Good morning. The U.S. and Chinese governments have started working together to fight money laundering in their financial systems, Risk & Compliance Journal’s Mengqi Sun reports, as the two find some common ground amid increasing geopolitical and economic tensions.

• What they will do: A new agreement, established during U.S. Treasury Secretary Janet Yellen’s recent trip to China, will allow Treasury Department officials and their counterparts at the People’s Bank of China, the country’s central bank, to meet regularly. The countries plan to share best practices and provide information on enforcement actions each is taking, with the goal of closing financial system loopholes.
   
• Areas of discussion: Officials plan to discuss their nations’ approach to cryptocurrency, financial technology regulation and enforcement, and ways to detect money laundering in real-estate purchases, a senior Treasury official told The Wall Street Journal. The two sides will also confer about ways to improve the effectiveness of anti-money-laundering enforcement actions and to potentially collaborate on their enforcement.
   
• When’s the first meeting? The first meeting under the new Joint Treasury-PBOC Cooperation and Exchange on Anti-Money Laundering agreement is being convened by Yellen with Chinese officials on Tuesday in Washington, according to the Treasury Department. The group aims to meet in person roughly every quarter with virtual meetings held in between, the official said.
   
• Context: These joint efforts come as criminal groups and individuals continue to identify and exploit loopholes across the U.S. and Chinese financial systems to advance their illicit activities.

Europe’s action on forced labor lags behind U.S., lawmakers say.

The U.S. State Department should press the U.K. and European Union to take a harder line on forced labor linked to China’s Xinjiang region, influential House lawmakers said, pressing for more diplomatic engagement as the EU weighs new rules.

Upping the ante. The department should increase U.S. diplomatic efforts to combat China’s alleged use of forced labor, the bipartisan leaders of the House Select Committee on the Chinese Communist Party wrote Secretary of State Antony Blinken in a letter that will be made public later Wednesday.

Justice Department to offer some execs immunity under whistleblower pilot program.

The Justice Department’s criminal division will give immunity to executives who provide information about corporate misconduct they themselves were involved in, according to details of a pilot program released this week.

New initiatives. The promise of immunity for tipsters involved in wrongdoing comes after the agency earlier this year said it would develop another pilot program that provides financial incentives to executives who blow the whistle on corporate or financial wrongdoing. That program will be aimed exclusively at executives who aren’t themselves involved in the misconduct they report, and who aren’t eligible for an award from a separate agency, such as the U.S. Securities and Exchange Commission.

Work in progress. The department is still in the process of developing its whistleblower award policy, a spokesman said Tuesday.

• Hours after UnitedHealth Group said it expects more than $1 billion in costs this year from a February cyberattack, U.S. lawmakers during a hearing questioned whether the dominant position of a few healthcare giants increases cyber risk for the industry.
   
• The U.S. government is investigating whether the consolidation of health insurers, pharmacy benefit managers and pharmacies is fueling high drug costs.
   
• The Supreme Court questioned a novel legal approach federal prosecutors used to charge hundreds of defendants who participated in the Jan. 6, 2021, riot at the U.S. Capitol.

Israel, Iran seek deterrence but risk escalation.

Israel’s military has long followed a clear policy: When enemies strike, hit back so hard they won’t do it again. That deterrence is no longer working.

Iran, after launching a massive missile-and-drone attack on Israel over the weekend, is threatening to strike again if Israel retaliates. Lebanese militia Hezbollah fires at Israeli forces almost every day despite frequent poundings by Israel. And Hamas continues to launch rockets at Israel even after being bludgeoned following its Oct. 7 attacks, which killed 1,200 people, according to Israeli officials.

With no side willing to compromise for fear of showing weakness and all players seeking greater deterrence, the risk of stumbling into a regional war increases.

• Israel-Iran Confrontation Forces Gulf Powers to Choose Sides

Global economy is picking up steam, but poorest countries are falling behind, IMF says.

The world economy is outpacing expectations this year, but the prospects for longer-term growth are less rosy.

Global economic output is likely to expand 3.2% in 2024, the International Monetary Fund said Tuesday, up from an October forecast for 2.9% growth. 

Beyond the next few years, however, the panorama is less favorable, according to the IMF. 

• Firm inflation during the first quarter has called into question whether the Federal Reserve will be able to lower interest rates this year without signs of an unexpected economic slowdown, Chair Jerome Powell said Tuesday.
   
• The specter of a widening war in the Middle East has put $100-a-barrel oil back on the table. But Wall Street is looking elsewhere in the region for hints about how high prices could go.
   
• Western governments are stepping up pressure on China to use its influence to help settle conflicts in Ukraine and the Middle East.
   
• China’s economy picked up pace in the first quarter as Beijing’s plan to boost growth by pouring money into factories began to show results.
   
• Big technology companies are cutting back on office space across major coastal cities, leaving some exposed landlords with empty buildings and steep losses.

She succeeds Paula Dominick, who died earlier this month, the bank said.

• America’s biggest banks reported stronger-than-expected earnings in the first quarter, highlighting how a resilient economy is helping power everything from Main Street to Wall Street.
   
• Elon Musk’s SpaceX has begun a crackdown on users who are connecting to its Starlink high-speed internet service from countries where it hasn’t been authorized.
   
• Tesla has delayed deliveries of its Cybertruck in recent days, according to buyers.
   
• Microsoft will invest $1.5 billion in a technology company backed by the United Arab Emirates, a deal that includes an intergovernmental pact to ensure artificial-intelligence security.
   
• PricewaterhouseCoopers has selected the new bosses of its global audit and advisory businesses as it prepares for Mohamed Kande to take the helm as global chair in July.

Follow us on X at @WSJRisk. Follow Risk & Compliance editor David Smagalla @DSmagalla_DJ and reporters Mengqi Sun @_MengqiSun, Dylan Tokar @dgtokar and Richard Vanderford @VanderfordRich.

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