Following the Money: How Legal Entity Identifiers Illuminate Fraud Trails
By Dr. Kimmo Soramäki (Founder & CEO)
In an era where financial crime is increasingly complex, detecting fraud and tracing illicit money flows requires more than traditional investigative methods. Criminal networks exploit cross-border structures, shell companies, and complex ownership arrangements to conceal their activities. To counter this, investigators need a reliable way to answer the most basic question: Who is this company, really?
The Legal Entity Identifier (LEI) is a globally recognized, open, and non-proprietary standard for identifying legal entities involved in financial and commercial transactions. Managed by the Global Legal Entity Identifier Foundation (GLEIF), the LEI provides structured reference data and verified ownership relationships. Crucially, this data is freely accessible and designed for integration into digital workflows.
As part of FNA’s collaborative partnership with GLEIF, Carlos Leon and Adam Csabay recently contributed to an article by Alexandre Kech of the Global Legal Entity Identifier Foundation (GLEIF) that outlined the transformative role of LEIs in enhancing trade finance risk management and reducing fragmentation in counterparty data. This article further develops these ideas in the context of fraud and scam response with Anti-Scam Utilities.
From Entity Verification to Fraud Detection
While LEIs are already embedded in regulatory reporting, their value extends far beyond compliance. By providing a defragmented or unique and consistent identity across borders, the LEI removes ambiguity, e.g. by eliminating confusion between similarly named entities and enabling accurate mapping of corporate relationships. This makes it increasingly difficult for fraudulent actors to hide behind complex naming structures or discrepancies in national registries.
When combined with network science techniques, LEI data becomes a powerful tool for detecting and investigating financial fraud. Analysts can ingest vast datasets, not only to reveal direct relationships (such as parent-subsidiary links), but also to uncover indirect ties—hidden through multiple layers of corporate control, shared directors, or cross-sector connections.
Mapping Money Trails Through Related Party Networks
At FNA, we have been applying network visualization and graph algorithms to LEI datasets for several years. Several public examples were already included in our winning G20 TechSprint proposition in 2020 — the G20 Monitor. Starting from a single entity under investigation, our approach rapidly maps its web of connections—highlighting potential points of influence, shared control, or unusual linkages or connections.
This method allows investigators to:
Identify concealed relationships that could signal collusion or front operations.
Trace multi-layered ownership structures used to disguise beneficial owners.
Assess network importance by ranking entities based e.g. on their centrality or potential to channel illicit funds.
Leverage LEI relationships to complete the record of other fragmented beneficial owner information or government data records (e.g. Sanctions lists that lack parent, child, or associations information)
By visualizing these links, complex money flows and other relationships of interest become easier to understand, explain, and communicate to decision-makers within compliance teams, law enforcement, other governmental investigative bodies, or regulatory agencies.
The verifiable LEI (vLEI) adds another layer of protection against fraud. Using cryptographic proofs, the vLEI not only confirms an entity’s identity but also validates the authority of its representatives in real time. This capability helps prevent impersonation fraud, forged authorizations, and other tactics used to bypass onboarding and transaction controls.
A Strategic Asset for Investigators
In fraud detection, speed and accuracy are critical. By integrating LEI and vLEI into investigative workflows, financial institutions, insurers, and regulators can:
Reduce false positives in alerts and investigations.
Shorten the time to establish trust in counterparties.
Map exposure across entire supply chains and trading networks.
Build defensible cases supported by transparent, verifiable data.
Close gaps in investigative threat finance networks.
The modern financial crime landscape is borderless. By combining the global interoperability of the LEI system with FNA’s expertise in network analytics and money tracing, investigators can move beyond static lists and fragmented registries—towards a dynamic, data-driven view of economic relationships that exposes hidden fraud pathways and illuminates the true flow of money.
