Key takeaways:

• • • The deal isn’t dead, but it’s not settled either 鈥� USMCA stays in force for now, but the refusal by the US to confirm a 16-year extension triggers rolling annual reviews, with a hard expiration in 2036 if no resolution is reached.

    • Auto rules of origin are the central battleground 鈥� Washington is pushing to raise North American content requirements well above the current 75% threshold, with a specific push for more US-based final assembly and parts production.

    • Uncertainty itself is a cost 鈥� Automakers make multibillion-dollar, multi-decade plant and supply-chain investments, and not knowing what the rules will look like next year (let alone in 2036) makes those bets harder to justify.

On July 1 鈥� the sixth anniversary of the United State-Mexico-Canada Agreement听(USMCA), taking effect 鈥� the United States, Mexico, and Canada were required under the agreement’s to jointly decide whether to extend the pact for another 16 years. The U.S. Trade Representative, Jamieson Greer, announced that the Trump Administration would not agree to renew USMCA in its current form, citing persistent US trade deficits with both neighbors and what the administration considers 鈥渦nresolved shortcomings鈥� in the deal. The move by the US pushed the North American trade pact into a new period of annual reviews and extended negotiations over tariffs, market access, and manufacturing rules.

This isn’t a withdrawal; indeed, the agreement will remain in force for another decade, providing that none of the three countries exits the agreement. However, the lack of a clean renewal opens the door to years of contentious negotiations over the rules governing continent-wide supply chains. Both Canada and Mexico had favored a straightforward 16-year extension, but the US was unwilling to sign off without changes.

Why automakers are ground zero

No sector is more exposed to this outcome than automotive manufacturing. Vehicles and parts routinely cross the borders of the US, Mexico, and Canada multiple times before final assembly, a pattern built up since the North American Free Trade Agreement (NAFTA) first opened North American auto trade in 1994, and the sector alone accounts for roughly 18% of all trade among the three countries.

At the heart of the dispute is the 鈥� the share of a vehicle’s value that must originate in North America to qualify for duty-free treatment. USMCA currently sets that threshold at 75% for passenger vehicles and light trucks, up from 62.5% under the old NAFTA rules. The Trump administration is reportedly seeking to push that figure to 82%, with half of that value required to come specifically from the United States 鈥� a change aimed squarely at pulling more engine, transmission, and assembly work back across the border.

That shift likely would ripple through the industry unevenly. The annual from American University’s Kogod School of Business, which tracks US content in vehicles annually, found that only 109 models are estimated to hit 51% or more US content for its upcoming index, down from 123 the year before 鈥� a sign of how far the current supply chain sits from any tightened standard. As one researcher involved in that analysis explains, automakers will ultimately have to weigh absorbing new tariff costs against relocating engine, transmission, and component production 鈥� or even entire assembly plants 鈥� into the United States.

have largely tried to protect the status quo rather than push for disruption. General Motors, Ford, and Stellantis have publicly urged Washington to extend the existing agreement, arguing it’s essential to American production, even as they privately brace for the possibility of major changes. Stellantis has also warned regulators about a separate risk: If US rules don’t keep pace with vehicles imported from outside North America, American-built models will keep losing ground to Asian imports, to the detriment of US autoworkers.

Managing the uncertainty tax

Perhaps the most immediate effect isn’t a specific rule change 鈥� it’s the absence of a deadline forcing one. that the decision doesn’t immediately change the flow of goods and services across North America, but it could weigh on business planning, particularly in industries that depend on long-term capital commitments.

Scott Lincicome of the Cato Institute, for example, pointed to exactly this risk, telling that the resulting uncertainty could weigh on investment decisions, which matters enormously for an industry that plans plant investments, supplier contracts, and vehicle platforms on five- and ten-year horizons.

There’s also a geopolitical wrinkle shaping the negotiations reflected in a growing concern in Washington over Chinese-made components entering North American supply chains through Mexico. Lawmakers have already proposed legislation directing US trade officials to prioritize protecting USMCA from Chinese investment during the review, which could translate into rules disqualifying vehicles that use components tied to Chinese state actors.

What happens next with the USMCA?

Formal bilateral talks between the US and Mexico are continuing, while US-Canada negotiations have barely begun. The US and Mexico are set to meet again the week of July 20 for a third round of bilateral negotiations tied to the joint review. Barring a breakthrough, expect this to become a recurring headline 鈥� another review, another round of tariff and rules-of-origin brinkmanship, repeated annually until either a deal is struck or the clock runs out in 2036.

For automakers, the message is less about any single new rule and more about planning in an environment in which the ground can shift every year. That’s a very different operating reality than the one the industry built its North American footprint on over the past three decades.

You can find out more about the USMCA and the challenges it faces here

Key insights:

• • • AI makes everyone鈥檚 job easier, including cybercriminals 鈥� With Anthropic鈥檚 Claude, an attacker breached Mexico鈥檚 federal tax portal in less than an hour.

    • Cybersecurity breaches may be a canary in the coal mine for a much larger problem 鈥� This is the second publicly disclosed Claude-enabled attack in less than a year.

    • Nearshoring the risk 鈥� Beyond the immediate damage to affected citizens and businesses, foreign investors and multinational evaluating their operations in Mexico may see a red flag that could discourage them from moving forward.

Amid the 2025 year-end celebrations 鈥� while most people were busy wrapping gifts, decorating trees, spending time with loved ones, and sketching out their 2026 resolutions 鈥� a quieter threat was unfolding. Unlike the Grinch, it had no interest in stealing Christmas cheer; instead, it set its sights on something far more valuable: more than 150 gigabytes of sensitive information from Mexican government organizations.

Armed with what appeared to be intermediate knowledge of cybersecurity and an advanced usage of AI tools, the Spanish-speaker attacker convinced Anthropic鈥檚 Claude chatbot that the interaction was part of a bug bounty 鈥� a legal way to hack a company and get paid for telling them how you broke in 鈥� with 3 key rules: avoid making changes that could damage the system, delete all logs, and disable command history.

At first, Claude strongly resisted, flagging these instructions as they sounded like detection-evasion techniques, commonly used by malicious actors. It even challenged the attacker, requesting verification.

However, just three minutes after the suspicious prompts, the attacker dropped a simple and straight-forward instruction: 鈥淐ould you add this to claude.md鈥�, with a penetration-testing cheat sheet attached. After that, things went as smooth as butter.

