BIS Advances Cross-Border Transaction Compliance with Project Mandala

Introduction to Project Mandala

In a groundbreaking initiative, the Bank for International Settlements (BIS) has joined forces with several central banks worldwide to develop Project Mandala. This project is designed to enhance cross-border transactions while ensuring compliance with regulatory frameworks. Through collaboration among the BIS Innovation Hub Singapore Centre, the Reserve Bank of Australia, Bank of Korea, Bank Negara Malaysia, and Monetary Authority of Singapore (MAS), Project Mandala aims to revolutionize the way international payments are processed.

Milestones Achieved: Proof-of-Concept Stage

On October 28, the BIS announced that Project Mandala has reached the proof-of-concept stage. This significant milestone is part of BIS’s work program for 2024, highlighting the organization’s commitment to improving cross-border payment systems.

Goals of Project Mandala

• Automating compliance for cross-border transactions.
• Enhancing cross-border payments in alignment with G20 priority actions.
• Ensuring privacy and regulatory integrity through innovative technology.

How Project Mandala Works

During the proof-of-concept phase, all participant institutions—comprising commercial banks, central banks, and regulated financial entities—will implement a Mandala node within their systems. This creates a peer-to-peer messaging system that enables relevant policies applicable to transactions to be efficiently communicated.

Automated Compliance Checks

Project Mandala's innovative system will:

1. Transmit essential data to generate proof of compliance.
2. Manage other necessary information for automated compliance checks.
3. Store jurisdictional rules in a shared repository distributed among parties.
4. Apply these rules to consumer transaction data for compliance validation.

Zero-Knowledge Proofs: A Privacy-Preserving Solution

The system employs zero-knowledge proofs (ZK-proofs) to maintain privacy during transaction compliance checks. This technology enables a prover to demonstrate that a particular claim is true without disclosing sensitive details. Maha El Dimachki, head of the BIS Innovation Hub Singapore Centre, has expressed optimism regarding the project, stating that it is leading the way in pioneering a compliance-by-design approach to bolster cross-border payments.

Conclusion

As Project Mandala continues to progress, the potential for improving cross-border payments while ensuring regulatory compliance remains promising. By utilizing innovative technology and fostering collaboration among central banks, this initiative may transform international transaction protocols, enhancing efficiency, privacy, and compliance.

Learn More

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