WASHINGTON, D.C. – Today, the Data Foundation and the Global Legal Entity Identifier Foundation (GLEIF) published Envisioning Comprehensive Entity Identification for the U.S. Federal Government. The report identifies a problem in the current system of entity identification: 36 federal agencies are using up to 50 distinct, incompatible entity identification systems to track non-federal entities, across 80 regimes. These systems are typically built for highly-targeted uses and lack governance structures to ensure flexibility for broader uses. The newly released report proposes a universal identification system with the ability to keep pace with technological changes: the Legal Entity Identifier (LEI).
LEI is a non-proprietary, federally administered identification system. As of September 2018, more than 1.2 million LEIs have been issued to legal entities globally. The report explains how LEI adoption by the U.S. federal government could streamline entity identification and produce benefits within and beyond financial markets, most notably with decreased cost and burden for federal agencies. Four benefits of the LEI outlined in the report include its global reach, federated administration, non-proprietary reusability, and reliable verification.
“Currently, the U.S. federal government uses dozens of siloed, disconnected ID codes to track and regulate various entities,” said Hudson Hollister, President of the Data Foundation. “The existing system is costly, over burdensome, and lacks integrity. If the U.S. government were to universally adopt the LEI, it would enable greater risk mitigation, minimize market abuse, and improve the accuracy of data. Despite these benefits our government continues to rely on incompatible, sometimes proprietary, ID codes.”
“The LEI responds to the critical need for a universal system of identifying entities across markets, products, and regions,” said Stephan Wolf, CEO of GLEIF. “Broad LEI adoption and the resulting access to open, standardized and high quality reference data will allow all stakeholders to generate the synergies arising from network effects. Operational efficiencies, cost savings, reduction of time to transact, and more reliable information can be gained by introducing the LEI into any process that requires identification and verification of a counterparty.”
Adoption: If implemented properly, a comprehensive entity identification system based on the LEI could help identify and mitigate risk in markets, track and debar low-performing contractors, improve supply chain efficiency, and be useful anywhere a government-to-business relationship exists.
Interoperability: A comprehensive entity identification system could also allow regulators, statisticians, contract and grant officers, corporate actors, and researchers to understand how an entity acts and interacts with government across sectors and industries, painting a more complete picture of economic and organizational activity in the United States.
Implementation: The report identified three agencies as likely candidates for first adopters of the LEI, which are Centers for Medicare and Medicaid Services, Federal Deposit Insurance Corporation, and Consumer Financial Protection Bureau.
Read the full report here.
About The Data Foundation: The Data Foundation is the nation’s first industry-focused open data research organization. Through research, education, and programming, the Data Foundation supports the publication of government information as standardized, open data.
About GLEIF: Established by the Financial Stability Board in June 2014, the Global Legal Entity Identifier Foundation (GLEIF) is a not-for-profit organization created to support the implementation and use of the Legal Entity Identifier (LEI). GLEIF is headquartered in Basel, Switzerland. GLEIF services ensure the operational integrity of the Global LEI System. GLEIF also makes available the technical infrastructure to provide, via an open data license, access to the full global LEI repository free of charge to users. GLEIF is overseen by the LEI Regulatory Oversight Committee, which is made up of representatives of public authorities from across the globe.