Disparate policy and regulatory frameworks between different jurisdictions are among the chief obstacles to smooth and efficient cross-border payments. They contribute to the regulatory compliance burden across the payment chain, increase the time for cross-border transactions and introduce uncertainties among stakeholders. Dubbed Project Mandala, the Proof-of-Concept seeks to ease the policy and regulatory compliance burden by automating compliance procedures, providing real-time transaction monitoring and increasing transparency and visibility around country-specific policies. In doing so, it aims to address key challenges identified during Project Dunbar, another BIS-led initiative which developed an experimental multiple central bank digital currency (mCBDC) platform. "Mandala is pioneering the compliance-by-design approach to improve cross-border payments without compromising privacy or the integrity of regulatory checks," says Maha El Dimachki, head of the BIS Innovation Hub Singapore Centre. "We are optimistic about the potential of these early results to enhance cross-border payments." The initiative entailed a compliance-by-design decentralised system that could help streamline 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 that all necessary compliance checks have been completed before the payment instruction is initiated. Once all checks have been completed, the Mandala system automatically generates a compliance proof, which can accompany any digital settlement asset or payment instructions across borders. The project proved its technical feasibility in cross-border lending between Singapore and Malaysia and cross-border financing for capital investments between South Korea and Australia, automating sanctions screening and CFM reporting requirements . Mandala is a futrue-proofed conept, integrating with both nascent digital asset settlement systems, such as a wholesale central bank digital currency, and traditional payment messaging systems like Swift. For digital assets, Mandala deployed programmable compliance that can be embedded into smart contracts.