Financial Crime World

Compliance Risks Loom Large for Fintech Players in Jamaica as Regulatory Sandbox Kicks In

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As of March 16, 2020, the Bank of Jamaica’s (BOJ) highly anticipated FinTech Regulatory Sandbox has come into effect. This controlled environment aims to provide a platform for the deployment and testing of financial technology, with several objectives in mind.

Objectives of the Regulatory Sandbox

The BOJ hopes that the sandbox will:

  • Encourage innovations in financial services
  • Promote competition and financial inclusion
  • Protect consumers from potential risks associated with digital financial services
  • Gain a better understanding of FinTech products, services, and business models currently available

Eligibility for the Regulatory Sandbox

The following regulated entities are eligible to apply for the sandbox:

  • Deposit-taking Institutions (DTIs)
  • Changos
  • Remittance service providers
  • Securities dealers authorized by the Financial Services Commission (FSC) to participate
  • Credit unions
  • Fintech companies incorporated in Jamaica, either alone or in partnership with a DTI

Exceptions and Invitations

Fintech companies offering solutions not directly related to payment services provided by regulated entities may not be required to partner with a DTI. The BOJ has also extended an invitation to selected entities to provide technology solutions within the sandbox.

Compliance Risks for Fintech Players

As Fintech players navigate this new regulatory landscape, they must be mindful of compliance risks and ensure that their operations align with the sandbox’s objectives. Some potential risks to consider include:

  • Non-compliance with regulatory requirements
  • Inadequate risk management practices
  • Failure to protect customer data

Conclusion

Only time will tell how successful this initiative will be in striking a balance between innovation and risk mitigation. Fintech players in Jamaica must prioritize compliance and ensure that their operations align with the sandbox’s objectives to avoid potential risks and achieve success.