Key Points
- BIS and multiple central banks have successfully demonstrated automated compliance checks for cross-border transactions using zero-knowledge proofs, marking a significant advancement in international payment systems
- The project, part of BIS’s 2024 key initiatives and aligned with G20 priorities, enables regulatory compliance verification while maintaining transaction privacy through a distributed node-based system
Project Overview and Partnerships
The Bank for International Settlements (BIS) has reached a crucial milestone with Project Mandala, demonstrating that regulatory compliance can be effectively embedded into cross-border transaction protocols. The initiative represents a collaborative effort between several major financial institutions, including the BIS Innovation Hub Singapore Centre, the Reserve Bank of Australia, the Bank of Korea, Bank Negara Malaysia, and the Monetary Authority of Singapore (MAS).
Technical Implementation and Innovation
At the heart of Project Mandala’s proof-of-concept stage is a sophisticated peer-to-peer messaging system where participating institutions operate individual Mandala nodes within their systems. The project utilizes zero-knowledge proofs (ZK-proofs) technology, allowing compliance verification without exposing sensitive transaction details. This innovative approach enables participants to confirm regulatory compliance while maintaining strict privacy standards.
Future Implications and Leadership Response
Maha El Dimachki, head of the BIS Innovation Hub Singapore Centre, expressed optimism about the project’s early results, highlighting its potential to transform cross-border payments. El Dimachki emphasized that Mandala is “pioneering the compliance-by-design approach to improve cross-border payments without compromising privacy or the integrity of regulatory checks.”
The project, which was included in BIS’s work program on January 23, 2024, continues to align with G20’s priority actions for enhancing cross-border payments, positioning it as a potentially transformative force in international financial transactions.
