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BANGl<O SENTRAL NG PILIPINAS

OFFICE OF THE GOVERNOR

CIRCULAR No. 1153

Series of 2022

Subject: Regulatory Sandbox Framework

The Monetary Board, in its Resolution No. 1217 dated 18 August 2022,
approved the institutionalization of the Regulatory Sandbox Framework.
which shall be incorporated as Section 1/5 of the Manual of Regulations for
Banks (MORB) and Sections 1/2-or115-Sins-PATS-Trios"NII41-CC of the Manual
of Regulations for Nori-Bank Financial Institutions (MORNBFl).
Section I. Section 115 of the MORB and Sections 1/2-or115-SII15-Pins-
Trios-NA41-CC of the MORNBFl are hereby created to read as follows:

Section '15/1/2-Q/115-5/1/5. Pm3. Trio3-NII4, -CC-

GUIDELINES FOR THE REGULATORY SANDBOX

PolicyStatement, It is the policy of the Bangko Sentra! to foster

an enabling environment for responsible innovation to promote the
development of an inclusive digital financial ecosystem that is
complemented by a sound risk management system. In this light. the
Bangko Sentral has welcomed transformative and game-changing
technologies over the years under the "test-and-learn" approach. The
institutionalization of this approach by adopting the regulatory
sandbox framework aims to promote a more active. evidence-based,
and results-driven assessment of new and emerging financial
solutions.

The sandbox is not intended and cannot be used to circumvent

existing laws and regulations under the guise of proposing new and
innovative products/services. In order for all sandboxes to operate
within a safe and secure environment, Participants are required to
adhere to the eligibility standards and operational guidelines set in
this framework.

Coverage. The Regulatory Sandbox Framework applies to all

Bangko Sentral rig Pilipinas (BSP)-Supervised Financial Institutions
(BSFls), third-party service providers of BSFls. other BSP-registered
institutions, and new players that intend to offer or use an emerging or
new technology' to deliver financial products/services pertaining to
activities that could fall under the regulatory purview of the Bangko
Sentral.

Proposed innovations that are determined to be

within the scope of existing regulations will be evaluated in
accordance with the established registration/licensing regimes.

' A new or emerging technology that supports the delivery of financial products and services may
include the use of artificial intelligence/machine learning (AllML). Internet-of-Things (10T). 5C.
Cloud Computing. Robotics Process/Business Automation (RPNRBA). Quantum Computing, or
,
,
' Decentralized Ledger Technologies (DLTl. among others'
,
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 Definition of Terms. The terms used in this Section are defined
as follows:

a. App/Itent shall refer to an entity that intends to test its financial

solution within the Regulatory Sandbox Framework.

the Bangko Sentral to assess the entities applying to be part of the

regulatory sandbox

c. Partic/;Dentshall refer to an entity that has been assessed as eligible

to take part in the regulatory sandbox.

d. ^egu/ato01 Sandbox shall refer to a controlled, time-bound, live

testing environment. which may feature regulatory waivers at the
regulators' discretion. The testing environment may involve limits
or parameters within which Participants must operate. 2

e. Test/hg Parameters shall refer to the rules or guidelines agreed

upon by the Bangko Sentral and the Participant in implementing
the testing exercise. The testing parameters shall include metrics
to assess the viability of the solution being offered,

f. Test/n9 Periodshall refer to the time duration of the testing phase

of the regulatory sandbox.

g. themat^^ Cohort shall refer to a regulatory sandbox

implementation strategy wherein the regulator may define the
sandbox parameters and/or set the innovation theme of financial
solutions or experiment at ions to be deployed in the sandbox.

h, Non-parti'<'110antshall refer to any external legal entity that is riot a

regulatory sand box participant. Non-participants may also refer to
supervised financial institutions that access customer-

permissioned data residing in the Participant, or those that may

access customer information and/or data within the regulatory
sandbox environment.

