Good morning. For years, Hong Kong has flourished as China’s hub for helping Iran survive punishing sanctions, much to the frustration of U.S. officials who have engaged in a whack-a-mole campaign to shut down billions of dollars in trade.

• Background: China has helped Tehran endure years of U.S.-enforced isolation and has allowed it to sell oil and buy missile parts, drone components and other supplies to build up its military.
   
• But why Hong Kong? A significant part of that trade goes through Hong Kong. The city’s ease of setting up new companies and moving money has made it a global financial hub and a useful spot for evading sanctions. A Treasury Department analysis found that entities in Hong Kong—most of them likely shell companies—transacted $4.8 billion in financial activity potentially related to Iranian shadow banking activity in 2024.
   
• Shifting tides: The amount was second only to the United Arab Emirates, which recorded $6.4 billion in transactions, almost entirely in Dubai. With the war in Iran raising new concerns about the security of Dubai, and the U.A.E. considering several options to crack down on Iranian shadow banking, more of this activity could shift to China.
   
• Increasing importance for Iran: “China as a trading partner and Hong Kong as a financial transaction hub will become very important,” said Maia Nikoladze, associate director of the Economic Statecraft Initiative at the Atlantic Council, a Washington-based think tank.

FCC considering stricter know-your-customer rules for phone companies.

The U.S. Federal Communications Commission is considering more stringent know-your-customer rules for phone companies to halt scammers and other criminals from using their services, Risk Journal reports (free link).

The telecommunications regulator said on Thursday it is looking at rules requiring phone service providers to collect the names, physical addresses, government-issued identification information and alternative phone numbers of new and renewing customers before onboarding them.

For “high-volume” customers such as businesses, the rules would require phone companies to collect information on a business’s purpose, such as whether it is a marketing firm or political campaign.

• FCC to Require Mutual Agreements for Non-U.S. Device Test Labs

FTC in settlement talks with ad companies in boycott probe.

The Federal Trade Commission is negotiating a potential settlement with several major advertising companies to resolve a probe into whether they violated federal antitrust laws by coordinating boycotts against platforms including Elon Musk’s X, people familiar with the matter said.

As part of the proposed resolution, several major ad firms, including Dentsu, Publicis and WPP, would commit not to direct clients’ ad budgets away from media platforms based on political content that might appear on those sites, according to people familiar with the matter. Individual advertisers can still choose to avoid specific sites for their ads, some of the people said.

• Serbia’s state energy company NIS said it has filed a request with the U.S. Treasury’s Office of Foreign Assets Control for a new special license to continue operations after April 17, when its current authorization expires (free link).
   
• After a year of tariffs, trade deals and geopolitical conflicts, former U.S. Trade Representative Katherine Tai sees the need for an “out of the box” trade approach.

You can listen to new episodes every Friday on Apple Podcasts, Spotify and Amazon.

The Dow Jones Risk Journal Summit London on May 7 will convene senior business professionals for discussions on a range of corporate risks including supply chains, artificial intelligence, geopolitics and financial crime. Speakers include: Kathy Wengel, EVP, Chief Technical Operations and Risk Officer, Johnson & Johnson; Nish Imthiyaz, Global Privacy and Responsible AI Counsel, Vodafone; and Will Mayes, Chief Executive, Cyber Monitoring Centre.

Request a complimentary invitation here using the code COMPLIMENTARY. Attendance is limited, and all requests are subject to approval.

U.S. threat to blockade Hormuz sets up risky new showdown.

President Trump’s announcement that the U.S. military would blockade the Strait of Hormuz sets up a risky new showdown that could draw American forces into a prolonged struggle to control the strategic chokepoint while compounding the global economic damage caused by the conflict.

The blockade is set to begin Monday at 10 a.m. Eastern Time, according to U.S. Central Command. The move comes after Vice President JD Vance ended 21 hours of talks in Islamabad without an agreement, blaming Tehran for refusing U.S. terms on its nuclear program.

Iran said in response that no port in the Persian Gulf or the Sea of Oman would be safe if its ports are threatened.

• What to Know About the Blockade and How It Could Work
• Trump Weighs Limited Strikes Against Iran After Peace Talks Collapse
• Iran’s Nuclear Program Has Survived, Posing Problem for U.S. Negotiators
• Iran Has Thousands of Missiles and Could Retrieve Launchers, U.S. Intelligence Finds
• Why Iran and Other Regimes Are So Hard to Break
• White House Fields Warnings About Iran War’s Economic Hit

The era of free seas is unraveling—and now everyone’s going to pay.

In just six weeks, the Iran War has shattered a system of global trade that has enriched people and nations for more than a century: the freedom to sail the open seas.

Maritime shift. The Strait of Hormuz long functioned as an artery for the world’s maritime economy. But that 30-mile-wide waterway is now a monument to a new global disorder. As some 20,000 sailors effectively held hostage at sea digested President Trump’s cease-fire announcement this week—contingent on the complete opening of the strait—Iranian officials stressed they would determine which ships could leave and at what price.

Sea change. The “Tehran toll booth” was taking effect, as the U.S. Navy watched on, an admission that, at least here and now in the world’s oil corridor, America no longer rules the waves.

• The Ships Sailing Through Iran’s Controlled ‘Tollbooth’

• Prime Minister Viktor Orbán suffered a landslide defeat in Hungary’s election on Sunday, ending the 16-year rule of a politician who had become a standard-bearer for populist right-wing leaders worldwide.
   
• Chinese leader Xi Jinping welcomed the leader of Taiwan’s main opposition party for a rare meeting in Beijing on Friday, leaning in to his campaign to steer the self-ruled democracy closer to China and nudge the U.S. to the sidelines.
   
• Russian President Vladimir Putin promised an Orthodox Easter cease-fire, but Ukraine’s military reported continued assaults and bombardments.
   
• Top White House officials are racing to address potential cybersecurity threats posed by the latest artificial-intelligence models, highlighting how AI’s perils are becoming a top priority for the Trump administration.
   
• Soon after securing its first best-picture Oscar nomination, streaming service Mubi landed a $100 million investment led by Sequoia Capital. But the investment and subsequent left-wing revolt ended up sending a fast-growing startup into a tailspin.
   
• A person was taken into custody after allegedly throwing a Molotov cocktail at OpenAI Chief Executive Sam Altman’s home and making threats at the company’s San Francisco headquarters, a spokeswoman for the company said Friday.
   
• President Trump’s renewed push to acquire Greenland has created diplomatic tensions and threatens to splinter the North Atlantic Treaty Organization.

• Companies are adding new, often hidden, fees and surcharges to recoup rising costs, affecting consumers already facing inflation.
   
• A team led by a star trader at Vitol, the world’s biggest oil merchant, took a several hundred million dollar hit early in the Iran war after bets in the petroleum market went awry, people familiar with the matter said.
   
• A growing number of powerful Democrats are calling for Rep. Eric Swalwell to end his campaign for California governor, citing allegations of sexual misconduct.
   
• Vice President JD Vance, an anti-interventionist tasked with leading peace talks with Iran, is now inextricably linked to the outcome of the war. It is the latest test for a politician who many believe hopes to succeed Trump in the White House, and presents acute risks.
   
• While the Middle East was breathing a sigh of relief at the U.S.-Iran cease-fire, a big-money battle was raging at Polymarket. It revolved around the question: Had American forces entered Iran?

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