On 25 September 2024, the Central Bank of Ireland (Central Bank) announced that its first Innovation Sandbox Programme (Programme), which is themed combatting financial crime, is open for applications.
The Programme commences in December 2024 and will run for six months. The Central Bank is calling for applications from firms developing a product or service that uses innovative technology to foster and develop solutions that minimise fraud, enhance Anti-Money Laundering (AML) and Countering the Financing of Terrorism (CFT) frameworks and improve day-to-day transaction security for consumers.
The Deputy Governor of the Central Bank, Derville Rowland, recently remarked that the new EU Authority for AML and CFT (AMLA) and national authorities must collaborate to raise standards and facilitate innovative solutions in the fight against money laundering and terrorist financing.
One example of this is the Central Bank’s establishment of the Programme to inform the early-stage development of selected innovative initiatives that are consistent with public policy objectives such as combatting financial crime.
The Programme aims to facilitate the development of new ventures and new business models that solve challenges identified in this sandbox theme and facilitate the faster and safer deployment of substantially new technologies, products, or services.
At the end of the Programme, the Central Bank will publish a report sharing key learnings.
Sandbox Programme framework
- Programme of workshops
Each month participants will engage in workshops on specific topics relevant to the theme of Combatting Financial Crime.
- Engagement with dedicated Sandbox Relationship Managers
Each participant will engage regularly with their dedicated Sandbox Relationship Manager, who will act as their point of contact to oversee and coordinate participation throughout the programme. The Sandbox Relationship Manager will also liaise with a broad range of Central Bank teams – from across the pillars of Consumer and Investor Protection, Financial Regulation and Monetary and Financial Stability – to provide regulatory advice and support as required.
- Access to Data Platform
Each participant can access a data platform offering data sets and tools relevant to the theme of combatting financial crime to test and develop their innovations.
Challenges and Problem Statements
Financial crime presents challenges, including the erosion of trust, the diversion of resources, the pace of innovation and new technologies, and financial loss. One key factor in successfully reducing financial crime is for firms and wider partners to work collaboratively by sharing data and intelligence.
To bring focus to specific areas of the combatting financial crime theme, applicants are asked to align with one of six Problem Statements set by the Central Bank.
Sandbox Frequently Asked Questions
There is a helpful section on anticipated Frequently Asked Questions on the Central Bank website, which broadly covers the following matters:
- Participant suitability
The Programme is open to applications from all sectors of the financial system such as authorised incumbent firms, start-ups scaling innovation, fintechs seeking authorisation, technology businesses providing services to financial firms and academic commercialisation projects.
It is also open to applications from standalone entities, partnerships and/or research projects that are focused on the commercialisation of research.
Whilst applicants do not have to be Irish-domiciled, the Central Bank expects that applicants are selling, or intend to sell, their service or product in the Irish market.
The Programme is not suitable for an innovation at a very early stage of development, where, for example, a model has not yet been built. The Central Bank does not help participants find partners to participate in the Programme or match participants together for projects.
- Benefits for participants
Enhanced understanding of regulatory frameworks: Although the advice and support provided within the Programme are not legal advice and do not relieve any of the participants of their legal/regulatory obligations, the Programme should provide participants with the opportunity to deepen their understanding of the regulatory frameworks applicable to their specific innovation, covering a broad range of domestic and European regulations, standards, guidelines and supervisory expectations.
– Data Platform access: The Data Platform provides a range of resources, including pre-loaded datasets and integrated developer environments. Participants will have access to these resources on combatting financial crime to explore, innovate, and build solutions for a diverse set of challenges. The Data Platform will also provide participants with access to relevant technical documentation/tutorials.
– Cost: There is no charge to participate in the Programme. The wider financial services industry funds the overall cost of the resources deployed on the Sandbox activities.
– Other: Once a participant’s name is published, it may mention that it is participating in the Innovation Sandbox Programme provided it is clear that the Central Bank does not endorse the participant or its innovation. Participants are prohibited from using any Central Bank crest, logo, or mark.
The Frequently Asked Questions section also mentions the selection criteria, the Central Bank’s expectations of participants and intellectual property and confidentiality.
Information for Applicants
Applications for the Programme will be accepted until 23:00 on 31 October 2024.
The Central Bank’s website provides additional guidance on applying for the Programme, an application form and some anticipated Frequently Asked Questions here.
For further information on the Central Bank’s Innovation Sandbox, please see our related article here and/or the Central Bank website here.
Contact Us
For more information on Fintech regulatory or legal matters, please contact Shane Kelleher, Louise McNabola, John O’Connor, or your usual William Fry contact.
Contributed by Jane Balfe.
