Good morning. The Dow Jones Risk Journal Summit convened in London on Thursday, the latest in a series of global events from Risk Journal.

Some highlights (with free links) from Thursday:

• Tech-powered enforcement: Innovations in financial markets such as cryptocurrencies and fintechs are important both for growing the U.S. economy and in countering financial crimes such as money laundering, Assistant Treasury Secretary Jonathan Burke told Dow Jones’ Nick Elliott.
   
• AI and competition: AI algorithms and agentic AI are testing in real time how well the U.K.’s competition watchdog can protect consumers while still promoting competition, reports Yusuf Khan.
   
• Evasion shift: Red flags once signaling potential sanctions evasion are giving way to more sophisticated tactics forcing manufacturers, distributors and shippers to do sharper due diligence, writes Kim Nash.
   
• Evolving crisis response: A wave of major global disruptions—including the Covid-19 pandemic, tariffs and wars—is forcing companies to hone their crisis responses with dedicated teams and new technologies, reports Richard Vanderford.
   
• More from London: Check out the Morning Risk Report on Monday and Tuesday for additional coverage from the Risk Journal Summit.

U.S. and China pursue guardrails to stop AI rivalry from spiraling into crisis.

Washington and Beijing are weighing the launch of official discussions about artificial intelligence, said people familiar with the matter, as their AI competition threatens to become the arms race of the digital era.

What this means. Establishing official discussions on AI would mark the start of U.S.-China engagement about the issue under the current Trump administration, reflecting a recognition that the rush to produce more powerful AI models could trigger a crisis neither government has the means to manage. The Biden administration started a dialogue with China, but it yielded limited results, and since then the risks have grown.

U.S. audit watchdog should rescind its independence rules, SEC official says.

The U.S. audit watchdog should rescind its rules around conflicts of interest for auditors and their clients and follow the Securities and Exchange Commission’s rules, which the securities regulator may change, an SEC official said.

The SEC plans to weigh revising auditor independence rules over the next year, starting with releasing informal, nonbinding guidance based on companies’ recurring questions, Chief Accountant Kurt Hohl said backstage at a conference Thursday.

• The Treasury Department sanctioned Iraq’s deputy oil minister on Thursday, alleging that he was involved in a scheme to help Iran sell its oil in violation of an international embargo by blending it with Iraqi crude.
   
• French prosecutors are summoning Elon Musk to the French capital again—this time to face preliminary criminal charges in a sprawling investigation into his social-media platform, X.
   
• The ripple effects of artificial intelligence on the economy are only expected to intensify, from job displacement to a shift in GDP from labor to capital. The unknowns are prompting some to revisit an old idea with a fresh face: a tax on AI processing, aka “compute.”
   
• Two U.S. citizens were sentenced to 18 months in federal prison for hosting laptop farms that enabled North Korean IT workers to fraudulently obtain remote employment at American companies, generating more than $1.2 million for North Korea’s government, the Justice Department announced Wednesday. (free link)
   
• Italy’s UniCredit said it reached a preliminary deal to sell part of its Russian unit to a private investor in the United Arab Emirates for an undisclosed sum, in its biggest step yet to exit the country.
   
• JPMorgan Chase CEO Jamie Dimon has likened prediction markets to gambling, and the company is urging caution around how its 320,000 employees use them. New internal guidelines stop short of a ban, though, potentially allowing employees to trade on markets involving the company itself.

“There is a misnomer about this deregulatory agenda. I don't see it as deregulatory. We refer to it as regulatory modernization.”
–Jonathan Burke, assistant secretary of the Treasury for terrorist financing

“What it really boils down to in a lot of cases is the fact that something is unlawful, whether a person does it or a machine does it. In other words, if you didn't want the people doing it, you probably don't want your machines doing it either.”
–Juliette Enser, executive director for competition enforcement and markets, U.K. Competition and Markets Authority

“I think sustainability as we knew it is actually dead.”
–Mardi McBrien, senior director, enhancing transparency, corporate performance and accountability, World Business Council for Sustainable Development

“Resilience is about having choices when you need them.”
–Kathy Wengel, chief technical operations and risk officer, Johnson & Johnson

“Business is now part of the terrain of geopolitics.”
–Henry Wilkinson, chief intelligence officer, Dragonfly

“Laws and regulations tend to lag behind technology, so you sometimes have to take more of an ethical view.”
–Kirin Kalsi, general counsel, E.ON UK, speaking about the governing of AI.

Gulf states lift restrictions that blocked ‘Project Freedom’ in Strait of Hormuz.

Saudi Arabia and Kuwait have lifted restrictions on the U.S. military’s use of their bases and airspace imposed after the start of the American operation to reopen the Strait of Hormuz, according to U.S. and Saudi officials, removing a hurdle that had tripped up President Trump’s effort to move ships through the vital waterway.

The Trump administration is now looking to restart the operation to guide commercial ships with naval and air support that it had paused after 36 hours this week, U.S. officials said. It isn’t clear when that could happen though Pentagon officials gave a timeline of as early as this week.

• Trump Says Cease-Fire Still in Effect After U.S., Iran Exchange Fire

Trade court rules against Trump’s new global tariffs.

A federal trade court ruled President Trump didn’t have the authority to impose new global tariffs after a previous set of levies was struck down by the Supreme Court in February.

The decision on Thursday from the Court of International Trade invalidated Trump’s attempt to impose a new 10% tariff on goods from virtually every nation by invoking authority under Section 122 of the Trade Act.

• Until recently, artificial intelligence was a welcome tailwind for U.S. growth. We’re beyond that now. AI is more like a hurricane-strength weather system making itself felt across the entire economy.
   
• Advances in artificial-intelligence can strengthen markets’ defense against cyber threats but the technology now has the capacity to cause a macro-financial shock too, the IMF warns.
   
• Putin on Saturday will preside over a Victory Day parade for the first time since his war on Ukraine went beyond the length of the Soviet Union’s war on the Nazis. He has no victories to celebrate.
   
• Economic discontent often leads to ruling parties being unseated. But in India, that sentiment is working in favor of Prime Minister Narendra Modi and his ruling party—for now.
   
• The Centers for Disease Control and Prevention is coordinating with the World Health Organization to help global authorities contain a hantavirus outbreak aboard a cruise ship, signaling collaboration from the U.S. with international authorities despite changes to its global public-health strategy that experts say make the country more vulnerable to disease.
   
• The war in Iran has increased oil, gasoline and jet-fuel prices, leading to higher airfares and political concerns for the Trump administration.
   
• Apartment buildings, stores, industrial warehouses, and other commercial real estate properties are getting a lot more costly to insure. That’s because of rising climate risks from hurricanes to hailstorms, according to a new report from data analytics firm First Street.
   
• U.S. shale companies have largely resisted President Trump’s call to boost oil output, despite crude futures rising 42% since the Iran war began.
   
• From Berkeley to Harvard, students at thousands of schools abruptly lost access to their coursework on Thursday, after a key software provider pulled the plug to deal with a cybersecurity incident.
   
• Kim Jong Un is taking his nuclear ambitions to the high seas. He inspected North Korea’s first nuclear-capable warship, the Choe Hyon, which state media says will deploy in June.