Eligibility Standards. Applicants should meet the following

criteria to be able to participate in the regulatory sandbox:

a. The financial solution:

(1) uses new or emerging technology or utilizes an existing
technology in an innovative manner. The applicant shall
provide justification (e. g. , business case/market research) that
shall support the mentioned characteristic in the proposed
solution: or
(2) bridges a market gap in the delivery of financial
products/services, This shall be supported by research that
shall be part of the documents submitted to the Bangko
Sentral;

b. The applicant must demonstrate its capability to deploy the

proposed solution through a roll-out plan or strategy:

' Appaya. Sharmista. at al. The World Bank Group. 2020, Global Experiences from Regulatory
Sandboxes

Page 2 of 10
c. The applicant shall provide an initial test plan, which includes test
case scenarios and expected outcomes of the experiment;

d. The applicant must be able to identify significant risks. including

money laundering and terrorist financing (ML/FF) risks. IT and
cybersecurity. data integrity and data privacy. market
acceptabi!ity, consumer protection, and project
implementation/execution. relevant to the innovation and the
corresponding proposed safeguards and risk mitigation strategies;

e. The applicant must be able to identify Key Performance Indicators

(KPls) or other metrics in monitoring the progress of the pilot
implementation; and

f. The applicant shall provide an acceptable exit and transition

strategy once the experimentation is completed regardless of the
outcome.

The applicant should submit to the appropriate supervising

department of the Bangko Sentral the documents supporting
compliance with the foregoing criteria.

Conditions of Approval A Participant that has been granted an

approval to perform a sandbox or become part of a cohort sandbox
activity shall, at all times, comply with the following conditions:

a, Oversee the sandbox activities through an appropriate top-level

committee;
b. Integrate the sandbox in its overall strategic plan to ensure that the
products/services being tested do not put undue strain on its
systems. financial performance. and risk management ca pability:
and
c, Ensure that the sandbox activities satisfy the legal and regulatory
requirements for Anti-Money Laundering/Combating Terrorism
and Proliferation Financing (AML/CFF);
d. Comply. to the extent possible. with the relevant regulations on
payments, information technology 11T) risk management,
Electronic Products and Financial Services (EPFS), business
continuity management, and consumer protection and market
conduct. among others;
e. Implement the sandbox for a period no longer than twelve (12)
months from the go-live date;
f. After the sandbox period, submit a report summarizing the
activities, accomplishments, and recommendations. The report
must include discussions/information on. but not limited to, the
following:
(1) Outcome evaluation - the degree to which the sandboxed
products/services are appropriate to their target market
segment/s and other relevant stakeholders: the extent to which
the sandbox stated objectives are achieved: and the
assessment of growth or change. measuring the results across
different levels IParticipant's customers, the Participant. the
Bangko Sentral;
(2) Viability evaluation - investigation of the value proposition's
sustainability. including lessons learned to make the business
grow and last: and
(3) Recommendations - recommended action plans for the
sandboxed product/service. and recommended policy

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 issuances or amendments to address risks arising from the
public launch of the sandboxed product/service;
g. Provide the necessary customer assistance in addressing
issues/concerns that may arise during the sandbox period;
h. If the sandboxed product/service is delivered through an API-
based distribution and servicing models, ensure that the internal
and security controls supporting its delivery shall be subjected to
independent security assessments and a report on the same shall
be provided to Bangko Sentral. when requested; and
i. Submit to the Bangko Sentral, through TRISD for evaluation, any
enhancements or changes to services offered in the sandbox.
within thirty (30) calendar days prior to the date of roll-out.

OversightFramework. The regulatory sandbox operates within

a supervisory and monitoring oversight framework and structure that
ensures the sound implementation of the guidelines set in this circular,
The oversight framework enables the formation and/or designation of
relevant units within the Bangko Sentral. This unit shall be called the
Sandbox Oversight Team. which shall act as the central point of
contact for each sandbox activity. It shall oversee the various stages of
the sandbox implementation. The framework establishes the specific
roles and responsibilities of the units to be created and/or assigned for
the appropriate management and oversight of all regulatory sandbox
endeavors and their related activities. The oversight activities shall
include, but are not limited to, the implementation of the regulatory
sandbox and its guidelines. evaluation of applications, and provision of
technical advisory or assistance to the participants.

