FCA announces plans for global fintech sandbox blueprint

The FCA’s original sandbox, launched in 2016, saw 90% of companies from its first round of applications going to market; the FCA has since also had 30 applications from international companies and gone on to support 11 of them.

The FCA will start working with regulators across Europe, the US and Far East, on a global sandbox blueprint.

One key shared area of interest for global regulators is money laundering – which the UN estimates to account for up to USD 1.6 trillion annually.

For this reason, in May 2018, FCA will be bringing together international partners from the US, Europe, Australia, Japan and Korea in a TechSprint which will focus specifically on developing solutions to the challenges of money laundering, financial crime and terrorist financing. The event will draw on the skills of software developers, data scientists and subject matter experts, working in cross-industry groups to develop solutions to critical problems in financial services.

The proposal comes as regulators globally grapple with the challenge of regulator decentralised cryptocurrencies – which fell some USD 140 billion since the beginning of March 2018 as regulators talk tough. Facebook and Google have now both banned cryptocurrency adverts and Twitter is reported to be set to follow.

A further area of global interest is the use of machine learning to support regulatory compliance. A previous TechSprint on regulatory reporting last year saw the FCA turn a regulatory requirement into machine-readable language.

The original FCA sandbox aimed to make testing in a live environment possible for companies that might have already run inhouse sandbox tests, so that they could gauge how receptive consumers are to different pricing strategies, communication channels, business models and to the new technologies themselves.

The FCA also supports technology and cyber resilience reviews of firms when setting up sandbox tests – allowing them to test their technology on a small scale in the market while ensuring controls are in place to minimise the risk of harm to consumers.