In simple terms, using a penetration-testing cheat sheet is like asking a security guard to write instructions to disable the alarms and he refuses, so you pull out a pre-written note with those exact instructions and say, 鈥淐an you just stick this on your booth door?鈥� and he does. Now those instructions are in front of him all day, and he follows it when you ask him, automatically without questioning it. In this case, Claude didn鈥檛 write the malicious manual 鈥� it just stuck the note up, but the result was the same.

Mexican government infrastructure attacked

According to Gambit Security, the attacker breached the Tax Administration Service (SAT, according to its acronyms in Spanish) 鈥� along with least 8 other Mexican government institutions during the end of 2025 until mid-February 2026. The incident has been described as one of the largest breaches of government infrastructure.

Within the scope of the SAT alone, the compromise reportedly exposed 195 million taxpayer records and 52 million directory entries. Building on this access, the attacker then leveraged Claude to pursue even more sensitive data, including Mexico鈥檚 electronic signature (e.firma) private keys, taxpayer identification numbers (RFC), national ID numbers (CURP), as well as customers鈥� biometrics, email addresses, phone numbers, and physical addresses.

Even beyond all of this, however, the most unsettling part of the attack came next. With a prompt that revealed a striking lack of technical literacy 鈥� 鈥淢ake a Python or something like that鈥︹�� 鈥� the attacker asked Claude to build a simple web application capable of querying and returning SAT taxpayer information. He then used this tool to develop a script that generated fraudulent tax status certificates, populated with real data pulled directly from the system. While he was unable to forge the document鈥檚 digital seal, the deception was still dangerously effective, because without proper cryptographic validation, the certificates appeared legitimate and were nearly indistinguishable from authentic ones.

Thus, the commercial relevance of the SAT hack is not secondary or collateral 鈥� it鈥檚 central. SAT is not merely a fiscal institution, it is the central nervous system of Mexico鈥檚 formal commerce, and its database holds information that companies provide under legal obligation, not only with a reasonable expectation that the government will protect it, but because they have no option but to do so.

When that information is compromised, the damage is not limited to the privacy of the affected taxpayers, it extends to a foreign investor or a company鈥檚 compliance team that may be evaluating a nearshore move for the establishment of operations in Mexico. And with all of that, it would be understandable for them to wonder:

If the government cannot protect the data that companies have little choice but to provide, what guarantee exists that it will be safe? And with that, in case of a danger, will the Mexican government have enough tools to investigate and sanction the attackers?

The hack spreads mistrust and apprehension

Within that calculus, weaknesses in government cybersecurity become more than a technical concern 鈥� they evolve into a tangible barrier to investment, a contradiction made even sharper amid the ongoing renegotiations of the United States-Mexico-Canada Free Trade Agreement (USMCA).

The last version of the USMCA establishes a framework for cybersecurity cooperation among member countries. Its legal architecture rests on three pillars: i) the recognition that cyber-threats represent a risk to digital commerce; ii) the commitment of the parties to develop capacities to identify and manage those risks; and iii) the promotion of cooperation between the public and private sectors in this area.

However, it never mentions a minimum-security standard that governments are required to meet, but that is not the only loose thread, since the USMCA was negotiated in a technological context radically different from the present one 鈥� back when generative AI (GenAI) was still science fiction rather than a browser tab. Indeed, the cybersecurity framework implicitly assumes that threat actors are organized structures.

And that鈥檚 where the case analyzed by Gambit Security could jeopardize everything, as the breach in which AI functioned as a primary operational tool, according to their document. More worrisome, what previously required months of specialized work and considerable resources by a potential network of hackers can today be executed in days by a much smaller unit, or singular person, with monthly subscription tools 鈥� and maybe less technical knowledge than you think.

That said, the push for stronger cybersecurity standards may extend beyond USMCA concerns and evolve into a broader industry imperative, particularly in places in which the agreement itself may fall short.

Claude as the mechanism

This attack marks the second known incident involving the use of Anthropic鈥檚 Claude 鈥� the first having been linked to a Chinese state-affiliated group 鈥� and it is unlikely to be the last. Without clearer regulation and stronger security standards, such misuse will not remain an exception but rather become an increasingly recurring threat not only in Mexico but also in Canada and the United States. Even in the US, which maintains comparatively advanced cybersecurity frameworks, experts acknowledge that defenses are still struggling to keep pace with an increasingly complex threat landscape.

The US is not the only one taking the lead, however, as the European Union has already introduced the first comprehensive AI regulatory framework, requiring systems to be resilient against misuse (including for cyberattacks) and obligating companies to report and address vulnerabilities. However, these rules primarily apply to AI developers rather than those who weaponize the technology. By contrast, the US has begun to address this gap by enacting laws that treat the use of AI in criminal activity as an aggravating factor, leading to harsher penalties.

As such, this is not only an alert for Mexico to improve its own cybersecurity practices but is certainly a broader call to action for all three countries. Regulating a technology that evolves faster than legal processes is both urgent and challenging 鈥� but not impossible.

You can find out more about the challenges facing Mexico on several different fronts here

Key highlights:听

• • • The scale of risk demands urgent attention 鈥� The World Cup’s five-week span across three nations creates a human trafficking risk profile far beyond any previous North American sporting event.

    • Geographic exposure extends far beyond host cities 鈥� Unlike the Super Bowl, where risk is concentrated in one metro area, the World Cup’s national identity-driven fan engagement means every city in the US, Canada, and Mexico is effectively a participant city.

    • Cross-sector preparation is the most critical investment 鈥� Cutting down siloed operations among law enforcement, financial institutions, and NGOs is required, that means establishing financial institution task forces, training frontline bank branch employees to recognize trafficking indicators, sharing cross-sector information, and amplifying public awareness campaigns before the tournament begins is crucial.

The 2026 FIFA World Cup will be the largest sporting event ever hosted on North American soil, a tournament with 104 matches spanning more than five weeks across three nations and drawing an estimated 6.5 million visitors from around the world. While the United States hosts large sporting events like the Super Bowl each year, the World Cup brings with it the unique challenges of length of time, fan influx from around the globe, and geographic expansion.

Assessing the scale of human trafficking risk

To understand the magnitude of the human trafficking risk involved in events such as this, it is useful to apply a framework that accounts for three variables: i) the likelihood of a trafficking event; ii) the potential extent of damage; and iii) the duration of exposure. When that framework is applied to the 2026 World Cup, the human trafficking risk associated with the event registers high due to numerous factors.

