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The Morning Risk Report: EU Ramps Up Trade System With Iran Despite U.S. Threats
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A paramedic at a hospital in Tehran works with a centrifuge to test blood samples. PHOTO: ALI SHIRBAND/ASSOCIATED PRESS
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Good morning. European officials announced Tuesday the completion of the first transaction with Iran through Europe’s Instex trade mechanism—a move designed to circumvent sweeping U.S. sanctions on Tehran. But the transaction, the export of medical goods, likely won’t encourage other international companies to start trading with Iran, sanctions policy experts said.
The deal is more about politics and symbolism, as Iran faces a worsening coronavirus outbreak, said Elizabeth Rosenberg, a senior fellow at the Washington think tank Center for a New American Security.
The medical equipment exported is unrelated to the coronavirus pandemic, The Wall Street Journal reported Tuesday. “It’s politically timely, recognizing the fact that there's a mainstream and bipartisan conversation about the effect of sanctions on Iran and its ability to cope with the pandemic,” Ms. Rosenberg told Risk & Compliance Journal.
[Continued below...]
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U.S. sanctions generally exempt humanitarian goods and U.S. officials have previously threatened to impose sanctions on Instex and individuals involved with it if it provides a significant economic lifeline to Iran’s economy.
Many companies have been hesitant to send humanitarian goods to Iran, Ms. Rosenberg said. Among the reasons: The high cost for banks, insurers and shippers to conduct due diligence associated with the legal trade of humanitarian goods—including paying for expertise to weave through complex and multiple layers of laws. There’s also the risk of missteps that violate U.S. sanctions laws. Unless there are assurances from U.S. authorities that such trade is encouraged, companies “are not going to touch it,” Ms. Rosenberg said.
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From Risk & Compliance Journal
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British bank Standard Chartered PLC must pay £20.47 million for violating sanctions imposed by the EU on Russia, U.K. authorities said. PHOTO: ISAAC LAWRENCE/AGENCE FRANCE-PRESSE/GETTY IMAGES
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U.K. authorities have fined Standard Chartered for violating sanctions that the European Union imposed on Russia following its annexation of the Crimea region of Ukraine in 2014.
The British bank must pay £20.47 million ($25.41 million) for violating the EU’s sanctions against Russia, the U.K. Treasury’s Office of Financial Sanctions Implementation said in a decision published Tuesday. The fine is the largest imposed yet by the agency, which was created in 2016.
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U.S. officials see Venezuelan President Nicolás Maduro, in white, under pressure from the coronavirus pandemic. PHOTO: ZURIMAR CAMPOS/AGENCE FRANCE-PRESSE/GETTY IMAGES
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The Trump administration proposed that Venezuelan President Nicolás Maduro hand power to a transitional government in return for sanctions relief and other measures.
Under the terms of a proposal announced Tuesday, a council made up of representatives from both Mr. Maduro’s government and the opposition led by U.S.-backed Juan Guaidó would form a transitional government until an election is held later in the year.
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European banks are shoring up capital by canceling or delaying dividend payments amid concern about their ability to absorb a potential rush of bad loans as households and companies are impacted by the coronavirus pandemic. Central banks and regulators started ordering curbs on dividends last week.
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Trump administration officials have eased tailpipe-emissions standards, a move they say will boost car sales and lower new-car prices but which has been blasted as shortsighted by environmentalists.
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A federal judge in Boston sentenced a Silicon Valley mother to seven months in prison, in the latest punishment handed down to parents charged in the “Varsity Blues” college-admissions scandal.
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More than two dozen Federal Bureau of Investigation applications to monitor Americans suspected of having links to foreign intelligence or terrorism had errors in their files, a Justice Department watchdog said, representing 100% of the sampling of applications he examined.
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The chairman of Huawei Technologies warned the U.S. to expect countermeasures from the Chinese government if it further restricts the technology giant’s access to suppliers, as the company’s profit last year grew at the slowest pace in three years.