Operational Guidelines. Each regulatory sandbox shall

undergo a four-stage process: Application. Evaluation, Testing, and Exit
Stage. This approach ensures that all applicants are assessed
according to established criteria:

a, Application Stage. Applicants shall submit, at the minimum, the

following to the Bangko Sentral:

(1) Letter of Intent signed by the president or officer of equivalent

rank, Appendix 1511Q"95 (Annex A)
(2) Corporate secretary's certificate on the approval of the board of
directors of the intention to apply for a sandbox (or a
local/regional management committee. in case of foreign
applicants)
(3) Accomplished Regulatory Sandbox Application Form
Appendix152/Q-96 (Annex B)
(4) Eligibility Self-assessment Checklist Appendix153/Q-97 (Annex C)
(5) Test Plan Appendix154/Q-98 (Annex D)
Additional requirements/documents, aside from the
aforementioned contents, may be requested by the Bangko
Sentral to aid in its evaluation of the application. The Applicant
may likewise submit other information it deems fit for the
prudential assessment of the Bangko Sentral.

b. Evaluation Stage. The Bangko Sentral shall evaluate the

documents submitted by the applicant as to completeness.
correctness, and suitability based on eligibility standards set out in
this Section. The Bangko Sentral reserves the right to reject an
application based on the merits of the submitted documents and
representations.

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 All applicants shall be informed of the result of their application.
Eligible applicants shall be informed of the su bsequent steps for
the experimentation. Applicants who did not meet the eligibility
standards shall be notified of the reason/s for the rejection of their
application without prejudice to the filing of a new application
after a cooling-off period of six (6) months from the release of the
result of the notification.

c. Testing Stage. Eligible applicants. which shall be called

Participants, shall proceed to the testing stage. This stage shall
ultimately determine the viability of the proposed solution, The
testing stage is divided into two phases:(i) testing design phase and
Iii) testing implementation:

(1) Test/hg Des/!g. n Phase. The Participant shall present the

proposed innovation to the Bangko Sentral, The presentation
shall cover the overview of the solution. the proposed products
or services created by the use of the solution, financial
projections on the expected revenues and expenses and the
assumptions used, operational/systems flow, and the test and
roll-out plan, The Bangko Sentral shall approve the test plan to
be utilized during the experiment at ion period and issue a
Letter to Proceed with the Test Implementation. The design of
the test plan shall be suited to the foatures of the proposed
solutions, which shall, at a minimum. contain the following:
(a) Overall timeline and budget
(b) Testing performance metrics
(c) Testing methodologies and/or scripts
(d) Customer acquisition plan
(e) Customer communications
(f) Minimum safeguards (such as information secu rity,
consumer dispute resolution/redress mechanism. AML/CFF
safeguards)
(9) Specific regulatory requirements, if any, to be relaxed
during the testing period
(h) Exit plan upon completion of the sandbox activity or in
case there is any serious concern on the continued
implementation of the sandbox activity, as may be
determined by the Bangko Sentral
(i) Testing deliverables

(2) Testing Implementation Phase. Once the test plan is approved.

the Participant/s shall proceed with the test implementation.
This marks the start of the initiative, which the Bangko Sentral
shall monitor.

Testing duration can range from 3 to 12 months from the go-

live date, depending on the complexity of the proposed
solution, The participant shall submit to the Bangko Sentral any
proposed adjustments in the duration or changes to the roster
of participants and/or services offered.

Extension of and/or Adjustment on the Terms of the

Experiment ation. The Participant shall submit for evaluation to
the Bangko Sentral any proposed adjustments in the duration of
sandbox activity or features of the proposed solution being tested.
Application for extension/adjustment should be filed at least 30
calendar days before the expiration of the sandbox testing period.
The Participant shall propose the duration of the extension. which

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 should riot exceed 12 months. The testing extension request shall
undergo necessary evaluation by the Sandbox OversightTeam. No
further extension shall be allowed after granting the initial request
to prevent the perpetuity of sandbox experiments.

d. Exit Stage. After the testing stage. a comprehensive evaluation of

the whole experiment at ion shall take place as part of the exit
procedures, A final report shall be prepared by the Participant,
which details the end-to-end result of the experimentation as well
as the exit scenario. The Participant shall request the Bangko
Sentral's approval of the final report and exit scenarioidentified.

The exit procedures shall be triggered in any of the following

instances:

(1) Upon completion of the sandbox activity as evidenced by

either of the following:
(a) Expiration of the approved test implementation time!ine;
or

(b) Attainment of the objectives of the experimentation as

indicated in the test plan regardless of the timeiine.