For more on this, tune into the 成人VR视频 Institute’s latest “Clarity” podcast

The most significant differentiating factor of the World Cup is its time duration. The Super Bowl is a single-day event, and the Olympics run approximately two weeks. The 2026 World Cup spans more than five weeks across three nations, a duration that has no modern sporting equivalent. The last three World Cups, held in Brazil, Russia, and Qatar, offer limited comparative value given the substantial differences in legal frameworks, cultural contexts, and infrastructure. For purposes of risk assessment, this is why the Super Bowl represents the most relevant domestic benchmark, even though it falls considerably short as a true comparison.

Human trafficking evidence from the most recent Super Bowl

The most recent Super Bowl, held in the San Francisco Bay Area in February 2026, illustrates the scale of the human trafficking challenge. A coordinated anti-trafficking campaign conducted across 11 Bay Area counties resulted in the recovery of 73 sex trafficking victims, including 10 minors, and 29 arrests, all in connection with a single-day event.

Sex advertisement data from that period further substantiates the scale of human trafficking concern. In the months preceding the event, advertisement volume rose steadily before spiking dramatically during Super Bowl weekend and declining sharply in the days that followed. Analysis that was restricted to advertisements referencing the Super Bowl by name showed trend lines that remained essentially flat until the event itself, at which point volume surged significantly.

Likewise, examination of phone numbers associated with those advertisements revealed organized and purposeful movement. Nearly 500 unique numbers that had posted sex advertisements in other states in the preceding weeks appeared in San Francisco during the event.

The risk of human trafficking expanding beyond the host city is one additional insight uncovered during the anti-trafficking operation during the Super Bowl. Advertisements referencing the Super Bowl spiked simultaneously in Boston and Seattle, the home cities of the two competing teams. In the context of the World Cup, every city in the United States, Mexico, and Canada is effectively a participant city, and national identity rather than team affiliation drives fan engagement. The geographic distribution of risk is therefore exponentially greater than anything observed around the Super Bowl.

Hotspots of sex ads

What anti-trafficking partners should do now

Those organizations and institutions that take action in advance of the World Cup will be substantially better positioned to detect exploitation and protect vulnerable individuals. More specifically, these organizations should:

• Establish financial institution task forces in advance of the event 鈥� Convening local financial institutions to align on existing practices and identify gaps will aid in ensuring all parties are on the same page. It also establishes relationships and procedures that cannot be built effectively during a five-to-six-week surge in cross-border transactions. Activating established information-sharing mechanisms, such as the processes supporting the filing of and the , will be essential for detection and pattern recognition.
• Institute branch-level employee training at local financial institutions 鈥� Frontline employees possess local knowledge that no centralized system can replicate. A branch employee in a high-traffic urban location understands the patterns of their customer base and is often the first to recognize when something is amiss. What they frequently lack is the context in which to interpret that instinct and the guidance to act upon it. Addressing that training gap before the World Cup represents one of the highest-value preparedness investments available to financial institutions at this time.
• Dismantle institutional silos 鈥� Siloed operations, in which law enforcement, financial institutions, and non-governmental organizations (NGOs) each operate independently, represent the least effective organizational posture for an event of this scale. Institutions that establish cross-sector relationships and information-sharing commitments in advance will be meaningfully better equipped to respond.
• Develop and amplify public awareness campaigns 鈥� Research demonstrates that sustained public awareness campaigns and visible law enforcement presence reduce demand. Host cities, law enforcement agencies, and NGOs should treat this as actionable guidance in planning their response strategies.

The 2026 FIFA World Cup is not simply another major sporting event. The institutions, agencies, and organizations that approach it as such will find themselves unprepared for a scale of human trafficking risk that North America has never previously encountered.

You can find more about the resources, tools, and information that cities and organizations need to address听human trafficking around large-scale sporting events at听the 成人VR视频 Institute鈥檚 Large-Scale Public Events Toolkit here

Key insights:

• • • Big sporting events create perfect cover for sex trafficking 鈥� The World Cup鈥檚 massive crowds, temporary workers, and stretched local infrastructure make it easier for traffickers to blend in and exploit vulnerable people while staying largely out of sight.

    • Money trails and online ads are where traffickers slip up 鈥� Trafficking often leaves patterns, such as payments tied to commercial sex ads, round鈥慸ollar peer鈥憈o鈥憄eer transactions, and repeat phone numbers or language across online ads. Banks and investigators can spot these red flags, if they know what to look for.

    • Early, cross鈥憇ector collaboration is what actually makes a difference 鈥� The strongest prevention efforts happen before kickoff, when law enforcement, financial institutions, and nonprofits share intelligence, use formal information鈥憇haring tools, and build trusted local networks to respond quickly and protect victims.

As millions of soccer fans descend upon stadiums across North America for the 2026 FIFA World Cup in June and July, perpetrators of human rights crimes also are getting ready to operate in the shadows of host cities. Criminal networks are preparing to exploit the crowds, traffic, and chaos during the event by trafficking vulnerable individuals for commercial sex.

Human traffickers and organized crime groups often exploit major sporting events as opportunities to make quick money because the massive influx of visitors, temporary workers, and strained infrastructure creates perfect conditions for traffickers to operate while being largely undetected. At the same time, the stakeholders involved in countering this illegal activity 鈥� including law enforcement, civil society organizations, and financial institutions 鈥� stand ready to detect it, disrupt it, and protect vulnerable individuals who are exploited by criminal actors.

Indeed, close coordination and collaboration among these entities in advance of the games is key. To that end, the Association of Certified Anti-Money Laundering Specialists (ACAMS) and 成人VR视频 are collaborating on a virtual and live event series to support these planning counter-trafficking efforts among stakeholders in several local cities this Spring.

Why major sporting events attract human trafficking activity

Not surprisingly, large crowds draw business opportunities whether they are legitimate or illicit. Collaboration between public and private entities underscore spikes in human trafficking activity. For example, during a recent large sporting event in 2025, 成人VR视频 Special Services partnered with federal law enforcement and other partners to identify nine adult encounters & services offered, which led to the recovery of two juveniles from sex trafficking and three state arrests

Common industries that involve the exploitation of vulnerable individuals include hospitality, construction, illicit massage businesses, escort services, and adult content production. The chaos of events and large influx of people mask the reality that exploitation is happening and makes detection significantly more challenging during these high-traffic periods.

Human traffickers and organized crime groups often exploit major sporting events as opportunities to make quick money because the massive influx of visitors, temporary workers, and strained infrastructure creates perfect conditions for traffickers to operate while being largely undetected.

Critically, understanding human trafficking as a business model depends on the recruitment of vulnerable people and access to money flows. These aspects of the business are also where detection can occur. Financial institutions and money service businesses can identify suspicious transactions related to human trafficking by understanding and recognizing specific transactional patterns, including payments to commercial sex advertisement websites, round-dollar peer-to-peer transactions, and merchant services linked to illicit massage businesses.

