Project Mandala enters phase 2 as it pushes for automation in cross-border payment compliance

The transition of Project Mandala to its second phase marks a pivotal advancement in the global effort to resolve the regulatory friction inherent in cross-border financial transactions. This initiative, led by the Bank for International Settlements (BIS) Innovation Hub Singapore Centre in collaboration with central banks including the Reserve Bank of Australia, the Bank of Korea, Bank Negara Malaysia, and the Monetary Authority of Singapore, has already demonstrated significant potential. The Phase 1 report, published in October 2024, confirmed the technical feasibility of embedding compliance rules directly within cross-border transaction protocols.

Mandala’s core innovation lies in its compliance-by-design architecture, which encodes jurisdiction-specific rules into a shared digital framework. This approach enables the real-time monitoring, pre-validation of checks, and automated proof generation before payments are executed. Phase 1 successfully proved this concept in simple bilateral use cases, specifically cross-border lending between Singapore and Malaysia and capital investment financing between South Korea and Australia. The results unequivocally demonstrated that automation could enhance transaction speed, substantially reduce duplicate checks, and provide regulators with high-integrity, real-time compliance oversight.

Commencing in November 2025, Phase 2 significantly expands this scope, welcoming new participants such as the Bank of France, the Reserve Bank of India, the Central Bank of Kuwait, and the Bangko Sentral ng Pilipinas, alongside the continuing involvement of Bank Negara Malaysia. This next phase will concentrate on testing the system’s scalability, expanding to a broader range of use cases, and deepening the research into programmable compliance for digital assets.

In its long-term vision, Project Mandala directly aligns with the G20 Roadmap for Enhancing Cross-border Payments, which prioritizes making international transactions faster, cheaper, more transparent, and more inclusive. The project offers the early architecture for a common, machine-readable protocol that could underpin all major cross-border payment rails. By ensuring that transactions are pre-validated for compliance against a universal, dynamic set of rules, Mandala aims for a genuinely frictionless procedure for global settlement.

Furthermore, Project Mandala holds the potential to instigate a fundamental paradigm shift in regulatory compliance. It seeks to replace the current system, which relies on retrospective checks and manual intervention often leading to costly delays, with a programmable, preventative approach. Utilizing cryptographic proofs, such as Zero-Knowledge Proofs, Mandala can deliver automated compliance validation while preserving the privacy of underlying customer data. This shift is expected to significantly reduce compliance costs for financial institutions and provide supervisory authorities with superior real-time oversight.

Crucially, Project Mandala is positioned as a critical foundational layer for the emerging digital finance ecosystem. While many industry projects focus on the mechanics of exchanging assets like CBDCs across borders, Mandala provides the essential compliance layer that must accompany such exchanges. By potentially establishing a mandated global standard, the project moves beyond theoretical concepts to lay the groundwork for a more unified, efficient, and secure global financial infrastructure.