How different jurisdictions approach AI regulatory sandboxes

Regulatory sandboxes provide a controlled environment for companies to test innovations while testing the bounds of regulation under the auspices of the regulator. In several jurisdictions, there are already provisions for sandboxes, which generally allow companies to apply for a waiver of regulatory obligations, often referred to as regulatory relief or mitigation, for a set period while the company tests out an innovative artificial intelligence system or feature. Often this can take the form of a company testing the impacts of an incremental change to current regulations. The coordinating regulator oversees the company and has greater access to observe whether the regulatory obligations should be modified in the future.

Regulatory sandboxes were first employed to test financial regulations in the U.K. in 2015, leading to various changes to regulations. In recent years, the idea of applying this concept to other innovative technologies has been put forth, as these technologies will likely change in coming years.

The Organisation for Economic Co-operation and Development, citing the use of regulatory sandboxes for financial technologies, recommends governments "consider using experimentation to provide a controlled environment in which AI systems can be tested and scaled up" in its AI principles, when regulatory sandboxes could provide such an environment. So far, regulatory sandboxes for AI will be administered in each EU member state, Utah, Singapore and the United Arab Emirates.