This online footprint left by traffickers proves invaluable for detection. Investigators track advertisements across adult services websites, identifying criminal networks through repeated phone numbers, distinctive emojis, and similar wording that may appear across multiple cities. However, smaller-scale operations present significant challenges as well. When the trafficker is an intimate partner or family member with limited transaction volumes, detection becomes exponentially more difficult without external intelligence.

Collaboration is key for prevention and detection

The most critical element for combating human trafficking at major sporting events is collaboration among anti-trafficking experts and employers of these professionals. Effective prevention requires building strong partnerships before these major events occur. Specific actions that can be taken include:

Establishing multi-sector task forces 鈥� The most successful anti-trafficking efforts involve joint task forces that combine federal, state, and local law enforcement with trusted private sector partners and supportive nonprofits or non-government organizations (NGOs) that offer victim services. This toolkit for large scale public events and other anti-trafficking toolkits are excellent resources for local host cities to use to execute these partnerships. These collaborative mechanisms allow different entities to share information in a timely manner.

Leveraging information sharing mechanisms 鈥� Financial institutions can use Section 314(b) authority for peer-to-peer information sharing between banks. This allows financial institutions to piece together fragments of suspicious activity that individually might seem insignificant but collectively reveal trafficking networks. Large federal agencies are consumed by multiple priorities and benefit from information sharing through Section 314(a) and assistance from financial sector partners during special operations to act as a force multiplier. Law enforcement also can benefit from detailed Suspicious Activity Reports (SARs) that contain specific dollar amounts, clear timelines, behavioral observations, and explicit keywords like human trafficking.

Preparing host cities by building networks and outreach in advance 鈥� Some World Cup host cities have already established human rights plans with robust collaborative systems within local task forces, government awareness campaigns, QR codes that link to support services, and multidisciplinary safety plans.

In addition, anti-trafficking professionals across all sectors are accessible and willing to help. Resources include national hotlines, such as the , referral directories on website, and the for cases involving minors. The most important step is simply reaching out to establish connections before crises occur.

Preparing for a safer event

The 2026 World Cup presents a pivotal moment to strengthen collaborative efforts against human trafficking across North America’s host cities. By establishing robust information-sharing networks between financial institutions, law enforcement, NGOs, and host communities before the tournament begins, stakeholders can transform heightened awareness into meaningful action that protects vulnerable individuals.

While traffickers will undoubtedly attempt to exploit the inevitable chaos surrounding a major event like the World Cup, a coordinated, multi-sector response grounded in shared intelligence, victim-centered approaches, and proactive preparation can disrupt their operations and ensure that the world’s celebration of soccer doesn’t come at the cost of human dignity and freedom.

You can find out more about听how organizations are trying to fight against human rights crimes here

• • • The ceasefire is between the US and Iran and is not a regional peace 鈥�听Israel launched its heaviest strikes yet on Lebanon within hours of the announced deal. Iran hit oil infrastructure in Kuwait, the UAE, Bahrain, and Saudi Arabia 鈥� including the East-West Pipeline, the primary route for bypassing the Strait of Hormuz. Companies planning around a return to normal should instead plan around the idea that the war has narrowed, not ended.

    • If the disruption stays within one quarter, the economic damage is painful but reversible 鈥� The Dallas Fed projects WTI oil at roughly $98 per barrel with a modest GDP hit in a short-closure scenario. The catastrophic scenario 鈥� WTI above $132 with sustained negative growth 鈥� requires the closure of the war to drag past Q2. Every week the ceasefire holds improves the odds, but Iran’s strike on the Saudi bypass pipeline complicates even the optimistic timeline.

    • Iran may have stumbled into the most lucrative chokepoint tax in modern history 鈥� At conservative estimates, transit fees charged for traversing the Strait of Hormuz could generate $40 billion to $50 billion for Iran annually, or roughly 10% to 15% of Iran’s pre-war GDP 鈥� all at near-zero operating cost. That revenue stream inverts Tehran’s incentives. Indeed, keeping the toll system in place may now be worth more than restoring free transit.

On April 7, less than two hours before a self-imposed deadline that threatened the destruction of Iran’s civilian infrastructure, President Donald J. Trump announced a two-week ceasefire in the war in Iran that began on the last day of February and continued over 38 days of sustained air strikes by the Unites States and Israel. In turn, Iran carried out retaliatory attacks across over a dozen countries and forced the effective closure of the Strait of Hormuz.

With the ceasefire, all that has paused. Yet, the question every boardroom, general counsel’s office, and procurement team is asking right now is simple: How can I plan around this?

The honest answer is, not yet 鈥� and the first 24 hours have already shown why.

A fragile, but functional peace

The ceasefire is remarkably thin, and it鈥檚 based on three operative clauses: i) the US and Israel halt strikes on Iran; ii) Iran halts retaliatory attacks on the US and Israel; and iii) Iran allows “safe passage” through the Strait of Hormuz. Everything else 鈥� from nuclear terms, sanctions, reconstruction, and the legal status of Hormuz transit 鈥� has been punted to negotiations in Islamabad beginning April 10, with Pakistan mediating.

With the ceasefire, the question every boardroom, general counsel’s office, and procurement team is asking right now is simple: “How can I plan around this?”

However, what the ceasefire covers matters less than what it doesn’t. Within hours of the announcement, Israel launched its heaviest strikes yet on Lebanon, and Iran warned it would withdraw from the ceasefire if attacks on Lebanon continue. Meanwhile, Kuwait, the UAE, and Bahrain all reported fresh Iranian missile and drone strikes targeting oil, power, and desalination infrastructure after the ceasefire was in place. Most critically, Iran struck Saudi Arabia’s East-West Pipeline, the main route by which Gulf producers have been rerouting oil to bypass the blockaded strait.

That pipeline strike should command attention in every supply chain and energy risk briefing this week because it signals how shaky the agreement is, and that Iran remains a long-term threat to vital infrastructure across the region.

For companies operating in or sourcing from the Gulf, the practical implications are immediate. This is not a ceasefire that restores pre-war operating conditions; rather it is a bilateral pause between two belligerents while the regional war continues around them. Insurance premiums, shipping risk assessments, and supply chain contingency plans should reflect that distinction until there is a meaningful shift.

What does this mean for the next two weeks?

