Business Type: The Regulatory Sandbox is not a license but a controlled environment established by the CMA to allow innovative financial products, services, and business models to be tested under regulatory supervision. It enables fintech companies and other innovators to experiment with new technologies and approaches without immediately complying with all regulatory requirements.
Licensing Requirements: Applicants must demonstrate genuine innovation, submit detailed proposals outlining the innovative product or service, show how the innovation benefits consumers or the market, provide risk assessments and mitigation plans, and agree to operate within specified parameters and timelines. Participants must also provide regular reports to the CMA during the sandbox period.
Government Fees: Application fees are typically waived or minimal (around KES 5,000 to KES 10,000) to encourage innovation. However, participants may incur costs for compliance monitoring and reporting.
Timeline: The sandbox application review process typically takes 30 to 60 days. The sandbox testing period is usually 6 to 12 months, with possible extensions subject to CMA approval.
Limitations: Sandbox participants must operate within specified parameters (e.g., limited customer numbers, transaction volumes, or geographic areas), provide regular reports to the CMA, implement consumer protection measures, maintain adequate safeguards against risks, and transition to full licensing or exit the market at the end of the sandbox period.
Penalties: Violations of sandbox conditions may result in immediate termination of sandbox participation, prohibition from future sandbox applications, public disclosure of non-compliance, and potential legal action if consumer harm occurs.
Enforcement: The CMA closely monitors sandbox participants through regular reporting, conducts periodic reviews, ensures consumer protection measures are in place, and makes decisions on graduation to full licensing or exit from the sandbox.