(2) At the discretion of the Participant. Testing may be stopped

at any time if the Participant becomes incapable of
continuing with the testing activities (i. e. . if there are issues
with its service provider or if the Participant does riot have the
internal skills or expertise to continue with the testing) orifit
wishes to do so (i. e. . if strategic direction has altered the course
of the product roadmap). In this respect, the Participant shall
notify the Bangko Sentral at least 30 calendar days prior to
exit. The Participant shall ensure that it fulfills any existing
obligations to its customers as a consequence of offering the
financial service before exiting or discontinuing the
experiment.

Authority to Operate

Participant/s whose sandbox activities are assessed as

successful and whose products or services are deemed fit for public
consumption shall be issued an authority to operate. The Participant
shall formally submit to the Bangko Sentral an application to operate
and offer for public use and consumption the proposed product or
service that was subjected to the sandbox activity. including any
proposed new regulations or changes to existing regulations.

The Sandbox Oversight Team shall endorse for approval by the

appropriate approving authorities within the Bangko Sentral the
product or service that resulted in a successful sandbox testing.
The pertinent requirements and processing timelines for the issuance
of an authority to offer Electronic Products and Financial Services
(EPFS) shall apply for this purpose. Despite the successful sandbox
testing, the approving authorities reserve the right to approve or
disapprove the proposed product or service, Participants with
disapproved application shall be notified accordingly on the reasons
for the denial.

Revocation of the Regulatory Sandbox Approval or

Terminatibn of the Sandbox Activity The Bangko Sentrai
may revoke the authority of entities to participate in the sandbox or

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 the Participants may voluntarily terminate the sandbox activity,
Certain conditions may trigger the revocation/termination of the
sandbox. which may fall under two categories: (1) sandbox
implementation-related condition; and (2) entity-related condition.

a. Sandbox implementation-related conditions. The following

scenarios related to the implementation of the sandbox may
trigger the revocation of the regulatory sandbox approval:
(1) The Participant is unable to deliver the approved
product/service features or has materialIy deviated from the
approved activities within the sandbox;
(2) The Participant has failed to develop and implement the
appropriate and required safeguards:
(3) The Participant has provided falsified. misleading. or
in accurate information, or has concealed or failed to disclose
material facts in the application;
(4) The Participant has committed significant breaches on data
protection. information security, and AML/CFT protocols in
undertaking sandbox experimentation:
(5) The Participant has failed to effective Iy address any technical
defects or vulnerabilities in the proposed solution, which gives
rise to recurring service delivery concerns or fraudulent
activities; or
(6) Any other significant concern as may be determined by the
Bangko Sentral.

b. Entity-related conditions. The following scenarios related to the

operational and/or business conditions of the participant may
trigger the revocation of the sandbox approval:
(1) The Participant is undergoing or has gone into liquidation or
similar financial standing;
(2) The Participant has been subjected to supervisory
enforcement action/5' that may have direct adverse impact
on the continuity of the sandbox experiment:
(3) The Participant has operated the sandbox activity in a
detrimental manner that negatively affects customers or the
industry or poses safety and soundness concerns to individual
financial institutions or the financial system; or
(4) Any other significant concern as may be determined by the
Bangko Sentral.

Due process shall be observed prior to the revocation of the approval

to participate in the regulatory sandbox.

Participants whose sandbox has been revoked may request

reconsideration. The Bangko Sentral, at its discretion, may allow
reconsideration only in extraordinary circumstances. This is to ensure
that all sandbox applications and all active sandbox activities are given
the appropriate attention to develop and grow, The Bangko Sentral
also reserves the right to revoke the approval without prior notice if
there is an urgent need to protect the financial system, the Participant,
its consumers, or the general public.

In case of voluntary termination or withdrawal from the sandbox

activity, the Participant should notify the Bangko Sentral through a

'Applicable only to existing Bangko Sentral rig Pilipinas Supervised Financial Institutions (BSFlsj
or their technology service providers.

Page 7 of 10
formal Withdrawal Letter citing the date of termination and the
reasons thereof.

