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Singapore MAS Fintech Sandbox Registration Service

We are a leading regulatory compliance consulting firm in Singapore. If you are developing a new fintech product, then we can help you to register your fintech Sandbox with the Monetary Authority of Singapore.

Singapore MAS Fintech Sandbox Application Service

What is a Fintech Regulatory Sandbox?

What is the meaning of Sandbox in normal terms?

The meaning of the word Sandbox in the normal software industry means a server or a machine which is for a test or play purpose. Where you can use any untested development for the time being. Those who are from the software industry know that typically there is DEV (Development), QAS( Quality testing) and PRD (Production) i.e. actual live environment.

You will typically develop the code in DEV system, then your team will do some basic testing in the same environment and then the code will move to the QAS system for User Acceptance Testing (UAT) and once the testing is passed the code can be deployed to the PRD, or the live environment. This is generally the model.

What is the Fintech Regulatory Sandbox, then?

The concept of MAS Fintech Regulatory Sandbox is similar to the Sandbox above. However, instead of a machine or a system (Which is for test purposes), it refers to a limited licensing environment where you can operate your Fintech offerings in a limited way.

So here once approved, the MAS will let you operate your fintech entity without a proper license (so you will have to comply with limited requirements only). This way you can operate the organization/offerings and then see if there is a demand for the services you are offering.

So regulatory Sandbox refers to an environment, which is relaxed specifically for your organization so that you can test innovative financial products/systems.

What purpose the Regulatory Sandbox achieves?

Fintech is rapidly evolving

In today’s world fintech organizations are rapidly evolving. New concepts of financial products, new web applications are commonly evolving. Now many of these products and concepts are totally new. There is no established market for these concepts. So organizations often times need flexibility for deploying and managing these products, and see if those have commercial demand.

A formal regulatory environment may be difficult for startups

Suppose a startup has a new fintech idea, which in the domains of Fund Management. Normally (without the Sandbox concept) this would have required an LFMC Retail license. This means possibly 250 K SGD base capital, min 3 representatives, A professional indemnity insurance, need for inhouse compliance team etc. Obviously, all these are going to cost a lot of money.

If even on a new startup all these requirements are imposed, then there is risk that the innovation may not happen. Because new startups do not have this kind of money just to satisfy the licensing requirements, therefore introducing this concept of Sandbox, helps these kind of startups and fuels their growth.

The Sandbox allows a fintech to connect to systems of others operator in a live environment without a need for a license

In today’s world, most of the fintech systems are connected to the systems of other banks, financial institutions through APIs and other similar technologies. So a new fintech product can not be tested (in a real sense) unless it is deployed in the live environment.

What I mean is 20 years back a company could have developed a banking application and could have tested it 100% within their own controlled environment before deploying it fully. However, such a thing is difficult today because of the interconnected nature of the financial systems.

Providing a sandbox concept helps the startups to achieve this objective.

What relaxations are available in Regulatory Sandbox?

You do not have to apply for the license

For the time of sandbox application, you do not have to obviously hold the required license.

Certain minimum requirements must be followed, which are

  • Confidentiality of customer information
  • Fit and proper criteria, particularly on honesty and integrity
  • Handling of customer’s money and assets by intermediaries
  • Prevention of money laundering and countering the financing of terrorism

MAS will approve relaxation in other matters like below

  • Asset maintenance requirement
  • Board composition
  • Cash balances
  • Credit rating
  • Financial soundness
  • Fund solvency and capital adequacy
  • Licence fees
  • Management experience
  • MAS Guidelines, such as technology risk management guidelines and outsourcing guidelines
  • Minimum liquid assets
  • Minimum paid-up capital
  • Relative size
  • Reputation Track record

Depending on the nature of the fintech product, MAS may require some additional conditions in place of relaxed conditions.

Key things you must note about Fintech Regulatory Sandbox

It is for innovative products only

Fintech regulatory sandbox applies only to the innovative products which are new and do not exist in Singapore. So in other words, you can not ask for sandbox status for an already established product just because you are a new startup. If the product is already established, then you will need to go for full licensing for the same.

There will be restrictions

While operating under a sandbox regime, you will have to follow some restrictions. You will be allowed to have a specific class, number or size of customers. There can be thresholds on monetary limits you can transact. This depends on case to case basis.

Declaration to customers

You will be required to declare to your customers that you are operating in a sandbox environment and are not a fully licensed entity. This needs to be done for every product or service you provide.

What happens at the end of the duration of Fintech Regulatory Sandbox?

Sandbox is approved for a specific duration only. If necessary, you can ask for an extension for a specific period by filing an extension request. However, at the end of the duration, if your experimentation is successful, then you must be ready to upgrade to the full licensing regime.

On the other hand, if your experimentation is not successful or commercially viable, then you will need to exit the Sandbox. While exiting the Sandbox, you will need to satisfy all the requirements listed in your application for the exit.

Two Options For Regulatory Sandbox

Sandbox Express

Sandbox Express provides firms with a faster option to test certain innovative financial products and services in the market. Eligible applicants can begin market testing in the pre-defined environment of Sandbox Express within 21 days of applying to MAS.

For a start, Sandbox Express will be available specifically for:

  • (a) carrying on business as an insurance broker; and
  • (b) establishing or operating an organised market.

Regular Sandbox

This is a normal sandbox service for all other applications which are not covered in Sandbox Express. Obviously, it has a longer approval time.

Summary: We can provide Sandbox Application Services to you

The application for Sandbox is not a standard application which we see where you tick some options and then submit an application. It's an open-ended application form. While filling the form, you are also required to provide many other pieces of information. This can get complicated for somebody who is not familiar with the Singapore regulatory environment. Also the chances of rejection can be high.

Instead, you can think of availing our services. We are well versed with the process of the Sandbox application and know what information is required for specific points. This can cut down the processing time and also the chances of rejection.

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