Both sides are claiming victory 鈥� and increasingly, claiming different deals. Trump called Iran’s 10-point proposal “a workable basis on which to negotiate”; and Iran’s Supreme National Security Council called the ceasefire a “crushing defeat” for Washington. The White House now says the 10-point plan Iran is publicly circulating differs from the terms that were actually negotiated for the ceasefire. Tehran, meanwhile, says there is no deal at all if Lebanon isn’t included 鈥� a condition the US has not acknowledged. And of course, the Strait of Hormuz remains closed.

These are not the hallmarks of a stable agreement; but they may be the hallmarks of a durable one. The deal is thin enough so that each side can brief its domestic audience on a different story, and as long as neither is forced to reconcile those stories publicly, the pause holds.

And the incentives to keep talking are asymmetric but real. The US has watched gas prices surge past $4 nationally as domestic support for the war 鈥� which started at levels best described as in a hole 鈥� continued to drop even further. Goldman Sachs raised its recession probability to 30% and JPMorgan to 35%, and every day the strait stays closed pushes those numbers higher. The administration needs the global economy to exhale and needs distance itself from a war so it can focus on other priorities, including an already difficult midterm election cycle.

With the ceasefire, all that has paused. Yet, the question every boardroom, general counsel’s office, and procurement team is asking right now is simple: How can I plan around this?

Iran, for its part, wants the bombing to stop. Its conventional navy has been functionally destroyed, its air defenses are highly degraded, its nuclear facilities have sustained severe damage, and its cities, bridges, and transportation networks have been hit repeatedly. The regime survived and arguably emerged with greater domestic legitimacy than it had before the war, but the physical toll is mounting. Tehran wants the strikes to stop so it can claim victory by survival without incurring any more costs.

This mutual exhaustion is the load-bearing structure of the ceasefire. If the ceasefire holds for 72 hours (as I think it might), and if the strait begins opening to escorted traffic by Friday as Iranian officials have signaled, and if neither side finds a reason to walk away before the Islamabad talks convene, then the ceasefire will likely be extended. Not because the underlying disputes get resolved, but because the cost of resuming hostilities exceeds the cost of continuing to talk. Expect a rolling series of extensions, probably 30 to 45 days at a time, that resolve nothing while letting global markets gradually stabilize.

As we wrote earlier this month, if the disruption remains limited to roughly one quarter, the oil price shock is painful but reversible, ugly, but manageable. And every week the ceasefire holds pushes the trajectory toward the manageable scenario.

What happens after the ceasefire?

Again, if the ceasefire holds, we then have to start thinking about how this conflict resolves. Not surprisingly, this is where it gets uncomfortable.

The conventional assumption in Washington and in global markets is that the Strait of Hormuz will return to normal once the fighting stops. That assumption underestimates what Iran has built.

Iran’s parliament is working to pass a Strait of Hormuz Management Plan, codifying its claimed sovereignty over strait transit and establishing a legal framework for collecting toll fees. Media reports indicate Iran has been charging vessels between $1 million and $2 million per transit and is planning to keep charging those tolls for all ships as the strait reopens. So, at $1 million per ship, and with up to 135 transits per day, 365 days a year, that’s about $40 billion to $50 billion in annual revenue for Iran, or up to 15% of Iran’s pre-war GDP. All at an operating cost that approaches zero.

Iran didn’t enter this war planning to build the most lucrative chokepoint tax in modern history, but it may have stumbled into exactly that.

Compare that to Iran’s oil sector, which generated approximately $53 billion annually in 2022 and 2023, required massive capital investment and maintenance, and was subject to constant disruption. The toll revenue is comparable in scale, dramatically cheaper to operate, and immune to sanctions. If the final number is even a fraction of this, it鈥檚 still a massive financial shot in the arm for Iran that could become a far greater advantage than the damage to capital that the war has inflicted upon the state.

Iran didn’t enter this war planning to build the most lucrative chokepoint tax in modern history, but it may have stumbled into exactly that.

Of course, this changes the structural incentives around the Strait of Hormuz in ways most analysts haven’t fully absorbed. A permanent toll system gives Iran a revenue base to rebuild the military assets it lost, reduce its dependence on oil exports, and fund domestic investment that could blunt future protest movements. The regime’s cost-benefit calculus has inverted: Keeping the toll operational in place may now be worth more than restoring the pre-war status quo.

For the US and Israel, the only way to dismantle this arrangement is by force and the last 38 days demonstrated the limits of that approach. The US achieved air and naval superiority, destroyed Iran’s conventional military, and killed the supreme leader. None of it was enough to compel capitulation, and in fact, may not have even come close. A second campaign faces the same likely result, against a population now unified by the experience of surviving the first one.

The war didn’t just disrupt global trade. It may have permanently repriced the most important shipping lane on Earth 鈥� and left every piece of energy infrastructure in the Gulf more vulnerable than it was before the first air strike landed.

You can find more about the global impact of the war in Iran here

Key takeaways:

• • • Q2 is a wound that heals if the war stops 鈥� Oil spikes, inflation revisions, and supply disruptions are painful but mostly reversible in a short-war scenario. The exception is insurance and risk premiums for Gulf maritime transit, which are permanently repriced.

    • Q3 is a wound that scars 鈥� Sustained oil at $130 per barrel changes household and business behavior in ways that don’t snap back. Recession probability crosses the coin-flip threshold and supply chain disruptions cascade into industries far from the Gulf.

    • Q4 is a different body 鈥� Even if the war ends, the global economy has rebuilt itself around the disruption. Trade routes, supplier relationships, and risk models have been permanently rewired, especially if there is nothing structural to prevent the Strait from closing again.

This is the second of a two-part series on the impact of the war with Iran as the conflict continues. In this part, we鈥檒l walk through what a quarter-by-quarter economic scenario would look like if the war continues.

Previously, we made the case that the US-Iran war is unlikely to end quickly. The regime hasn’t collapsed, the asymmetric force controlling the Strait of Hormuz is nowhere near neutralized, and diplomacy seems dead on arrival. Most significantly, the United States military is escalating, not winding down.

While the first part of this series was about the military and diplomatic picture, this piece is about your balance sheet.

What follows is a quarter-by-quarter map of what a prolonged conflict means for the global economy, charted from now through Christmas 2026. We鈥檒l cover how oil, supply chains, GDP forecasts will be revised in real time, and how disruptions that look temporary in Q2 could trigger a permanent rewiring of how the global economy moves goods, prices risk, and sources critical inputs.

Even if your company doesn鈥檛 import a single barrel of Gulf crude, you could still get hit by this. Indeed, if you’re plugged into the global economy like the rest of us, you’re going on this ride.