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Washington state Gov. Jay Inslee said the new law balanced ‘the interests of law-enforcement, the business community and individuals’ right to privacy.’ PHOTO: AMANDA SNYDER/ASSOCIATED PRESS
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Washington state adopted a Microsoft-backed law enshrining the most detailed regulations of facial recognition in the U.S., potentially serving as a model for other states as use of the technology grows.
Gov. Jay Inslee signed the law Tuesday allowing government agencies to use facial recognition, with restrictions designed to ensure it isn’t deployed for broad surveillance or tracking innocent people.
The law makes Washington’s policy stricter than many states that don’t have any laws governing the technology, but more permissive than at least seven U.S. municipalities that have blocked government from using it out of concerns about privacy violations and bias.
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Marriott International is investigating a data breach that exposed up to 5.2 million customers’ personal information, at least the third cyber incident for the hotel giant in the past 18 months.
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After whittling its portfolio of mortgage-backed securities for years, the Fed said in March it would step in and start buying again. PHOTO: PATRICK SEMANSKY/ASSOCIATED PRESS
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The Federal Reserve rescued the mortgage market. Part of it.
The central bank’s decision to buy a nearly unlimited supply of government-backed mortgages has helped calm skittish markets and ensure that 30-year home loans remain available. But the market for loans in which the government doesn’t shoulder the risk is coming undone.
Investors are abandoning that market, starving the lenders that extend mortgages to borrowers who don’t qualify for conventional loans. Those lenders are halting operations, bracing for a sharp rise in missed mortgage payments during the coronavirus shutdown.
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Lumber prices are signaling that the nascent housing boom is fizzling, despite home builders’ push to keep residential construction going through the coronavirus crisis.
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A worker at an Amazon facility in Bethpage, N.Y. The company’s retail operation now plays a role more essential in American life than almost any other company. PHOTO: ANDREW KELLY/REUTERS
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The coronavirus is pulling Amazon in many directions. Chief Executive Jeff Bezos is counting on front-line workers to bring essential goods to millions of homebound Americans. It has been a bumpy ride.
Amazon order volumes match those of the holiday season. Usually, the company has months to prepare. Before the pandemic hit, it has had just weeks, and the strain is showing in shortages, delays and worker unrest, including some walkouts, no-shows and Covid-related sickness. At times, Amazon has had to operate warehouses with half the typical number of workers, according to employees. On Tuesday, employees at Whole Foods Market, a grocer owned by Amazon, organized a “sick out” at its stores and called on management to provide hazard pay and other benefits.
While the coronavirus is straining Amazon’s retail operations, it is boosting some of its other businesses. Companies are relying on its cloud-computing arm, Amazon Web Services, as their employees work from home, and customers are streaming home-entertainment content on Amazon Prime.
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Hundreds of Apple contract workers at its Silicon Valley campus were told in recent days that their jobs would be suspended without pay as the tech giant curtails work at the offices amid the coronavirus outbreak. But on Monday, a company spokeswoman said Apple plans to pay the hourly workers.
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Walmart will start taking temperatures of U.S. store workers at the start of each shift and offering masks for those employees who wish to wear them, the company said Tuesday. Privacy lawyers say companies must be careful not to demand excessive personal information from workers, saying that could violate data-protection and employment laws in Europe and the U.S.
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Some U.S. airlines want to share domestic flying between them to maintain service to smaller cities, but federal conditions for accessing up to $50 billion in aid rule out what is normally considered anticompetitive behavior.
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Xerox had argued that a combination could yield annual cost savings of more than $2 billion that would help them weather an overall industry decline. PHOTO: MICHAEL NAGLE/BLOOMBERG NEWS
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Corporate deal making, prone to unexpected twists and turns in the best of times, has been upended by the coronavirus pandemic.
Companies from Xerox Holdings to Axalta Coating Systems have abandoned takeover deals as employers shift their focus to ensuring they have enough cash to stay afloat and pay workers. Those plotting initial public offerings, such as Airbnb, may postpone them.
Overall merger volume, which was already having a sluggish start this year, has come to a virtual standstill in the past two weeks. The value of announced mergers in the first quarter through Monday is down 33% from a year ago to $572 billion, a seven-year low. In the U.S., the decline is even more acute at more than 50%.
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