The June 2020 enactment of the Financial Services (Regulatory Sandbox) Regulations, 2020 (the “Regulations”) created a mechanism established within the Financial Services Commission (the “Commission”) to enable the processing and acceptance of participants into a regulatory sandbox (the “Regulatory Sandbox”). This includes a live and contained environment in which sandbox participants may test their products or services in relation to the provision of financial services business. The Financial Services (Regulatory Sandbox) Order, 2020 brought the Regulations into force on 31st August, 2020.
The Regulatory Sandbox encourages innovation within the jurisdiction’s financial services sector, while mitigating and managing possible risks. For example, the risks of financial disruption and instability to the economy. It creates a space which enables participants to introduce and test innovative financial services products and services in a defined and controlled environment, with specific regulatory parameters; including but not limited to a restriction on the period for testing.
Sandbox participants testing an innovative financial services product or service within the Regulatory Sandbox do not have to comply with the provisions of any regulatory legislation listed in Part 1 of Schedule 2 of the Financial Services Commission Act, 2001 except for the Proceeds of Criminal Conduct Act, 1997 and its subsidiary legislation. Sandbox participants must also comply with the requirements of the Regulations and any guidelines the Commission issues in relation to the Regulations.