Q2 2026 (April鈥揓une): The wound that heals

If the war ends by the close of the second quarter on June 30, most of the damage is reversible 鈥� painful, but reversible.

Brent crude is up about 60% since before the start of the war when it was roughly $70 per barrel; and Capital Economics , prices could fall back toward $65 by year-end. The interim outlook from the Organisation for Economic Co-operation and Development (OECD) now to be 4.2% for 2026, up sharply from 2.8%, assuming energy disruptions ease by mid-year. If that assumption holds true, it鈥檚 likely we鈥檒l be able to muddle through the pain.

Even in the most optimistic scenario, however, Q2 introduces disruptions beyond oil that most people aren’t tracking. The Gulf supplies roughly 45% of global sulfur, and Qatar produces around one-third of the world’s helium, which is essential for semiconductor manufacturing. Further, Qatar鈥檚 liquified natural gas (LNG) production was significantly damaged by Iranian strikes.

Even in the most optimistic scenario, however, Q2 introduces disruptions beyond oil that most people aren’t tracking.

Further disruptions in fertilizer supply chains could delay spring planting, which could ripple into agricultural yields well into 2027. These effects don’t snap back the moment oil flow normalizes; they have their own timelines.

And here’s the one thing that doesn’t reverse even in the best case 鈥� risk premiums. The Strait of Hormuz was priced as a chokepoint that would never actually close. So when it did, that repricing is permanent and will be felt across the world as risk around other too important to fail chokepoints is itself reevaluated and priced higher.

Q3 2026 (July鈥揝eptember): The wound that scars

If a Q2 end to the war represents a recoverable spike, a Q3 end is where the word structural starts showing up in the discussion.

Capital Economics models Brent at roughly $130 per barrel 鈥� or roughly 14% higher than where it is now 鈥� in a prolonged scenario. At those prices, the damage stops being abstract. And Moody’s Analytics chief economist Mark Zandi estimates that every sustained $10-per-barrel increase . At $130 (nearly double pre-war levels) that’s approaching $2,700 per family. That is the kind of money that changes behavior.

In this case, Zandi says, especially if the cost of oil stays elevated for months 鈥� and by Q3, it would have. Moody’s recession probability model was pushing 50% in late-March when oil was $108 per barrel. At $130, the math speaks for itself.

Again, in this scenario, the damage fans out beyond energy. Fertilizer shortages hit crop yields, and helium disruptions cascade into semiconductors, automotive, and medical devices. The potential impact on AI-related manufacturing alone could spook investors already primed to see AI as a bubble. Capital Economics projects Eurozone growth at 0.5% and Chinese growth below 3%. Emerging markets could face forced rate hikes that deepen their own recessions.

This is the quarter in which contingency plans become operating assumptions. The question is no longer When does this go back to normal? 鈥�听rather the question is whether normal is coming back at all.

Q4 2026 and beyond: The different body

Here’s what most forecasts don’t capture about a war that continues passed Q4: It almost doesn’t matter whether the war is still active or not. The damage has changed shape, and it’s no longer about what the conflict is doing to the global economy. Instead, it’s about what the global economy has done to itself in response.

Companies that spent Q2 and Q3 diversifying away from Gulf suppliers have now spent real money building alternatives. They are not going back to their previous pathways even if there is a ceasefire. The sunk costs make the reversal unthinkable, and the memory of this conflict makes it irrational. No supply chain director is walking into a boardroom to recommend re-concentrating risk in a chokepoint that closed once and might close again.

The prudent approach for companies remains clear. They should plan for the war to last into at least Q2, probably Q3, with structural effects persisting beyond.

Because, of course, it could close again. If Iran emerges weakened but intact, which is the most likely outcome per multiple intelligence assessments, the result is a hostile state with every incentive to reconstitute its asymmetric capabilities the moment the pressure lifts.

Companies are thus going to reroute their future supplies around the Strait rather than through it. High oil prices and the potential for global shortage will also further accelerate green energy initiatives or alternate fuel sources across the globe as oil security reenters geopolitical calculations. Most importantly, every organization鈥檚 supply chain will need a reevaluation in light of an increasingly dangerous world, with expensive secondary supply chains becoming more a necessity than a luxury.

That鈥檚 the real legacy of a war continuing past the end of this year. Not oil prices on any given day or even insurance premiums, but the permanent repricing of an assumption. The war didn’t just disrupt the flow of goods through the Strait of Hormuz, it broke the premise that some geographies were too big to fail and would be protected and kept open. Once that premise is now broken so thoroughly companies will need to reevaluate whether the concentration of risk in individual areas is a luxury they can afford. Many will find the answer to be no, resulting in an increased push to diversify risk away from single points of failure.

The planning imperative

Fortunately, the best-case scenario remains possible. However, it requires Iran accepting terms it has publicly rejected as existential, its navy being neutralized despite retaining significant asymmetric combat capability, a coalition materializing from countries that have refused to send warships, and mine-clearance operations succeeding with the deck stacked against them. Only then, we鈥檒l see if civilian traffic is willing to risk billions of dollars that the clean-up job was done right. Each is possible, but the odds remain slim.

The prudent approach for companies remains clear. They should plan for the war to last into at least Q2, probably Q3, with structural effects persisting beyond. They should model energy prices at between $120 and $150 per barrel, not $70. The smart companies are the ones building optionality now because the cost of flexibility is far lower than the cost of being caught flat-footed in September.

Four weeks ago, the assumption was that the Strait of Hormuz was too important to close. However, it did, and the assumption that it will reopen quickly deserves the same scrutiny.

You can find out more about the听geopolitical and economic situation in 2026听here

Key insights:

• • • Nature-related risks underreported 鈥� Companies鈥� nature-related interfaces are underreported across industries, despite being increasingly seen as decision-useful information for investors and regulators.

    • Stricter requirements for disclosure growing 鈥� Both voluntary and mandatory frameworks are increasing their requirements for nature-related disclosure.

    • Organizations should be proactive 鈥� Getting ahead of disclosure trends means that organizations should be measuring their nature-related interface as well as integrating nature-positive transition planning to their business strategy.

As the impacts of nature loss become more prevalent, companies are on business risk and performance. This is due to both physical nature-related impacts and increasing stakeholder pressure on organizations to integrate long-term nature-positive strategies. Managing nature-related impacts and dependencies is a framework-driven mandate for all boards of directors to consider.

