are consumed simply determining whether two records describe the same organization.
A proto-LEI-based reference layer changes this equation without disrupting existing infrastructures. Company registration numbers, tax identifiers, VAT numbers, banking references, procurement IDs, customs registrations, and other operational identifiers all remain in place, continuing to serve their specific business purposes. What changes is that they can all be linked through a common organizational reference point. Identity is no longer managed as a collection of disconnected silos but as an interoperable network built around a single authoritative reference.
The implications for digital trade are profound. Global trade continues to depend on fragmented ecosystems. Buyers, sellers, banks, logistics providers, customs authorities, insurers, ports, regulators, and technology providers maintain independent identity frameworks. Considerable effort is invested in onboarding, verification, KYC processes, sanctions screening, counterparty risk assessment, and compliance reviews. Many of these activities ultimately attempt to answer the same question: who is the organization with which we are interacting?
The cost is enormous. Businesses repeatedly verify the same counterparties. Information is duplicated across systems. Updates propagate slowly. Errors accumulate. Fraudsters exploit inconsistencies. Sourcing the data from commercial data providers is costly and untransparent.
A globally accessible reference layer anchored in authoritative sources would not eliminate all trust challenges. However, it would establish a common foundation upon which trust services could operate. Counterparty verification becomes easier. Data integration becomes simpler. Compliance processes become more efficient. Automation becomes more reliable. And the value proposition extends beyond efficiency. It directly affects risk management and trust.
Identity Is More Than an Identifier
The discussion becomes even more important in the context of digital identity and verifiable credentials. Around the world, governments and private-sector initiatives are investing heavily in digital identity infrastructure. Yet many initiatives focus primarily on natural persons.
Organizations face a different challenge. An organization is not a static object. It possesses ownership structures, governance arrangements, delegated authorities, subsidiaries, branches, contractual relationships, and changing legal status. Organizational identity is therefore inherently dynamic.
Organizational identity is not limited to identifying a single legal entity. Business decisions frequently depend on understanding ownership structures, ultimate parents, subsidiaries and control relationships. A global reference layer therefore becomes substantially more valuable when it connects not only entities themselves but also the relationships between them. This enables better sanctions screening, supply chain transparency, beneficial ownership analysis, risk assessment, and regulatory reporting.
The Verifiable.Trade identity series argues that identity should be understood as a living network of relationships rather than a static database record. This perspective aligns naturally with the proto-LEI vision. A reference layer provides a stable anchor for organizational identity while allowing credentials, authorities, and relationships to evolve over time.
In such a model, the proto-LEI becomes more than an identifier. It becomes a globally recognized organizational reference point to which credentials, attestations, authorizations, and trust relationships can be attached.
A stable organizational reference also enables the portability of trust. Once an organization can be identified consistently across digital ecosystems, credentials, authorizations, certifications, compliance information, and reputation no longer need to be recreated for every new business relationship. Instead, they can travel with the organization while remaining independently verifiable against authoritative sources. This reduces onboarding effort, avoids repeated due diligence, and enables trusted information to be reused across payments, trade, finance, procurement, and regulatory processes.
Why AI Makes Identity Infrastructure Essential
Artificial intelligence further increases the urgency of the problem. Human beings can often resolve ambiguity by applying experience and context. Machines cannot. AI systems require persistent, unambiguous references that are linked to authoritative evidence of legal existence. Without such references, they cannot reliably distinguish between organizations with similar names, identify entities that have changed names or legal form, or determine whether different records refer to the same legal entity. Organizational identity therefore becomes a prerequisite for trustworthy machine reasoning, not merely a convenience for data management.
The future will involve increasing numbers of software agents acting on behalf of organizations. These agents will negotiate contracts, verify credentials, assess risks, trigger payments, monitor compliance obligations, and coordinate supply chain events. None of this can scale effectively if organizational identity remains fragmented.
A global reference layer creates the foundation for machine-readable trust. It allows systems to independently determine whether records refer to the same organization. It enables portability of organizational reputation and credentials. It supports interoperability without requiring centralized ownership of data.
In this sense, organizational identity becomes infrastructure. Just as internet protocols enabled the global exchange of information, organizational reference layers can enable the global exchange of trusted business data.
