BIS and big banks introduce Project Mandala for improved cross-border transactions 

The Bank for International Settlements and the central banks of Australia, South Korea, Malaysia and Singapore have implemented Project Mandala, a system that incorporates regulatory compliance directly into cross-border financial transactions.

This initiative addresses common barriers to international transactions, such as changing regulations that often increase costs and slow transaction speeds. According to BIS, it hopes to facilitate cross-border payments without compromising privacy or the quality of regulatory controls by using a “compliance by design” approach.

Project Mandala can also integrate with both modern digital asset systems such as central bank digital currencies and established systems such as SWIFT, making it flexible for traditional financial institutions and emerging digital financial systems.

Improved cross-border transactions

Project Mandala has reached the proof-of-concept stage by demonstrating its functionality in a controlled environment. The project’s objectives align with the G20’s vision of making cross-border payments faster, cheaper and more transparent.

This system uses a decentralized architecture consisting of three main components: peer-to-peer messaging system, rules engine, and evidence engine. These elements ensure that all regulatory checks are completed before payments are processed.

Once the controls are validated, a “proof of compliance” is created that accompanies digital transactions across borders. This proof of compliance is also designed to protect user privacy and enable verification without revealing sensitive customer data.

Project Mandala demonstrated its real-world application with two specific use cases. The first involved cross-border lending between Singapore and Malaysia, where the system automates capital flow management and compliance with sanctions screening.

The second case, involving South Korea and Australia, improved compliance processes for unlisted securities transactions in cross-border financing, according to BIS.