Payments

Regulatory Sandbox FAQs

General Public

1. What is a Regulatory Sandbox?
   A Regulatory Sandbox is a controlled environment where businesses can test their innovative financial products, services, business models, and delivery mechanisms, in a live environment, while being closely monitored by regulators.

2. What is the purpose of a Regulatory Sandbox?
   A Regulatory Sandbox allows regulators to gain a better understanding of the product or service and to determine what, if any, regulation is necessary to protect consumers.
   
   For businesses, a Sandbox presents an opportunity to test the viability of their product, service, etc. on a small scale, and allows them to detect and address any issues before the product or service is offered on a wider scale.

3. How does the Regulatory Sandbox work?
   Businesses offer their innovative products and services to the public on a small scale, while being closely monitored by Regulators. Regulators monitor the activity and determine if the product or service should be regulated.

4. Why are the Central Bank of Barbados and the Financial Services Commission introducing this?
   FinTech innovations can differ significantly from traditional financial services, so there can be some uncertainty on how they should be regulated. By allowing businesses to test their products and services within the controlled live environment of a Regulatory Sandbox, the CBB and FSC, as Barbados’ financial regulators, will be able to determine whether existing regulations are sufficient to protect consumers, or if new legislation is needed.

5. What type of businesses is the Sandbox for?
   The Regulatory Sandbox is intended for businesses testing technology-based financial products and services.

6. How long does the Sandbox last?
   The duration will vary based on the nature of the product or service being offered by the business.

Businesses

1. What is a regulatory Sandbox?
   A regulatory Sandbox is a controlled environment where businesses can live test their innovative financial products, services, business models, and delivery mechanisms while being closely monitored by regulators.

2. What is the purpose of a regulatory Sandbox?
   A Sandbox allows regulators to gain a better understanding of the product or service and to determine what, if any, regulation is necessary to protect consumers and the financial system.
   
   For businesses, a Sandbox presents an opportunity for them to test the viability of their product or service on a small scale, and allows them to detect and address any issues before the product or service is offered to a wider audience.

3. How does the Sandbox work?
   Businesses offer their innovative products and services to the public on a small-scale basis, while being closely monitored by regulators. Regulators keep track of the activity and determine whether the product or service is viable as well as if and how it should be regulated.

4. What are the benefits of participating in the Regulatory Sandbox?
   Being in the Sandbox allows businesses to discover and address any regulatory concerns early in the life of the product or service, thereby avoiding the possibility of major regulatory issues being discovered after the product or service has been offered on a wider scale.

5. What types of businesses are eligible to participate in the Regulatory Sandbox?
   To be eligible to participate in the Regulatory Sandbox, the product or service being offered by the business:

   1. Represents a genuine financial innovation;
   2. Uses technologies that are as yet unproven and whose failure would give rise to risks to consumers or financial stability;
   3. As a result of new technologies or practices, creates ambiguity as to the appropriate regulatory regime for the product or service;
   4. Has been subject to adequate and appropriate functionality and risk assessments.

6. Is there a cost associated with entering the Regulatory Sandbox?
   Yes. Businesses hoping to participate in the Regulatory Sandbox are required to pay the applicable fees, which will be used to cover regulatory and administrative costs.

7. How do I apply to enter the Regulatory Sandbox?
   The application process includes two major steps. The business must:

   1. Complete an application form and Confidential Statements for each shareholder, prospective shareholder, director and executive officer and submit to regSandbox@centralbank.org.bb; or regsandbox@fsc.gov.bb as applicable.
   2. Pay a fee, which will be used to cover the associated regulatory and administrative costs.

8. How long does participation in the Regulatory Sandbox last?
   The duration of a business’ participation in the Regulatory Sandbox will be determined by a Regulatory Review Panel (RRP) based on the nature and complexity of the product or service.
   
   Based on issues or concerns that emerge during testing, the RRP may extend the time beyond what was originally anticipated. A business can also request to have the time extended.

9. What happens on completion of the Regulatory Sandbox?
   Once a business has successfully completed testing in the Sandbox, the RRP will issue a report that outlines how the product or service performed during its participation in the Regulatory Sandbox.

   1. Any new regulatory issues that were identified during testing and whether satisfactorily addressed.
   2. Where the RRP has determined that the product or service falls within the scope of existing legislation, the entity should make a formal application for a licence under that legislation.
   3. Where a product or service does not fall within the scope of existing legislation, and should be regulated, the CBB and/or FSC will be responsible for ensuring that appropriate regulatory framework is developed.
   4. A detailed explanation, where the RRP has recommended that the product or service should not be licensed.

Have any queries? Please contact us.

Central Bank of Barbados:
regsandbox@centralbank.org.bb and Tel 436-6870

Financial Services Commission:
regsandbox@fsc.gov.bb and Tel 421-2142