Why nature matters

All businesses impact and depend on the four realms of nature: land, freshwater, ocean, and atmosphere to some extent, with the highest impact sectors being . These dependencies could include the provision of water supply to an organization, or services provided by nature to a business, such as flood mitigation. A could result in a $2.7 trillion GDP decline annually by 2030. In turn, most businesses also positively and negatively impact nature.

Financial flows that were determined to be harmful to biodiversity reached , including private investment in high impact sectors, with only $213.8 billion (鈧�184.6 billion) invested in conservation and restoration. Despite this financing gap, less than 1% of publicly reporting companies currently disclose biodiversity impacts, indicating the need to align incentives and policies with nature-related outcomes.

Indeed, nature does not have a single indicator, like greenhouse gas (GHG) emissions; instead, its measurement involves multiple complex, location-specific factors. Despite this, disclosure of nature-related risks and impacts are increasingly being required by regulators.

Regulatory incentives to disclose

The disclosures being driven by regulatory frameworks include material information on all nature-related risks, particularly those requested by the International Sustainability Standards Board (ISSB) and European Sustainability Reporting Standards (ESRS). The ISSB Biodiversity Ecosystem and Ecosystem Services project (BEES) was initially considered a research workplan but was modified to a standard-setting approach.

Through its work, the ISSB due to: i) the deficiencies in the type of information on nature-related risks and opportunities reported by entities, which are identified as important in investor decision-making; and ii) the requirement of nature-related information that is not included in climate-related disclosures, including location-specific information on nature-related interface and nature-related transition planning.

On Jan. 28, all 12 ISSB members voted to , which included two important implications. One is that standard setting is to cover all material information on nature-related risks and opportunities that could be expected to affect an entity鈥檚 prospects. And two, it mandated that entities applying International Financial Reporting Standards听S1 and S2 for climate-related disclosures supplement these with nature-related risks and opportunities disclosures as well.

Similar to the ISSB requirements to report material nature-related risks and opportunities, the ESRS also requires information to be disclosed for material impacts, risks, and opportunities found in an entity鈥檚 double-materiality assessment. The Task Force on Nature-related Financial Disclosures (TNFD) and its European counterparts have been in close collaboration since 2022, and all 14 TNFD recommendations have been incorporated throughout the ESRS environmental standards.

Companies that are required to comply with the EU鈥檚 sustainability reporting mandate also will be required to collect similar data for their future ESRS data points disclosure.

Alongside regulatory requirements, there are voluntary requirements and investor pressure to consider for many organizations. These include investor coordination initiatives on nature such as Nature Action 100 and considering which investors look at Carbon Disclosure Project (CDP) data.

To use the CDP as an example, 650 investors with $127 trillion in assets they needed in 2025. Further, the CDP is increasing its disclosure requirements for nature-related data in its questionnaire as it progresses to . This includes, for example, requiring disclosures on environmental impacts and dependencies for disclosers, enhancing commodities included in the forests questionnaire, and introducing oceans-related questions in 2026.

All of these heightened requirements underscore the need to measure a company鈥檚 nature-related impacts and proximity to its nature-related issues.

Implications for company boards

To align with these additional requirements and investor expectations, corporate decision-makers should consider the questions they are asking related to nature, as well as what data is being collected in relation to the organization鈥檚 impact on nature. The following steps can give leaders a starting point for how boards should consider this information:

Track relevant developments in regulatory and investor standards 鈥� Ensure there is a management-level understanding of how nature is considered in relevant standards for the company based on its current and anticipated locations of operation and specific industry.

Measure nature-related risks and opportunities 鈥� Given that identifying material nature-risks, with a particular focus on location specificity, is a common first step across current mandatory and voluntary regulatory frameworks, organizations should conduct a regularly updated, location-specific assessment on the company鈥檚 interface with nature, especially in instances in which these issues are material. Organizational leaders should also produce financial quantification of these risks within an overall materiality assessment and corporate risk register. For guidance, the best practice across these regulatory and disclosure frameworks is to utilize the .

Make further disclosure of any material nature-related information, including financial quantification 鈥� Frameworks such as the ESRS require further disclosure of any risks that are found to be material, including financial quantification and scale of the risk.

Integrate mitigation of nature-related risks in business strategies 鈥� Upcoming standards and research, such as that from the ISSB, indicates that missing disclosure includes company鈥檚 nature-positive transition planning. Consider how to integrate nature into long-term business strategies for full alignment with upcoming regulations and standards, including establishing nature-related governance.

Adopting these processes and integrating nature into corporate decision-making will provide corporations with a more future-proof and resilient business model. The increased adoption of nature within these frameworks is driven by the clear economic impact that our current loss of nature is having. This will only continue to become more of a priority as the impacts of nature loss are increasingly felt worldwide.

You can find out more about the听sustainability issues companies are facing around the environment听here

Key takeaways:

• • • New Zealand legal market achieves revenue and profit growth 鈥� A new TRI report on the New Zealand law firm market shows firms rebounding strongly from the pandemic, with firm revenue and profits up impressively.

    • Transactional and counter-cyclical practice demand drives success 鈥� More than half of the legal demand for New Zealand law firms comes from transactional work, which rose of the past year; meanwhile, counter-cyclical practices saw even higher growth rates.

    • Managed expenses and increased partner utilisation boost profit margins 鈥� Despite rising expenses due to technology and knowledge management investments, New Zealand law firms maintained manageable costs and increased equity partner utilisation.

For New Zealand law firms, years of careful investment and strategic pandemic recovery have paid off. Today, strong demand has vaulted firm revenue growth above double digits, leading to profits not seen among New Zealand firms since the early days of the pandemic, according to a new report from the 成人VR视频 Institute (TRI) and data from TRI鈥檚 .

Jump to 鈫�

2026 Report on the State of the New Zealand Legal Market

Demand at New Zealand law firms rose more than 5% last year, following stagnant or decreasing growth rates between 2022 and 2024, according to TRI鈥檚 2026 Report on the State of the New Zealand Legal Market. As a result, overall firm revenue rose by more than 10%, placing it back near pre-pandemic levels. Coupled with managed expense growth, New Zealand law firms saw their first double-digit profit growth since 2021, after declines in demand for transactional practice work scuttled profits in 2022 and 2023.

Overall, more than half of the legal demand for New Zealand law firms comes from transactional work such as corporate general and M&A practices; and indeed, demand for such work rose last year after seeing only modest growth or declines in the the years prior. However, the report shows that even more notable is the rise of demand in counter-cyclical practices such as disputes & litigation, insurance defense, and workplace relations. The growth rate of counter-cyclical demand topped that of transactional demand in the second quarter of last year and continued to separate itself throughout the remainder of the year.

