Good morning. As the Trump administration tries to stymie the flow of drug proceeds linked to cartels in Mexico by targeting small money transactions, Risk Journal’s Mengqi Sun reports that a group of small businesses in Texas and California that say they are being unfairly swept into the dragnet could upend the White House’s plans.

• The order: A March order from the Treasury Department’s Financial Crimes Enforcement Network requires money-services businesses in five counties in Texas and two counties in California—a total of 30 zip codes along the southern border—to flag to the government cash transactions greater than $200, rather than the standard $10,000 threshold.
   
• Why they say they did this: Administration officials said the so-called geographic targeting order would bolster the fight against cartels in Mexico, which the U.S. has designated as terrorist groups. Treasury Secretary Scott Bessent labeled the effort part of the “whole-of-government” approach to tackle transnational criminal groups.
   
• The reaction: But the small transactions are a financial lifeline to many in the migrant diaspora along the border, and some transmitting companies have sued to stop the new order. Owners of some of the firms say its requirements are onerous, and at least three lawsuits have been brought in federal courts challenging the order.

JPMorgan to pay $330 million over 1MDB transactions.

JPMorgan Chase will pay $330 million to settle claims that it facilitated transactions in the looting of a Malaysian sovereign-wealth fund, one of the largest financial crimes of the century.

Background: Malaysia had sued the bank’s Swiss unit in Malaysian civil court four years ago, alleging dishonest assistance in facilitating $800 million of payments from Malaysia’s 1MDB state investment fund, formally called 1Malaysia Development Berhad, to a fraudulent joint venture. Two businessmen behind the joint venture, 1MDB PetroSaudi, were found guilty of fraud, criminal mismanagement and money laundering in Swiss criminal court last year.

California regulator urges companies to report climate metrics.

A California regulator said investors are better off if companies report their climate targets and the metrics used to measure them, reports Clara Hudson for Risk Journal.

What was said: In a public hearing held by the California Air Resources Board on Thursday, the regulator briefed companies on how to prepare for coming climate disclosure rules. It will require businesses to report their Scope 1, 2 and 3 greenhouse gas emissions and will also mandate disclosure on how climate poses a financial risk to their business.

• The No. 2 Treasury Department official was pushed out of his job after frustrating President Trump and feuding with those close to him, according to people familiar with the matter.
   
• Mexican bank CIBanco dropped a lawsuit accusing the U.S. Treasury of arbitrarily cutting it off from the U.S. dollar for allegedly allowing several cartel groups to use its services, reports Risk Journal.
   
• Nvidia is halting production of an artificial-intelligence chip it developed for China after the government in Beijing told companies not to buy it, the latest twist in the U.S.-China tech war centered on the $4 trillion chip designer.
   
• U.S. President Trump signed a new law that grants oversight to Congress over export control applications.
   
• The U.K. competition regulator said it started an investigation into the $3.7 billion merger between Getty Images Holdings and stock-photo rival Shutterstock.
   
• After months of targeting universities over antisemitism allegations, the Trump administration is turning to a new focus: whether schools are using proxies for race in admissions to diversify student bodies.

Powell highlights job market worries, opening path to rate cut.

Federal Reserve Chair Jerome Powell opened the door for rate cuts next month when he said the labor market might be softening enough to rein in inflation that is being pushed up by tariffs.

Throughout the year, Powell and his colleagues have held rates steady, pointing to a solid labor market and uncertainty over the inflation outlook given large tariff hikes. But Powell suggested the outlook was changing in a direction that could justify a resumption of rate cuts in a widely watched address at a conference in Wyoming on Friday.

• Trump’s Pressure Campaign on the Fed Casts Shadow Over Jackson Hole Gathering
• Stagnant Job Market Is a Rising Risk for the U.S. Economy

Pentagon has quietly blocked Ukraine’s long-range missile strikes on Russia.

The Pentagon has for months been blocking Ukraine’s use of long-range missiles to strike inside Russia, U.S. officials said, limiting Kyiv from employing a powerful weapon in its fight against Moscow’s invasion.

A high-level Defense Department approval procedure, which hasn’t been announced, has prevented Ukraine from firing any U.S.-made long-range Army Tactical Missile Systems, or Atacms, against targets in Russia since late spring, the officials said. On at least one occasion, Ukraine sought to use Atacms against a target on Russian territory but was rejected, two officials said.

Why? The U.S. veto of long-range strikes has restricted Ukraine’s military operations as the White House has sought to woo the Kremlin into beginning peace talks.

• Europe’s Fragile Energy Lifeline Exposed by Ukraine’s Strikes in Russia
• Trump Gives Familiar Two-Week Deadline for Next Steps to End War in Ukraine

• European nations have fallen far behind in economic dynamism and military clout. Will the continent that once ruled the world become a bystander to history?
   
• Canada said it would remove its 25% tariff on about half of the U.S. goods it has targeted since March as the country attempts to reset its trading relationship with the U.S.
   
• Deutsche Post said it and DHL Parcel Germany would temporarily suspend business shipping to and from the U.S. due to new customs regulations.
   
• South Korea pledged $150 billion to revive U.S. ship manufacturing, a key concern for the Trump administration, during trade talks.
   
• French President Emmanuel Macron’s decision to recognize a Palestinian state has sparked a backlash from the Israeli government, galvanizing hard-liners and drawing an accusation from Prime Minister Benjamin Netanyahu that he is stirring up antisemitism.

• Keurig Dr Pepper has struck a deal to buy Peet’s Coffee owner JDE Peet’s for $18 billion, a prelude to spinning off its coffee brands into a separate public company.
   
• SpaceX is aiming to reignite its 403-foot-tall Starship project.
   
• The Trump administration has a new weapon at its disposal in its efforts to take down Democrats and their appointees: mortgage records.
   
• Some investors had been hoping Target would tap an outsider to come in and shake things up. They got Michael Fiddelke instead.
   
• E-commerce brands are turning to warehouses with an obscure federal designation as they brace for the end of a popular tariff exemption.

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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