The Bank Negara Malaysia (‘BNM’), the central of Malaysia, has issued the Financial Technology Regulatory Sandbox Framework (‘Policy Document’) on 29 February 2024. The Policy Document came into effect immediately upon its issuance and supersedes the policy document of the same name issued on 18 October 2016. The Financial Technology Regulatory Sandbox Framework (“Framework”) was first introduced in October 2016 to provide a regulatory environment that is conducive for the deployment of financial technology (“fintech”) and to facilitate meaningful innovation in the Malaysian financial sector. Through the regulatory sandbox (“sandbox”), regulatory flexibilities may be granted to applicants to allow experimentation of fintech solutions in a live environment, subject to appropriate safeguards and regulatory requirements.
The sandbox has played an important role in advancing digital innovation for both incumbents and start-ups, with over 110 applications received over six years since it began operation. The sandbox has enabled the testing of various new technologies (e.g. electronic Know-Your-Customer) and business models (e.g. digital insurance, peer-to-peer family takaful, buy-now-pay-later, digital remittance) in the market which has helped inform the Bank’s developmental policy considerations and contributed to several policy enhancements. The sandbox also strengthened collaborative efforts between stakeholders in the fintech ecosystem by acting as a platform for active and open engagements with the Bank.