Federation Instead of Centralization
Importantly, the proto-LEI vision does not imply centralization. One of the most common misunderstandings in identity discussions is the assumption that interoperability requires a central database or distributed ledger.
The internet demonstrates otherwise. DNS, IP addressing, and internet standards created interoperability without requiring all content to reside in a single location. Similarly, a global organizational reference layer can connect distributed authoritative sources without replacing them.
Business registers continue performing their legal function. Tax authorities continue performing theirs. Industry registries continue operating independently. The reference layer simply creates a common framework through which these sources can be understood consistently.
The reference layer is intended to operate as a federated ecosystem rather than a centralized service. Multiple organizations may contribute authoritative data, perform quality assurance, maintain mappings or provide lookup services. Governance therefore resembles other successful Internet infrastructures in which common standards enable interoperability while operational responsibilities remain distributed.
This characteristic makes the proto-LEI particularly attractive for a world increasingly concerned with sovereignty, privacy, resilience, and decentralization. Interoperability does not require uniformity. It requires coordination around references.
What This Means in Practice
The case for a global reference layer is strategic. Adoption, however, starts with function-specific decisions. What follows is what changes for four practitioner groups that deal with fragmented identity every day.
KYC/S
Query the proto-LEI registry during onboarding to resolve which local identifiers, such as VAT numbers or company registration numbers, belong to the same legal entity before running separate checks on each. Use the proto-LEI as the reconciliation key across sanctions lists, PEP screening, and beneficial ownership checks. Fragmented local identifiers currently produce false negatives when the same entity appears differently across sources.
CRM
Introduce the proto-LEI as a stable foreign key against which counterparty records are matched, replacing name-based fuzzy matching for deduplicating company records across regions. Flag records without a resolvable proto-LEI as unverified until confirmed against the registry.
IAM
Bind delegated signing authorities, API access grants, and organizational credentials to the proto-LEI rather than to a platform-specific account ID, so access rights survive a platform migration and remain independently verifiable. Use the proto-LEI to scope machine-to-machine authentication, so an AI agent’s authority can be traced back to a verifiable legal entity.
Data Management
Establish the proto-LEI as the master data key in MDM pipelines for organizational records, running deduplication against it instead of building custom fuzzy-matching logic per source system. Set a reconciliation cadence, for example quarterly, to re-check registry status, since registry data changes and static snapshots decay.
A practical starting point: check whether your top counterparties already hold a proto-LEI or LEI, then pilot the reference layer in a single process area before scaling further.
From Identifiers to Infrastructure
The path forward should therefore focus on practical adoption rather than theoretical perfection. The proto-LEI provides precisely such a bridge. It preserves investments in existing infrastructures. It respects authoritative sources. It aligns with international standards. It enables gradual adoption. Most importantly, it addresses the coverage problem that has historically limited the emergence of a truly universal organizational identity framework.
Success should not be measured solely by the number of proto-LEIs assigned. Success should be measured by the emergence of a common organizational reference language used across payments, trade, supply chains, compliance, sustainability reporting, digital credentials, and AI-driven commerce.
The ultimate objective is straightforward. Any system, anywhere in the world, should be able to identify an organization consistently and connect that identity back to authoritative evidence of legal existence.
The organizational identity debate is entering a new phase. Earlier discussions focused on identifiers. More recent discussions focus on trust. The next phase will focus on interoperability.
A global economy cannot operate efficiently when every ecosystem maintains its own identity silo. Nor can it rely on a single centralized registry. The solution lies between these extremes: authoritative local sources combined with a globally interoperable reference layer.
The proto-LEI offers a compelling path toward that future. It recognizes that organizational identity begins with authoritative registers. It acknowledges the value of the LEI model. It addresses the challenge of coverage. It enables interoperability without forcing replacement of existing systems.
The Internet did not transform the world because everyone agreed on a single website or stored their information in one place. It succeeded because everyone agreed on common protocols and shared reference mechanisms that allowed independently operated systems to communicate with one another. Organizational identity requires the same approach. Business registers will remain national. Governance will remain distributed. Data will remain where it belongs. What must become global is the ability to reference organizations consistently across jurisdictions and digital ecosystems. From that perspective, the proto-LEI is far more than another identifier. It is a foundational component of the shared reference layer upon which the next generation of trusted digital commerce can be built.
