Project Mandala, a collaboration between the Bank for International Settlements (BIS) innovation hub Singapore centre, Monetary Authority of Singapore (MAS), Reserve Bank of Australia, Bank of Korea and Bank Negara Malaysia, has successfully demonstrated that regulatory compliance can be embedded in cross-border transactions.
Project Mandala developed a compliance-by-design decentralised system that streamlines cross-border payments by embedding regulatory compliance within a network of financial institutions and central banks.
This decentralised architecture integrates three core components: a peer-to-peer messaging system, a rules engine and a proof engine.
It ensures all necessary compliance checks are completed before the payment instruction is initiated and once all checks have been completed, the system automatically generates a compliance proof, which can accompany any digital settlement asset or payment instructions across borders.
This project proved its technical feasibility through cross-border lending between Singapore and Malaysia and cross-border financing for capital investments between South Korea and Australia.
Project Mandala successfully integrates with both nascent digital asset settlement systems, such as a wholesale central bank digital currency, and traditional payment messaging systems.
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The project has now reached the proof-of-concept stage.
Sopnendu Mohanty, chief FinTech officer at MAS notes that “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.”
“MAS is glad to have contributed to the development of Project Mandala, by extending the architecture of Purpose Bound Money to support capital flow management and sanctions screening,” Mohanty adds.