Upon revocation or voluntary termination/withdrawal, the Participant

should:

a. Immediately execute its exit plan to cease the operation or the

provision of the product, activity. or service;
b. Notify the customers of the cessation of the product. activity. or
service and their rights to redress where relevant:
c. Comply with requirements of the Bangko Sentra! to securely store
or dispose of all confidential information, including customer
personal information collected during testing pursuant to Section
1002/100Z-Q/'702-SI602-PI7'02. N on Consumer Protection
Standards and Section 148h47-or145. Sri42-PA26-N on Information
Technology Risk Management. and other relevant Bangko Sentral
rules and regulations;
d. Compensate customers who have suffered financial losses. if any.
during the testing period in accordance with the safeguards
submitted by the participant pursuant to Section 1002/1002-
Q/702"SI602-Ply02-N of the MORB and MORNBFl on Consumer
Protection Standards and other relevant Bangko Sentral rules and
regulations: and
e. Submit a report. within 30 calendar days, to the Bangko Sentral on
the actions taken after the revocation or termination.

Reportor, ;,/Requirements* Participants shall submit (i) interim

and (ii) final reports to the Bangko Sentral to facilitate monitoring of
the progress of the regulatory sandbox and the attendant risks. and
assessment of the success of the experiment ation. In the test design
phase. the Bangko Sentral and the Participant shall agree on the
details of the reports to be submitted such as the content, frequency,
and schedule of reporting, among others,

The interim report serves as the status update of the experimentation,

which should contain the following at the minimum:

a. Status of Sandbox in relation to key milestones and timelines.

budget, key performance indicators, and key product/service risks
and mitigation plans;
b. Key issues such as misconduct, fraud, or operational incident (e. g. .
network/connectivity issues, database issues, internal and external
interface issues). if any, and measures taken by the Participant to
address such incidents;
c. Actions or steps taken to address customer complaints. emerging
risks, or other emerging regulatory policy issues that should be
brought to the Bangko Sentral's attention:
d. Changes/Planned changes in the Participant's key personnel.
management, leadership. and business plan, or any concerns on
financial solvency; and
e. Any other matter deemed relevant by the Participant or other
information prescribed by the Bangko Sentrai.

The final report contains the final results of the experiment ation. It
should present the complete set of necessary information on the
testing. At the minimum, the final report should contain the following
information:

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a. Key outcome and performance indicators (time!ine, budget.
scope. and financial metrics);
b, Full account of all incident reports and resolution of customer
complaints;
c. In the case of a failed test, lessons learned from the test;
d. In the case of a successful test. the Participant's plan for the
transition of the product. solution. or service to commercial scale;
and
e. Key insights from the sandbox activity for possible consideration
of the Bangko Sentral in its policy formulation.

The Participant should submit the final report to the Bangko Sentral
within 60 calendar days from the end of the sandbox activity.

Consumer Protection. Participants shall adopt measures to

protect the rights and interests of consumers in implementing
sandbox experiment ation to ensure that customers are well-informed
and protected in availing of the product or service being tested.
Customers should be informed that the product or service being
offered is under the regulatory sandbox platform and that their
availment is part of the pilot implementation. Moreover, customers
should be informed of all the possible risks associated with the
product. The Participant shall ensure that the customers fully
understand the risks and their potential implications.

Customers should also be informed of the related complaints

handling and dispute resolution procedures. in this regard,
Participants shall ensure that adequate, prompt. and effective
mechanisms or procedures for handling and resolving disputes
covering regulatory sandboxissues are in place.

Data Privacy and Data Protection. All regulatory sandbox

experiment at ion shall follow the rules and guidelines on data sharing,
data privacy, and data protection in all implementation phases. All
customers participating in the experimentstion should be informed
that they own the data being collected and processed through the
transaction. and that they have all the rights enumerated under
Philippine data privacy laws. otherwise known as Republic Act 10/73
or the Data Privacy Act of 2012. The rights of the Participants and non"
participants to control the use of customer data are limited to the
boundaries of the consent provided by the customer in availing the
product or service.

Restrictib"s of Sandbox Approval The Bangko Sentral's

approval of the live deployment of the proposed solution shall be
limited to the agreed terms and conditions of the regulatory sandbox
plan and shall not be construed as a means to circumvent any legal or
regulatory requirements in offering of products/services.

