Good morning. Visa and Mastercard blocked two Mexican banks from accessing their payment networks, reports Risk Journal’s Max Fillion, after the U.S. government accused them of allowing criminal groups to funnel proceeds of opioid sales through their accounts.

What happened? The prohibitions render the banks’ debit and credit cards mostly useless, given the dominance of Visa and Mastercard in the payment networks space.

Implications: The episode demonstrates the consequences of being targeted under a recently passed law allowing the Treasury Department to block U.S. companies from transmitting funds to financial institutions assisting the opioid trade.

Background: Treasury’s Financial Crimes Enforcement Network blacklisted the banks, CIBanco and Intercam, Mexico’s 20th and 25th largest financial institutions, respectively, alongside broker dealer Vector in June. The move marked the first action under the FEND Off Fentanyl Act, signed into law by former President Biden in March 2024.

Impact of FinCEN sanctioning: “If you cut them off from the dollar you destroy their business,” said Daniel Tannebaum, an Oliver Wyman partner who leads the consulting firm’s global anti-financial crime practice. The FinCEN orders, however, offer few clues as to how other Mexican businesses could avoid similar fates, experts said.

‘Burdensome’ state regulations targeted by federal AI plan.

A Trump administration move to withhold federal tech funding from states with stringent artificial intelligence laws comes as a warning shot for statehouses poised to enact data security and privacy regulations, state and digital policy experts say.

What’s the impact? By threatening to cut off funding for AI-related projects, the administration is telling them that “overregulating AI could be held against you one day,” said Cobun Zweifel-Keegan, a managing director of the nonprofit International Association of Privacy Professionals.

CME Group wins lawsuit by former floor traders.

Exchange giant CME Group prevailed on Friday in its decade-old legal battle with former floor traders when a jury rejected claims that the company breached its contract with them when it pivoted to electronic markets.

The unanimous verdict came at the conclusion of a three-week trial that delved into the history of Chicago’s exchanges, featuring testimony from top executives as well as retired traders who reminisced about their days wheeling and dealing in open-outcry trading pits.

• Meta Platforms said it would stop political adverts being displayed on its social networks in the European Union from October, citing an incoming law designed to tackle misinformation and foreign interference in elections.
   
• The U.K.’s Financial Conduct Authority fined an asset management firm executive more than 1 million pounds, the equivalent of $1.3 million, and banned him from working in the financial services industry for lying to authorities.
   
• The Consumer Financial Protection Bureau dropped a case against Navy Federal Credit Union, reversing an agreement to refund $80 million to service members. CFPB critics say the Trump administration is reversing the agency’s overaggressive actions, while former agency officials warn of risks to consumers.
   
• Regulators have suspended a former Schwab advisor over allegations that he engaged in an illicit profit-sharing arrangement with a client who was also a family member, Barron’s reported.
   
• President Trump’s administration has opened a new front in its widening battle with the judiciary, sparring with federal courts over his picks to lead U.S. attorney’s offices around the country.

Trump and EU reach tariff deal, avoiding trade war.

President Trump said he reached a trade agreement on Sunday with the European Union, avoiding a damaging trade war with the U.S.’s largest trading partner and marking his biggest deal so far in his attempt to remake the global trading system through higher tariffs for U.S. trading partners.

The rates. Trump said the U.S. would set a baseline tariff of 15% for European goods, including automobiles. He said the EU had agreed as part of the deal to buy $750 billion of energy products from the U.S. and invest an additional $600 billion in the U.S.

• Trump Is Shifting to Dealmaking Mode on China
• Companies Welcome EU-U.S. Trade Deal as Least-Bad Outcome

China strong-armed Japan over rare earths. It’s a lesson for the U.S.

The U.S. found out this year that China could use its chokehold on rare-earth minerals as a coercive tool when Beijing imposed export controls. For Japan, it was déjà vu: It had been the victim 15 years earlier.

Tokyo vowed in 2010 to be ready for next time and over the years put hundreds of millions of dollars into Australian supplies.Yet as of last year, it was still relying on China for some 70% of its imports of rare earths, according to the government-owned Japan Organization for Metals and Energy Security. Japan’s experience drives home lessons for the U.S., where the Pentagon recently agreed to take a stake in Las Vegas-based MP Materials so it can mine and refine rare earths on American soil.

• Companies are raising tens of billions of dollars, not to invest in their businesses or hire employees, but to purchase bitcoin and more obscure cryptocurrencies. Skeptics say the rush of companies buying crypto is a sign the market is overheating.
   
• Last year, Satya Nadella pledged to make security priority number one at Microsoft. A new hack involving China is showing just how difficult that can be.
   
• Thailand and Cambodia said they were open to talks on a cease-fire in their deadly border clashes after President Trump held calls with both countries’ leaders.
   
• Volkswagen said President Trump’s tariffs have cost it $1.5 billion. Now it has a solution: An offer to the White House that could bring production of its Audi brand to the U.S. for the first time.
   
• India has transformed from a net importer to net exporter of mobile phones.
   
• Israel announced a tactical pause in military activity in parts of the Gaza Strip and the establishment of safe routes for humanitarian aid, as a deadly hunger crisis spreads across the enclave.

• Big companies are getting smaller—and their CEOs want everyone to know it.
   
• Speculative stocks like Opendoor and Kohl’s are surging, reminiscent of 2021’s meme stock frenzy.
   
• At least 11 people were injured Saturday in a Traverse City, Mich., Walmart store after a suspect stabbed them, according to authorities.
   
• Americans view President Trump’s tax-and-spending law as a win for wealthy households and large corporations that will hurt poor people and widen federal budget deficits, according to a new Wall Street Journal poll.

Follow us on X at @WSJRisk. Send tips to our reporters Max Fillion at max.fillion@dowjones.com, Mengqi Sun at mengqi.sun@wsj.com and Richard Vanderford at richard.vanderford@wsj.com.

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