Mongolia Sets Stage for Fintech Regulatory Compliance with New Sandbox Regulation
In a move aimed at promoting innovation and protecting consumers, the Mongolian government has introduced a regulatory sandbox environment for fintech companies. The new regulation, approved by the Financial Stability Council on March 1, 2021, provides a framework for testing new financial products and services in a controlled environment.
Key Requirements for Participants
- A legal entity registered in Mongolia
- No overdue debts to banks and financial institutions
- Shareholders and executive officials with no previous convictions for money laundering or financial crimes
- Minimum share capital invested by shareholders that meets the requirements under the Law on Combating Money Laundering and Terrorism Financing
Application Process
Applications to enter the sandbox are accepted twice a year, during the first 10 days of March and September. Applicants must submit documents, including:
- An official letter requesting entry into the sandbox
- Application form
- Business plan
- Internal control program
- Procedures for delivery of products and services to consumers
- Identification of consumers and ultimate beneficial owners
- Reduction of risk
Participant Obligations
Participants must withdraw from the sandbox upon termination of the term or early termination by the Financial Regulatory Commission or at the request of the participant. This can occur if the participant violates laws and regulations, terms and restrictions set out by the Financial Regulatory Commission, or if they are found to have misled, misrepresented, or concealed information.
Consumer Protection
Consumer protection is a key aspect of the regulation, with participants required to take measures to protect consumers and notify them of potential risks. In case of financial loss, the participant must compensate the consumer in an agreed amount. The Financial Regulatory Commission is not responsible for the liabilities of the participant to others.
The introduction of this regulatory sandbox environment aims to promote innovation in the fintech sector while protecting consumers from potential risks. Specialist advice should be sought about specific circumstances.