The Bank for International Settlements, in collaboration with the central banks of Australia, Korea, Malaysia, and Singapore, is investigating the integration of regulatory requirements into cross-border transactions.
Disparate policy and regulatory frameworks across different jurisdictions pose significant challenges to efficient cross-border payments. These inconsistencies contribute to a heavy regulatory compliance burden throughout the payment process, prolong the time required for transactions, and create uncertainties for stakeholders.
Known as Project Mandala, this Proof-of-Concept aims to alleviate the compliance burden by automating processes, offering real-time transaction monitoring, and enhancing transparency regarding country-specific regulations.
This initiative addresses issues highlighted during Project Dunbar, a previous BIS-led exploration of an experimental multi-central bank digital currency (mCBDC) platform.
The proposed compliance-by-design framework is designed to facilitate a more efficient transfer of various digital assets, including CBDCs and tokenized deposits, and could serve as a foundational compliance layer for both existing and emerging wholesale and retail payment systems.
Potential measures being considered include quantifiable and configurable foreign exchange rules, as well as anti-money laundering and counter-terrorism financing (AML/CFT) protocols.