Good morning. President Trump threatened Iraq with sanctions and a bill for billions of dollars if the U.S. is forced to withdraw its troops after the Iraqi parliament voted in favor of expelling them. The vote was a response to the U.S. airstrike that killed a powerful Iranian general on Iraqi soil. 

Sanctions observers will be watching this week to see if the U.S. decides to place more sanctions on Iran or other countries as tensions escalate. The U.S. could impose more sanctions on Iranian officials or companies that trade with Iran, Peter Harrell, an adjunct senior fellow at Washington think tank Center for a New American Security, tells Risk & Compliance Journal.

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But he added that sanctions might not pressure Iran to come to a negotiated solution. “Iran is already feeling the maximum pressure,” said Mr. Harrell, who previously served as the deputy assistant secretary for counter threat finance and sanctions in the U.S. State Department’s Bureau of Economic and Business Affairs. “This airstrike shows that we’re getting towards the end of the road of what a maximum pressure campaign can do.”

Iran said Sunday that it no longer will comply with limits on uranium enrichment under its 2015 nuclear pact. If Iran significantly boosts production of enriched uranium, Europe would almost certainly trigger a dispute mechanism in the pact, which could lead to reimposed international sanctions within two months. 

• Europe Tries to Balance Iran and the U.S. After Strike
• Iran Lacks Allies in Confronting the U.S.
• U.S. on Alert for Direct Assaults or Cyberattacks from Iran
• Oil Firms Tighten Security After U.S. Strike on Iranian Commander

Financial regulators are asking banks to show they have plans in place to manage the risks stemming from the planned demise of a key benchmark interest rate, Risk & Compliance Journal’s Kristin Broughton reports. Regulators, which for months have urged banks and other financial services firms to prepare for the likely end of the London interbank offered rate in 2021, have recently begun asking for evidence of their preparations.

The New York State Department of Financial Services is requiring banks and insurers to submit plans for managing the risks associated with the end of Libor, the agency said in a recent letter. The Office of the Comptroller of the Currency, which oversees national banks, said in December that it plans to increase oversight of the issue and that examiners will evaluate whether banks have made an inventory of contracts that could be affected.

• Companies Give Investors a Peek at Life After Libor

About three months before former auto titan Carlos Ghosn’s escape from Japan to Lebanon, an operative helping plan his extraction visited Kansai International Airport in Osaka, Japan, and realized there was a huge security hole, according to a person familiar with the matter.

The terminal for private jets was quieter than those at most other airports and essentially empty, unless there was a flight coming in, this person said. What’s more, oversize luggage was too big to fit in the airport scanners.

The security hole proved crucial in Mr. Ghosn’s cinema-worthy escape from Japan, where he was out on bail facing charges of financial crimes. He has denied the charges and has previously said he would fight them in court.

• Japanese Officials Break Their Silence on Ghosn’s Escape
• Carlos Ghosn Lawyer Expresses ‘Despair’ Over Japanese Legal System

• The first trial to emerge from a yearslong investigation into an alleged international insider-trading ring is set to begin in Manhattan, a case likely to shed light on a network of highflying securities traders and investment bankers who authorities say were responsible for tens of millions of dollars in illicit profits.
   
• Illumina Inc. has called off its plans to buy Pacific Biosciences of California Inc., the companies said Thursday. The companies said they wouldn’t move forward with the $1.2 billion deal “considering the lengthy regulatory approval process the transaction has already been subject to and continued uncertainty of the ultimate outcome.”
   
• A former top security official of Mexico pleaded not guilty to federal drug charges for allegedly aiding the violent Sinaloa cartel in exchange for millions of dollars in bribes.

The country’s primary regulator of derivatives markets is clashing in court again with some of the nation’s biggest food companies, in a case that could reveal the extent of the government’s power to go after market manipulation. A federal judge last year scuttled a $16 million settlement between the Commodity Futures Trading Commission, Kraft Foods and Mondelez Global after a dispute erupted over an unusual feature in the agreement: a gag order on both sides.

Now the CFTC is headed toward a civil trial to try to prove its case, which dates to 2015, when regulators accused Kraft of illegally manipulating the price of wheat by amassing a huge position in futures contracts though it didn’t intend to take delivery of the commodity. The case would be the first involving manipulation claims to go to trial under an antifraud statute, passed in 2010, that was intended to make it easier for the CFTC to go after wrongdoing.

• Federal aviation regulators are considering mandatory flight-simulator training before U.S. pilots can operate Boeing’s 737 MAX jets again, according to government and industry officials familiar with the deliberations, a change that would repudiate one of the plane maker’s longstanding arguments.

Not a single bank failed in 2018, and just four small lenders have gone under since the end of May 2019. Yet some bank analysts and former regulators say the very paucity of failures may be a sign that hidden risks are building.

“It’s in the good times, when things seem very calm and when there are no bank failures, that the bad loans are made,” former FDIC Vice Chairman Thomas Hoenig said in a recent interview.

• The new CEO of McDonald’s is determined to make changes at the top to move the company away from a culture that tolerated partying and fraternizing between some senior managers and rank-and-file employees. Chris Kempczinski, the new chief executive, is seeking to restore a more professional culture at McDonald’s after what some current and former employees described as an environment influenced by his predecessor’s late-night socializing with some executives and staffers at bars and flirtations with female employees.
   
• The world desperately needs new antibiotics to tackle the rising threat of drug-resistant superbugs, but there is little reward for doing so. Instead, the companies that have stepped up to the challenge are going bust.

U.K. government agencies are examining whether a trading outage blamed on a software hiccup at the London Stock Exchange in August may actually have been caused by a cyberattack aimed at disrupting markets, according to people familiar with the matter.

A British intelligence agency has contacted the LSE in the past two months requesting additional information about the Aug. 16 outage, according to people familiar with the matter. The U.K.’s Treasury is also involved in the probe.

An LSE spokesperson denied that the incident was cybersecurity related, attributing it to a “technical software configuration issue following an upgrade of functionality.” She added that the LSE “has thoroughly investigated the root cause of the issue to mitigate against any future incidents.”

HSBC Holdings has suffered a backlash over an account closure in Hong Kong, with protesters vandalizing branches and cash machines, making it the latest multinational affected by social unrest and deepening political divides in the city.

For HSBC the stakes are high. While now based in London, HSBC has deep ties with mainland China, and Hong Kong, an exceptionally profitable banking center, is its largest market by both revenue and profit.

For years the bank has positioned itself to take advantage of China’s growing economic ties with the wider world, but that integration is now imperiled by the trade conflict with the U.S. The lender is also battling to lift returns and turn around operations in the U.K., Europe and the U.S., and parted company with its previous chief executive in August.

Amazon and Microsoft are turning up the pressure on each other as they battle to supply corporate America with remote computing power, stoking a fight that is expected to dominate the tech world over the next decade. Revenues from this business—known as cloud computing—jumped 246% in the previous decade, according to a 2020 estimate from research firm Gartner Inc.

Some of the sharpest barbs are now coming from Amazon, long the dominant provider of data storage to large multinationals. Andy Jassy, chief executive of Amazon Web Services, targeted Microsoft in remarks last month to attendees of the company’s annual cloud-computing gathering in Las Vegas.

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Send comments to the Risk & Compliance editor, Jack Hagel, at jack.hagel@wsj.com