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SEC improves status of FinTech hub

Chris Hamblin, Editor, London, 7 December 2020


The US Securities and Exchange Commission's Strategic Hub for Innovation and Financial Technology, commonly referred to as FinHub, will become a stand-alone office. Valerie Szczepanik, its first director, will continue to lead it and will report directly to the SEC's chairman.

The SEC established FinHub in its Division of Corporation Finance in 2018, with a brief to encourage responsible innovation in the financial sector, especially DLT or distributed ledger technology, digital assets, automated investment advice, digital marketplace financing, AI or artificial intelligence and machine learning. Inventors use FinHub to speak to SEC staff about new approaches to capital formation, trading and other financial services.

Apart from FinHub's upgrade in status, nothing appears to be new. The agency claims that the creation of a separate office will "facilitate the agency's agility and flexibility to work with market participants and regulators worldwide and to encourage leading-edge innovation," but does not say how.

Before she joined the Division of Corporation Finance, Valierie Szczepanik was an assistant director in the Division of Enforcement's Cyber Unit. She is an engineer by trade.

FinTechs are often start-ups with limited resources, yet they regularly handle sensitive personal and corporate financial information. The FinTech revolution has been very convenient for financial firms, but all this automation comes at a cost, since online fraud has expanded with access to digitally-held information.

To help combat the problem, ACAMS — the global financial crime training firm set up by Charles Intriago in Miami in the 'noughties — is inviting FinTechs to earn compliance certificates that it has created specifically for them. The idea is that any employee at a FinTech who has gone through the necessary training and passed the examination will be able to act properly in the so-called "first line defence" against financial crime in his daily work. ACAMS claims that the certificate is the first of its kind.

The FinTechs in question encompass everything from prepaid card issuers, payment service providers (PSPs), neo-banks, InsureTech, crowdfunding platforms and P2P platforms and the certificate includes digital training to do with governance and regulations, "customer due diligence" or CDD controls, the best ways to monitor transactions, investigatory procedures, regulatory reporting and other topics vital for AML compliance.

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