Good morning. The European Union is pushing back against a French-German drive to target Iran with sanctions over its provision of missiles and other military hardware to its regional allies, with senior EU officials saying new sanctions could undercut diplomacy with Tehran.

• Eight-nation push: France, Germany, the Netherlands and five other EU countries wrote last month to EU foreign-policy chief Josep Borrell, saying the bloc should adopt a sanctions regime that allows them to target “Iranian actors which arm, fund, advise and instruct” pro-Iran regional militias, as well as the groups themselves, according to a letter seen by The Wall Street Journal.
   
• The reply: Borrell’s response, which EU officials said was backed by Washington: Don’t do it now.
   
• Reasons for the reply: In a letter to the eight EU member states last week, Borrell said that their proposal to target Iran’s regional destabilizing activities “would conflate the two theaters” of Russia and the Middle East, “which could have potentially unintended consequences.”
   
• U.S. view: A Biden administration official said they have told the EU they support increasing pressure on Tehran through sanctions on Iran’s transfers of missiles and military equipment to regional militias as well as to Russia.
   
• Pressure on Iran continues: The dispute, which was raised again at a meeting of EU foreign ministers on Monday, comes days after Europe and the U.S. pledged to swiftly and jointly impose meaningful new sanctions on Tehran if it delivers ballistic missiles to Russia. Western officials said they have no proof that Tehran has yet delivered the missiles but expect it to do so.

U.S. Bank and Oppenheimer fined by CFTC over off-channel communication violations.

The Commodity Futures Trading Commission has settled with U.S. Bank and Oppenheimer over their employees’ use of personal text and messaging apps that violated record-keeping rules, in the latest case of regulators cracking down on off-channel communications.

The context: Off-channel communications—those that take place outside a firm’s formal, approved methods—have been a focus for Wall Street regulators for the past few years. The CFTC since December 2021 has imposed $1.12 billion in civil monetary penalties for firms’ use of unapproved methods of communication.

Russia’s backdoor to the global banking system is slamming shut.

When the U.S. and Europe tried to sever Russia from the Western financial system, Moscow found workarounds. Key among them: banks in the Gulf and Europe that maintained ties with Russia.

Now, Washington’s efforts to close these loopholes appear to be paying off. Dubai’s main state-owned bank has shut some accounts held by Russian oligarchs and traders of Russian oil. Turkish lenders are growing wary of handling Russia-related business. The U.S. has also put bankers in Vienna, another important financial hub, on notice.

• Bankrupt crypto lender Genesis Global Capital has agreed to pay $21 million to settle charges from regulators that it failed to register its retail crypto lending product before offering it to the public, the Securities and Exchange Commission said Tuesday.
   
• A former finance director of the Latin America division of waste management company Stericycle was charged over his alleged role in a scheme to pay bribes to officials in Brazil, Mexico and Argentina, the U.S. Justice Department said. Another former executive was charged last month.
   
• Hong Kong lawmakers passed a bill that includes heavy punishments for foreign interference endangering national security and criminalizes the possession or disclosure of state secrets.
   
• Chinese biotechnology company WuXi AppTec said net profit jumped last year, while reiterating that it doesn’t pose a security threat to any country amid worries over a potential U.S. ban.

The Fed is playing a waiting game on rate cuts. The rules are starting to change.

For investors, the big question hanging over this week’s meeting of the Federal Reserve is whether it will wait a little longer to cut interest rates because of recent, firm inflation readings.

The Fed, though, has a different preoccupation: If it waits too long, will it inadvertently cause a recession?

Taiwan acknowledges presence of U.S. troops on outlying islands.

As tensions rise with China, Taiwan’s defense minister has hinted that U.S. troops have been training the Taiwanese military on outlying islands that would be on the front lines of a conflict with its neighbor. 

The defense minister, Chiu Kuo-cheng, didn’t offer details of the U.S. deployment, but said the outlying islands include Kinmen, which sits 3 miles east of the Chinese coastal city of Xiamen and more than 100 miles from Taiwan’s main island.

• Turbulences in real-estate markets on both sides of the Atlantic raised fears of contagion risks for Europe’s financial sector, but analysts see European banks better insulated from the downturn than their American peers.
   
• Lawmakers who are finishing writing six annual spending bills have resolved a last-minute roadblock over border funding, setting the stage for Congress to review and approve the legislation on a tight timeline that could take them to the brink of a partial government shutdown this weekend.
   
• Israel and Hamas are locked in Gaza truce talks with goals that seem impossible to reconcile.

• Tthe Supreme Court allowed Texas to begin arresting and deporting noncitizens on its own—only for another court to step in hours later and block any such state efforts for now.
   
• More than a million people who broker home buying and selling in America are re-examining their careers.
   
• After more than 100 years of selling ice cream, Ben & Jerry’s owner Unilever has lost its taste for the business.
   
• It is the time of year when throngs of Western corporate chieftains and big-name investors descend on Beijing to pay homage to China’s leadership. This time, the focus will be just as much on who is there to greet them.
   
• When the pandemic raged in 2020, medical technology firm Hologic developed two Covid tests that became revenue juggernauts. Since then, demand for those products has dried up. One thing never swung up or down at Hologic: the size of its full-time workforce.

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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