Pub. 9 2019 Issue 3

14 www.azbankers.org Applicants must submit to the Attorney General a testing plan explaining the objectives of testing within the sandbox, the metrics for measuring the test’s success, why testing needs to be done in the market, why the product or service would benefit from the sandbox, and, if applicable, why an applicant cannot proceed with a test out- side the sandbox. They must also provide a timeline, including key milestones and any anticipated extensions. The Attorney General’s Office requires applicants to provide a de - tailed consumer protection plan describing marketing plans, identi- fying consumer risks and how the applicant intends to address those risks, and explaining how they will monitor the testing to assess the test and protect consumers from the test’s failure. Once admitted to the sandbox, participants must adhere to a number of statutory requirements, including caps on individual and aggre - gate consumer loan and money transmission transaction amounts, and certain statutory requirements for consumer loans, money transmission, sales financing, and investment management. Before testing begins, all participants must clearly and conspicuous- ly disclose, in both English and Spanish, a variety of information to consumers, including: 1. The participant’s name, contact information, and sandbox registration number. 2. The innovative financial product or service that is offered pursuant to the sandbox. 3. Notification that the state does not endorse or recommend the innovation. 4. The fact that the innovative financial product or service is a temporary test that may be discontinued at the end of the testing period, including the expected end date of the testing period. 5. Information on how consumers may contact the Attorney Gen - eral to file complaints about the innovative financial product or service, including the Attorney General’s telephone number and website address. Participants must retain all records, documents, and data produced in the ordinary course of business about the test and must alert the Attorney General’s office to a testing failure or data breach. 26 Beyond the statutory requirements, the Attorney General’s Office has implemented procedures to routinely engage with applicants and participants as they move through the sandbox process. This degree of engagement, which far exceeds that provided by licensing agencies, affords participants a unique degree of flexibility with their innovation and enables the Attorney General to closely moni - tor testing, consumer engagement, milestones, and an innovation’s success or failure in the market. A critical feature of the fintech and proptech sandboxes is reci - procity, empowering Arizona to enter into agreements with other states – or other countries – to enable sandbox participants to test their innovations in other jurisdictions. 27 Businesses seeking to offer financial products or services in the U.S. must often obtain one or more licenses from each state on top of complying with federal regulations. But the reality is that having 50 licenses doesn’t make a business 50 times more compliant and it doesn’t afford consumers 50 times more protection. States are just now contemplating the notion of reciprocal licensing as the realities of our national compet- itive disadvantage come into greater focus. If other states follow Arizona’s lead in adopting reciprocity for sandbox innovations, they can further incentivize companies to bring and keep their businesses in the U.S. Arizona Sandbox Participants The Attorney General has received 15 applications, and to date has admitted the following seven companies: 28 1. Omni Mobile, Inc. (admitted Oct. 11, 2018) is developing a financial service platform implementing an array of avante garde technologies to improve payment systems through the use of direct ACH payments through Omni’s centralized wallet infrastructure. Omni will test its product at the Westward Look Wyndham Grand Resort and Spa in Tucson. 2. Grain Technology, Inc. (admitted Oct. 29, 2018) is develop - ing an application that offers consumers personalized sav - ings plans and credit opportunities through the consumer’s existing bank account. 3. Sweetbridge NFP, Ltd. (admitted Oct. 29, 2018) is developing a blockchain-enabled product designed to enable asset liquidity Continued from page 13 A critical feature of the fintech and proptech sandboxes is reciprocity, empowering Arizona to enter into agreements with other states – or other countries – to enable sandbox participants to test their innovations in other jurisdictions. 27