Project Mandala embeds policy compliance in cross-border transactions

The Bank for International Settlements (BIS) and its central bank partners have successfully demonstrated with Project Mandala that regulatory compliance can be embedded in cross-border transaction protocols.

This experimental project is a collaboration between the BIS Innovation Hub Singapore Centre, the Reserve Bank of Australia, the Bank of Korea, Bank Negara Malaysia and the Monetary Authority of Singapore.

The project, which has now reached proof of concept stage, aligns with the G20 priority actions for enhancing cross-border payments, as it has the potential to reduce costs and increase transaction speed, while preserving regulatory compliance.

Regulatory frameworks pertaining to cross-border transactions are essential to the safe and secure operation of the global financial system, but complying with disparate jurisdictional regimes presents challenges that have contributed to increased costs and affected the speed of transactions.

Project Mandala aims to increase the speed and efficiency of cross-border transactions by automating compliance procedures, enhancing transparency of country-specific policies and providing real-time reporting and monitoring for regulators and supervisors.

The project developed 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. To preserve privacy, the compliance proof can be verified without revealing underlying customer data. The project proved its technical feasibility through two primary use cases:

• Cross-border lending between Singapore and Malaysia: Mandala streamlined the compliance processes for capital flow management measures (CFM) and sanctions screening for financial institutions and facilitated real-time compliance monitoring for central banks.
• Cross-border financing for capital investments between South Korea and Australia: Mandala automated the sanctions screening and CFM reporting requirements for an unlisted securities transaction.

Mandala successfully integrates with both nascent digital asset settlement systems, such as a wholesale central bank digital currency, and traditional payment messaging systems like Swift. This dual integration ensures the system's versatility and modularity in supporting both future digital asset ecosystems and existing financial infrastructures. For digital assets, Mandala deployed programmable compliance that can be embedded into smart contracts.

 

Finance chiefs turn to AI to combat crisis of confidence in corporate reporting

Fears about the integrity and reliability of crucial corporate reporting data are weighing on the minds of finance leaders around the world, but hopes are rising that Artificial Intelligence (AI) may offer some much-needed answers, according to the 2024 EY Global Corporate Reporting Survey. 

The ninth edition of the survey explores the views of more than 2,000 finance leaders and 815 institutional investors around the world on the state of corporate reporting. It assesses the major challenges businesses are facing in financial and non-financial reporting, the actions they are taking and the outlook for the coming years.  

Among the key findings from the research is an almost universal concern amongst finance leaders that the non-financial data produced by their organisations is not fit for purpose to support decision-making – 96% of respondents say they worry about the integrity and reliability of this data, and many have reported problems with data formats (39%) and inconsistencies (35%).  

The findings sound further alarms on corporate reporting standards, as they expose fears over the impact that poor data may have on important global goals. Half of those surveyed are seriously worried that organisations will miss vital sustainability targets over the coming years – only 47% of finance leaders and 53% of investors believe that most corporates are on track to achieve stated goals.  

The survey shows that the focus by stakeholders on non-financial drivers of value is intensifying, with more than two-thirds of finance leaders (69%) saying that they have noticed investors asking more questions about these issues than they did two years ago.

Many of those surveyed (55%) harbour fears that allegations of greenwashing could be levelled against companies in their various industries, highlighting underlying doubts that non-financial disclosures are backed up by the necessary due diligence, data and processes. 

Investors are hopeful that new reporting standards could help businesses’ efforts to improve sustainability disclosures – 78% of respondents say they think new regulations could have a positive impact. However, finance leaders seem to have worries: more than half (55%) say they expect costs to be burdensome, and two-fifths (44%) believe that meeting the new rules would be highly complex.  

Hopes are high, however, that technology could provide urgently needed answers. More than half of investors (57%) believe that AI could prove very useful as a tool to assess the credibility and accuracy of financial and non-financial disclosures, while 52% think it could be used to assess alternative data, and 51% believe it could help to spot discrepancies in company disclosures.  

Two-fifths of finance leader respondents (43%) say they are enthusiastic about using AI in corporate reporting, however, more than one-quarter (29%) say they are holding out until the risks of the technology are better understood; 39% are apprehensive about the likely costs; and 36% are worries about ensuring they comply with all the relevant rules and regulations relating to AI. Only one-third (32%) say they already have high-grade technology in place for managing and analysing data. 

 

Aramco, SIDF and Taulia announce supply chain financing solution

Aramco, a leading integrated energy and chemicals company, and Taulia, an SAP company — supported by the Saudi Industrial Development Fund (SIDF) as one of the key finance providers of the domestic industrial sector — have signed agreements to establish a supply chain financing solution.

