New Decree about Regulatory Sandbox

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On September 14, 2020, the National Government issued Decree 1234, whereby matters related to the controlled testing environment for financial innovation activities are regulated.

This regulation allows to test innovative technological developments in the provision of services of the entities supervised by the Colombian Superintendence of Finance (CSF).

The innovative technological developments that will be allowed must have the following characteristics: (i) increase efficiency in the provision or offering of services; (ii) solve a problem of financial consumers; (iii) facilitate financial inclusion; (iv) improve regulatory compliance; and (v) develop markets or improve their competitiveness.

It is important to note that this testing environment is offered for existing entities that have proposals for new products or financial innovation developments or for new entities wishing to become entities supervised by the CSF for the provision of services subject to supervision by this entity.

Within this modality, the CSF has the power to issue a temporary operating certificate, which allows whoever meets the requirements of the decree, to start operations as a supervised entity in a controlled testing environment with strict supervision of the CSF.

Once the test space is finalized, which may not exceed two years from the date of issuance of the temporary certificate of operation, and provided that the objectives of innovative technological development are met, the entity may transition to a definitive license of a financial, stock market or insurance sector entity, evidencing compliance with the requirements requested in the controlled testing environment.

This decree is a great advance for the development of new technologies for the financial sector and benefits many startups and companies that, although they still do not meet all the requirements to incorporate a supervised entity, have innovative technological developments that will benefit financial consumers.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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