The Monetary Authority of Singapore (MAS) seeks to create a smart financial c...


An Overview of MAS’s FinTech Regulatory Sandbox

January 15, 2018
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The Monetary Authority of Singapore (MAS) seeks to create a smart financial centre where innovative technology is pervasively utilised in the financial sector, and from which Singapore can reap benefits such as increased efficiency and risk management.  To achieve this objective, MAS issued its FinTech Regulatory Sandbox Guidelines in November 2016.

Financial institutions and any interested firms are encouraged to test their financial technology (“FinTech”) products and services in an environment where “actual products or services are provided to the customers” (“production environment”), but within a well-defined space[1] and duration.  This allows for the consequences of failure to be contained within the production environment.  MAS may also relax certain legal and regulatory requirements on a case-by-case basis.  

It should be noted that the sandbox is the last step between product development and full-scale deployment.  Each applicant must be able to:

  • demonstrate that it has done its due diligence (which includes “testing of the proposed financial service in a laboratory environment and knowing the legal and regulatory requirements for deploying the proposed financial service”);
  • clearly articulate the ways in which its technology is innovative compare to competing services;
  • state the reasons why the sandbox is necessary (i.e., why the tests to be conducted in the sandbox could not have been conducted in a non-production testing environment);
  • define the parameters of the sandbox testing;
  • assess the risks of the technology being tested and address how they will be mitigated;
  • produce plans for managing communications with customers; and
  • provide in detail and with reasons, any specific legal or regulatory restrictions to be relaxed during the sandbox period.

It must be emphasised that the sandbox “cannot be used as a means to circumvent legal and regulatory requirements”.  The sandbox entity must be able to fully comply with the relevant legal and regulatory requirements upon exiting the sandbox.  The sandbox is also not suitable if the proposed financial service is similar to those that are already being offered in the Singapore market.  

[1] For example, the financial product or service will only be offered to a limited number/specific types of customers or the number of transactions allowed will be limited for the duration of the sandbox period.


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