The entities are joining forces to establish one of the world’s largest supply chain financing programmes, which aims to provide an alternative and affordable source of financing for Aramco’s suppliers. Announced during the FII 8th Edition in Riyadh, the solution is expected to enhance suppliers’ liquidity and cash forecasting accuracy, while reinforcing Aramco’s supply chain resilience.

The financing solution aims to unlock billions of Saudi Riyals in liquidity, enabling suppliers to optimise working capital, gain access to alternative financing, and strengthen business relationships.

“At Aramco, we recognise the crucial role our suppliers play in contributing to our business continuity, which in turn enables the delivery of energy and petrochemical products reliably and competitively across the globe,” commented Ziad T. Al-Murshed, CFO and Executive Vice President of Finance, Aramco. “Together with our partners, we are introducing this fintech solution for our suppliers, offering them an access to a unique and competitive financing opportunity.” 

 

MAS unveils Global Finance & Technology Network for next phase of fintech growth

The Monetary Authority of Singapore (MAS) has announced the establishment of the Global Finance & Technology Network (GFTN) to further strengthen Singapore as a global fintech hub and enhance global connectivity for impactful innovation in financial services.

The first phase of fintech growth in Singapore was driven by experimentation, as well as promotion of key initiatives to harness technology and innovation in the financial sector. These included developing a regulatory sandbox framework, establishing cross-border payments linkages, piloting digital assets and tokenisation, and promoting AI adoption as part of MAS’ goal to develop Singapore as a Smart Financial Centre. A highlight has been the growth of the Singapore FinTech Festival (SFF), which has become the largest platform for the global fintech community to collaborate on catalysing technology and innovation in finance.

To further build on industry collaboration and enhance connectivity for impactful innovation in financial services, GFTN will be established to catalyse the growth of the Singapore fintech ecosystem and drive greater synergies and networks with the global fintech community. GFTN will work with MAS to advance industry and policy dialogues in payments, asset tokenisation, and AI/quantum. GFTN will also support the central bank’s efforts to develop and grow a vibrant fintech ecosystem, and scale SFF as the premier global fintech event.

 

Thunes and Circle unveil stablecoin-powered liquidity management solution

Thunes has announced a strategic collaboration with Circle, the issuer of stablecoins USDC and EURC through its regulated entities, to accelerate innovation in stablecoin liquidity management.

The alliance is designed to let members of Thunes’ Direct Global Network to fund and execute cross-border transactions using USDC, enabling faster transfers in seconds, seven days a week. The use of USDC settlements should boost liquidity and reduce capital costs for Thunes’ members.

Regulated stablecoins act as a bridge between traditional fiat currencies and digital assets. They can offer a reliable medium for enhancing liquidity in payments, mitigating volatility, and facilitating seamless, near-instantaneous transactions across global markets. Such stablecoins leverage the speed, immutability and traceability advantages of blockchain technology, making them a new financial tool for businesses and individuals.

Thunes says it will use the power of stablecoins to optimise cross-border transactions and deliver faster, more cost-effective payment solutions and new opportunities for growth to members of its Direct Global Network.

 

IFC and C2FO to enhance financing for local enterprises in Africa

To increase the availability of affordable finance and strengthen local enterprises and supply chains across Africa, IFC, a member of the World Bank Group, has announced a strategic partnership with global supply chain finance platform, C2FO.

The partnership will see IFC and C2FO jointly develop, test, and deploy a specialised, web-based multinational working capital platform for micro, small, and medium enterprises (MSMEs) across Africa. This is IFC’s first dedicated supply chain financing facility in Africa for smaller businesses.

MSMEs account for up to 90% of businesses and 80% of jobs across the continent, yet these enterprises struggle to obtain working capital through the traditional financial system, constraining the growth of firms. Such financing is critical for helping build more sustainable economic ecosystems, and for strengthening food security, a strategic priority announced by World Bank President Ajay Banga last week.

The program will use C2FO’s patented technology and dynamic discounting model to connect MSME suppliers and their anchor buyers with global and local financial institutions. Those institutions will use the platform to extend affordable receivables financing to suppliers through the funding of discounted invoices accepted for payment by buyers. In turn, African MSME suppliers should be able to improve their access to working capital by converting sales receivables into immediate cash, leveraging the better credit risk of buyers without requiring collateral or facing other barriers of traditional lending.

The programme will begin in Nigeria, where C2FO estimates that a national supply chain finance platform could unlock around US$25bn in annual financing for MSMEs. IFC has estimated that for every US$1m of working capital made available in developing countries,16 new jobs are created over two years.