- Project Mandala automates compliance for cross-border transactions, aligning with G20 actions to enhance payment speed and reduce costs.
- Developed by the BIS Innovation Hub with central banks from Singapore, Australia, Malaysia, and South Korea.
The Bank for International Settlements (BIS) along with its central bank partners including the Reserve Bank of Australia, the Bank of Korea, Bank Negara Malaysia, and the Monetary Authority of Singapore, have recently showcased an advancement in financial technology with Project Mandala.
This project focuses on automating compliance in cross-border transactions, demonstrating a substantial step forward in addressing the complexities of regulatory adherence across different jurisdictions.
Singapore, 28 October 2024—Project Mandala has reached a proof of concept stage and is part of an experimental initiative led by the BIS Innovation Hub Singapore Centre. It seeks to align with G20 priority actions aimed at enhancing the efficiency of cross-border payments.
The project’s goal is to reduce costs and increase the speed of these transactions while ensuring that they remain compliant with various regulatory standards.
Maha El Dimachki, Head of the BIS Innovation Hub Singapore Centre, emphasized the project’s innovative approach:
“Mandala is pioneering the compliance-by-design approach to improve cross-border payments without compromising privacy or the integrity of regulatory checks.”
This method integrates compliance into the fabric of transaction protocols, ensuring that all regulatory requirements are met before any funds are transferred.
Sopnendu Mohanty, Chief FinTech Officer at MAS, highlighted the collaborative nature of the project:
“This collaboration between Singapore, Australia, Malaysia, and South Korea to incorporate programmable compliance into payment flows marks a significant development in advancing seamless cross-border financial transactions.”
Project Mandala extends the architecture of Purpose Bound Money to support critical regulatory functions such as capital flow management and sanctions screening.
Streamlining Compliance in Cross-Border Transactions
Traditionally, cross-border financial operations have been bogged down by the diverse and often conflicting regulatory frameworks of different countries, leading to increased costs and slower transaction speeds.
Project Mandala addresses these issues by automating compliance procedures, which not only speeds up the process but also enhances transparency and provides real-time reporting capabilities for regulators and supervisors.
Key Innovations and Technical Achievements
The core of Project Mandala’s innovation lies in its decentralized system designed to streamline cross-border payments by embedding regulatory compliance directly within the transaction process. This system combines a peer-to-peer messaging platform, a rules engine, and a proof engine to ensure that all compliance checks are complete before initiating any financial transfer.
Moreover, the system is capable of generating a compliance proof for each transaction, which supports the integrity of digital settlements across borders without compromising customer privacy.
Integration with Existing and Emerging Financial Systems
Project Mandala is not only compatible with emerging digital asset systems like wholesale central bank crypto currencies but also integrates seamlessly with traditional payment systems such as SWIFT.
This dual capability ensures that Mandala can support both current financial infrastructures and future digital asset ecosystems. For digital assets, particularly, Mandala utilizes programmable compliance embedded into smart contracts, further enhancing its utility and adaptability.
Through its technical trials, including scenarios like cross-border lending between Singapore and Malaysia and financing for capital investments between South Korea and Australia, Mandala has demonstrated its capability to significantly reduce compliance burdens while maintaining real-time monitoring and enforcement.
