Project Mandala: BIS and Central Banks Lead a Compliance-By-Design Revolution in Cross-Border Payments

Project Mandala, led by BIS and central banks from Australia, Korea, Malaysia, and Singapore, successfully demonstrates a compliance-by-design system for cross-border payments, streamlining compliance and enhancing transaction efficiency. The project integrates with both digital and legacy financial systems, paving the way for the future of global financial regulation.


29 October 2024 – The Bank for International Settlements (BIS) Innovation Hub, in collaboration with central banks from Australia, Korea, Malaysia, and Singapore, has successfully concluded the proof of concept for Project Mandala, a pioneering initiative aimed at embedding regulatory compliance directly within cross-border transaction protocols. This experimental project, spearheaded by the BIS Innovation Hub Singapore Centre, supports the G20’s push for more efficient cross-border payment solutions by reducing costs and improving transaction speed while maintaining regulatory oversight.

Maha El Dimachki, Head of the BIS Innovation Hub Singapore Centre, stated, “Mandala is pioneering the compliance-by-design approach to improve cross-border payments without compromising privacy or the integrity of regulatory checks. We are optimistic about the potential of these early results to enhance cross-border payments.”

Project Mandala addresses the complexities and challenges posed by diverse regulatory frameworks, which have often slowed down cross-border transactions and inflated costs. By implementing compliance-by-design, the project aims to streamline compliance procedures, increase transparency on country-specific regulations, and provide real-time monitoring for regulatory bodies.

Technical Achievements and Innovations in Project Mandala

Mandala utilizes a decentralized system that embeds regulatory compliance across a network of central banks and financial institutions. This system integrates three key components: a peer-to-peer messaging system, a rules engine, and a proof engine, which collectively ensure compliance before a transaction is initiated. For added security and privacy, the system generates a compliance proof without disclosing underlying customer data, enabling cross-border payments to be both transparent and confidential.

The technical feasibility of Mandala was successfully tested in two cross-border use cases:

  1. Cross-border Lending between Singapore and Malaysia: Mandala simplified compliance processes for capital flow management and sanctions screening, facilitating real-time compliance monitoring by central banks.
  2. Cross-border Financing between South Korea and Australia: Mandala automated reporting requirements for sanctions screening and capital flow management in an unlisted securities transaction.

Seamless Integration with Digital and Legacy Systems

Mandala is versatile, capable of integrating with both digital asset systems, such as central bank digital currencies (CBDCs), and established payment messaging networks like SWIFT. This dual compatibility enhances Mandala’s adaptability for use in current and future financial ecosystems. Additionally, Mandala supports programmable compliance for digital assets, embedding compliance processes directly into smart contracts.

Bank Negara Malaysia Assistant Governor Dr. Norhana Endut remarked, “Project Mandala has given us a peek into the future of cross-border payments, demonstrating a potential solution to address existing compliance challenges. This project marks a significant step forward in creating faster, more secure, and efficient international transactions, reinforcing our commitment to economic integration and enhanced regulatory oversight.”

Project Mandala, presented at the BIS Innovation Hub, signals a pivotal advancement in cross-border payments, setting the stage for a more integrated, efficient global financial system aligned with evolving regulatory standards.

Author: Terry KS

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