ThematIC Cohort, The Bangko Sentral may launch a sandbox

implementation in the form of a cohort in pursuit of a regulatory
agenda on innovative technologies or financial solutions. The Bangko
Sentral shall set the innovation themes for the cohort sandbox
activities to set the impact of a solution orinnovation on the financial
sector in relation to its regulatory agenda or digitalization initiatives,
The Bangko Sentral shall establish the sandbox parameters based on
its objectives in undertaking the sandbox experimentation. The
cohort's duration may vary depending on the initiative's objectives.
scope, and/or complexity.

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 Regulatory Sandbox Lite. Applicants for regulatory sandbox
experimentation may be advised to use a simplified approach known as the
"regulatory sandbox lite". This approach intends to accelerate the end-to-end
process of the testing period and is generally shorter than the entire
regulatory sandbox process. The "regulatory sandbox lite" shall be limited to
BSFls to encourage digitalization and/or participation in the electronic
offering/delivery of financial products/services that are already within the
scope of existing regulations.

The regulatory requirements and expectations that will be temporarily

lifted shall be identified by the Bangko Sentral on a case-by-case basis, taking
into account the merits of the proposed activity as well as the associated risks.

Section 2, Appendix' 755 of the MORB and Appendix Q-99 of the

MORNBFl (Annex E of this Circular) on the regulatory sandbox end-to-end
process map is hereby created to provide an overview of the entire process
flow in the implementation of the regulatory sandbox.

Section 3. Effectivity. This Circular shall take effect fifteen (15)

calendar days following its publication in the Official Gazette or any
newspaper of general circulation.

FOR THE MONETARY BOARD:

EDUARDO BIER
Officer-in- arge

o~C'September 2022

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ANNEX A
Appendix 757Q-95

SAMPLE FORMAT OFTHE LETrER OFiNTENT

IDATEi

INAMEl
tPOSITIONj
tDepartment. in-Chargel
Bangko Sentral rig Pilipinas
A. Mabini Street corner P. Ocampo Street
1004 Malate, Manila

Dear [Addressee],

tStatement of intention to participate in Bangko Sentral's regulatory

sandboxl

IProvision of overview of the company and the proposed innovationl

iprovision of other pertinent details such as attached

requirements/documents and contact detailsl

Sincerely yours,

[signature]
NAMEl
tPOSITION I
[COMPANY]

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ANNEX B
Appendiir152/12-96
REGULATORY SANDBOX APPLICATION FORM

Date of A Iication
Name of A Iicant
Address
Contact Person
Mobile and Landline Number
Email Address
Sandbox Name

Please provide the information requested below. This requirement shall be

submitted as an attachment to the Letter of Intent, duly signed by the
president or officer of equivalent rank in the entity, to participate in the
regulatory sand box.

Part I, Company Profile

I, Company Overview
2. Form of Business Organization and Organizational Structure
3. Board of Directors, Key Officers and Personnel
4, Financial standing of the company (i. e. , latest audited or interim
financial statement)
5. Regulatory Licenses or registrations with the Bangko Sentral (if
applicable)

Part 11. Proposed Innovation Details

I. Proposed Innovation and its Value Proposition
a. Innovative characteristics (includes market research or proof of
genuine innovation )
b. Problem statement and/or the existing gap being solved in the
financial ecosystem
c. Why and how the proposed innovation will solve the problem or
will provide benefits to the consumers and/or the industry
2. Product features and/or functionalities
3. Customer Terms and Conditions and Data Privacy Agreement
4. Total Budget and Source of funding or capitalization
5. Target Market and Market Projections. including operational expenses
6. Operational Workflow/End-to-end Customer Journey
7. Consumer complaints handling/redress mechanism process
8, ITlnfrastructure Ii, e. , system architecture, network diagram. etc. )
9. Business Continuity Plan and Disaster Recovery Setup
10, Identified Risks and Safeguards/Security Controls/Risk Management
Tools (
11. Third-party service/outsourcing partners (if any)

Part 1/1. Sandbox Proposed Test Details

I. Test Duration and Parameters
Z. List of Test Metrics and Reportoria! Requirements
3. Initial Test Plan
4. High Level Milestones and Expected Outcomes/Results
5. Key Personnel/Officers Involved in the Experimentation
6. General Exit and Transition Strategy

