A Jungle of Entity Identifiers, and What We’re Going to Do About It
It’s awfully hard to track what you can’t identify. Every U.S. government agency has to uniquely identify the businesses, organizations, and other legal entities that must submit information to it. This task may sound straightforward, but it isn’t. Across the federal government there are scores of different identification schemes. And they don’t agree. The jungle of entity identifiers creates big problems–for citizens seeking accountability, for entities trying to comply, and for the government itself.
Let’s name just a few of the entity identification schemes that make up this jungle. The IRS uses Employer Identification Numbers (EIN) and Global Intermediary Identification Numbers (GIIN) to identify companies and organizations reporting their taxes. The GSA requires contractors (and, indirectly, most grant recipients too) to apply for a DUNS Number in order to get an award and supply an EIN to receive the cash. In the financial regulatory world, the thicket gets thicker. The FDIC uses Certificate Numbers, the OCC uses Charter or Docket Numbers, and the Federal Reserve Bank uses RSSD ID Numbers. The Securities and Exchange Commission assigns a completely different identification scheme depending on which of the securities laws it’s operating under. An SEC registrant might be identified using the Central Registration Depository (CRD), the Central Index Key (CIK), or one of the multiple filing numbers required under the 1933 Securities Act, 1934 Securities Act, or 1940 Investment Company Act. And the Defense Department is its own fenced-off grove–a grove dominated by Commercial And Government Entity (CAGE) Codes.
Because these different agencies assign different and incompatible electronic identifier codes, one entity could be denoted by dozens of unrelated numbers. Investors seeking to track a public company’s government contracts, regulators trying to determine a firm’s exposure to SEC-regulated and CFTC-regulated derivatives, inspectors general trying to find suspicious patterns in a grantee’s federal payments are all out of luck. Even with ready access to huge repositories of filings, transactions, and forms, incompatible identifiers make matching difficult or impossible. And it’s nobody’s job to make sense of it all.
Watch DTC’s Hudson Hollister explain the grantee/contractor identifier mess.
Help may be on the way. Since 2010, the U.S. Treasury’s Office of Financial Research has been working with financial regulators around the world to establish the Legal Entity Identifier (LEI)–a global standard for entity identification. The LEI is built for interoperability. And it’s domain-agnostic, which means it’s just as easily used by a securities regulator as by a contracting office.
At Data Transparency 2014 last month, Matthew Reed, chief counsel in the U.S. Treasury’s Office of Financial Research suggested that the LEI is ready to be used by agencies to tame the jungle of identifiers. Reed has previously described the LEI as “a bar code for identifying entities” and “a linchpin for making connections in the massive volumes of financial data that course through the international economy every day … [the LEI will] help companies manage their risk and government regulators analyze data related to financial stability.” Matthew Reed at DT2014Reed outlined three important questions the LEI could answer:
- Who is who? LEIs uniquely identify entities.
- Who owns whom? LEIs show parent-child corporate relationships.
- Who owns what? LEIs attached to products show who owns what.
Our Coalition has called on the Treasury Department and the White House to start taming the jungle of identifiers when it comes time to set up government-wide data standards for federal spending, under the DATA Act. Whenever the government collects information, it should reuse an identifier code that is already being used somewhere else. Equally important is choosing a standard that is non-proprietary. We must avoid identifiers carrying restrictions that impede the free reuse of open data.
The LEI fits both these criteria. That’s why our Coalition urges the Treasury Department and the White House, when they adopt the common identifier for grantees and contractors that is required by the DATA Act, will adopt the LEI system. And as we pursue future open data mandates in other areas of government information, we’ll try to make sure that the decision-makers in these areas, too, also consider the LEI. Gradually, outdated and incompatible identification schemes can be retired and replaced by the LEI. This won’t happen fast, but it can happen eventually. With the LEI uniting disparate reporting requirements, the jungle of entity identifiers will become a garden of open, interoperable data–producing abundant insights and opportunities for all.