=== NOTHING FOLLOWS ===

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ANNEX C
Appendix 1537'Q. 97
REGULATORY SANDBOX ELIGIBILITY SELF-ASSESSMENT CHECKLIST

Complied Provide an overview or indicate

reference to the specific
Eligibility Criteria provision in the submitted
documents/ ro OSal
Yes No
I. The financial solution:
a. uses new or emerging technology or utilizes
an existing technology in an innovative
in a rine r. The applicant shall provide
justification (e. g. , market research ) that shall
support the mentioned characteristic in the
proposed solution; or

b. bridges a market gap in the delivery of

financial products/services. This shall be
supported by research that shall be part of
the documents submitted to the Bangko
Sentrai

2. The applicant demonstrates capability to deploy

the proposed solution through a pilot roll-out
plan or strategy;

3. The applicant provides an initial test plan. which

includes test case scenarios and expected
outcomes of the experiment;

4. The applicant is able to identify significant risks.

including money laundering and terrorist
financing (ML/TF) risks, IT and cybersecurity, data
integrity and data privacy, market acceptability,
consumer protection. and project
implementation/execution. relevant to the
innovation and the corresponding proposed
safeguards and risk mitigation strategies;

5. The applicant has identified Key Performance

Indicators (KPls) or other metrics in monitoring
the progress of the pilot implementation; and

6, The applicant has designed an acceptable exit

and transition strategy once the experimentation
is completed regardless of the outcome.

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ANN Ex D
Appendix154Q. 98
REGULATORY SANDBOX TEST PLAN FORMAT

The details that are required to be indicated in the test plan are, but not
limited to, the following:

I. Overall timeline/test duration and budget

Z, Milestones or key activities
3. Test activities/methodologies and its details
4. Planned start and completion date
5. Actual start and completion date
6. Test performance metrics
7, Customer acquisition and communications plan
8. Test deliver ables

Shown below is a sample format for the test plan schedule, Note that this
may change based on the agreed test plan between the Bangko Sentral and
the participant, which takes place upon the approval of the applicant to join
the regulatory sandbox.

In- Planned Planned Actual Actual

Remarks
char e Start Coin letion Start Coin letion
Milestone/Ke Activit I
Test Activit I
Test Detail I
Test Detail2
Test Details
Test Activit 2
Test Detail I
Test Detail 2
Test Details
Test Activit 3
Test Detail I
Test Detail2
Test Detail3
Milestone/Ke Activi 2
Test Activi
Test Detail I
Test Detail2
Test Detail3
Test Activit 2
Test Detail I
Test Detail2
Test Details
Test Activit 3
Test Detail I
Test Detail2
Test Details

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 .,

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AN N Ex E
Appendix. 1557Q. 99
REGULATORY SANDBOX END-TO-END PROCESS MAP

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Start -+
Testing Completed B
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Submit applicat;o I A
a Testing Stage Testing Discontini, ed
a. requirements
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h Testing Extended C
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Yes I
Reject Application

Evaluation and ,, \ No ,,-...\

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LA Eineibj, ,ty Eligible? ,
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Co Assessiitenl I' \- ,
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Endorse for alternative
approach
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Yes
Improve Solution or
I' '
C I
Business Case ,

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I IP '\'\ NO
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a. Pursue ,

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*. Application? I ,

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Operate \-./
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co
co
Exit Evaluation I' Experiment *, I' Fitfor \ ^
End
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Stage

*,*,' "' I Propose revision or

creation o1 regulations

Notes:
I. On the process of the endorsement for an alternative approach, the BSP shall advise the
applicant that the innovation shall be tested using an alternative regulatory approach
2. Prior to the Testing Stage proper, the Applicant's Sandbox Team and the Ssp's Sandbox
Oversight Team shall discuss and agree on the testing plan and the parameters of the testing
experiment and environment
3. Following the agreed notification requirements, the testing can be discontinued at any time
by the participant Ivoluntary) or by the BSP tinvoluntary).
4. Participants can request for extension up to a maximum of I year to complete the test plan
and its objectives, subject to prior BSP approval
5. If the product/'service is assessed as not fit for public consumption, the applicant could either
improve its business proposition or decide not to pursue the offering of the product/service.

Pagel on