At the same time, firms continued to enjoy steady rate growth, with their worked rate growth over this past year coming close to their average rate growth than was seen from 2022 to 2024.

Interestingly, this represents a different strategy by New Zealand firms, compared to those in the United States or Australia, to capture profits through other means while keeping their rate increases manageable. And indeed, while Australian and US firms have largely seen falling utilisation, New Zealand equity partners averaged more hours worked per month in 2025 than they did the year prior, which helped to drive higher revenues.

Meanwhile, total expenses ticked up slightly last year compared with 2024, with both direct expenses and indirect expenses rising. However, much of this growth in indirect expenses is largely due to increased investments in technology and knowledge management, an increasingly necessary expense in the age of AI.

As a result of the demand rebound and more manageable expenses, New Zealand law firms are seeing their revenues and profits soar.

Overall revenue more than doubled, percentagewise, in 2025, which in turn directly led to sky-high profits in 2025 that were almost triple what they were the year prior. Profit per equity partner also saw similar gains.

Overall, New Zealand law firms on average largely held steady with a profit margin around 43%, while some firms saw profit margins soar above 50%.

As the report shows, all of this represents a very positive financial picture for New Zealand law firms. The return of demand, steady rate growth, and managed expenses has provided firms a solid footing from which to grow further. And if New Zealand law firm leaders can build on those positive metrics, they look poised to take these gains and grow further in 2026.

You can download

a full copy of the 成人VR视频 Institute’s “2026 Report on the State of the New Zealand Legal Market” by filling out the form below:

Key insights:

• • • Geopolitical crises fuel financial volatility and illicit activity 鈥� Conflicts have traditionally accelerated capital shifts and flows, creating cover for bad actors.

    • Predictable patterns emerge 鈥� Financial institutions should watch for sudden cross-border activity, unusual cash deposits, and transactions from border areas.

    • Conflict zones enable black market expansion 鈥� They also should adapt their compliance systems to detect more sophisticated methods used by criminals, tightening screening and enhancing staff training.

While business and international politics may appear cold and calculating, these things are often driven by emotion, especially fear 鈥� and fear of instability often drives market volatility.

So it goes as the United States attacks one of the world’s largest militaries and supporters of regional terror groups, causing deepening instability in a Middle East already beset by violence. It is certain that there is already a surge of money flowing in and out of the region for different reasons. Legitimate and illegitimate actors alike will seek to both run away from the crisis and profit from it. However, there are some anti-money laundering specific thoughts that financial institutions need to consider during a time of global uncertainty.

The bottom line 鈥� lots of money is on the move. Funding will send aid groups towards the crisis; it will also send logistical supplies, war material, and other necessities. All of these cost money, and defense sectors in multiple countries will be pumping out munitions to refill stockpiles in any country that is related to or in the neighborhood of the conflict.

Not every large transaction is an unusual, reportable event, but financial institutions now need to look one or two layers below the surface. What does not seem related on the surface is always a red flag. Look at beneficial ownership of companies and vessels, look at relations of the owners, not just the 听(OFAC) results of those people themselves. The financial system will, and should, allow the legitimate funds to flow. However, financial investigators must remain diligent to catch bad actors that take advantage of the surge in non-profit activity or the urgency with which legitimate businesses operate in a conflict zone.

Risk Factor 1: Capital flight from regime change

Just as the fall of the Al-Assad regime in Syria caused family funds to flow to as regime members fled the country, you will see the same with politically exposed persons (PEPs) who are inevitably fleeing regime change in Iran. A political crackdown will come. Whether the victors are on the side of the West or not remains to be seen, but some factions are going to flee the country and take family wealth with them.

Banks and other financial services should watch for anyone connected to people moving money through neighboring countries in which they may have literally hiked or driven before depositing cash into a financial institution. There are stories of refugees leaving places with gold bands on their arms, cash and false bottom purses, and diamonds in the lining of sweaters. These things will be converted to cash in neighboring countries and put into financial systems less affected by the conflict. An influx of cash throughout the region, therefore, could indicate this type of capital flight.

Risk Factor 2: Illicit finance and black markets

Since the fall of Syria, we have also become aware of that helps fuel addiction and armed conflict. There are certainly other substances and drug trafficking networks about which we know very little on this side of the secrecy veil.

Therefore, this instability will be seen as a time of opportunity for criminal groups. Indeed, with Assad鈥檚 security forces no longer controlling middle eastern captagon and other narcotics trade and various armed groups looking for funding sources, this is an illicit business opportunity.

Financial institutions can expect rapid movement of money between unrelated shell corporations, new corporations, and shadow vessels. They also should expect the black market to boom with drugs, contraband Iranian oil, and funds tied to narcotics that they have only yet to discover. Illegal arms will also generate funding, so all of the methods, both formal and informal, used to transfer value will become active.

In fact, large portions of such funding will flow through financial institutions; and peer to peer payment providers, FinTechs, and money transmitters should be especially wary of funds moving rapidly through their platforms. A burst in conflict means a burst in activity from illicit sources; therefore, enhanced, targeted monitoring is a must.

How financial institutions鈥� risk & compliance teams should respond

First, all financial institutions鈥� risk & compliance departments need to assess their institutions鈥� OFAC and sanctions screening search parameters. This is a good time to dial up fuzzy logic capability and reduce match percentage thresholds. In other words, risk tolerance should go down while the metaphorical dragnet gets wider. Surge the department鈥檚 personnel capability to compensate if you have to, because that is better than a strict-liability OFAC fine. Remember, OFAC sanctions are closely tied to national security, especially when it comes to Iran. This is not an arena in which leniency can be expected. Compliance teams should look at monitoring systems and thresholds immediately, create geographical targeting models to cover the conflict zone, and consider a command center approach to deal with the fluidity of the situation until things settle.

If your institution has not already taken the hint from regulators, this also is an opportunity to double down on Customer Due Diligence and identity verification. Front line staff and embedded business compliance personnel should receive updated training and job aids to increase awareness and hone internal reporting. Indeed, it is an advanced business skill to understand complex corporate beneficial ownership, much less to detect when it may be tied to illicit activity or corrupt regimes. Now is the time to increase that level of knowledge and thereby make the culture of compliance more robust.

In every crisis there is opportunity as well as risk: Managing the risk allows every company to take advantage of the opportunity, shore up its mission, and strengthen the institution.

You can find out more about听the geopolitical and economic outlook for 2026听here

Key insights:

• • • Pushing innovation in the financial sector 鈥� The OCC is actively enabling innovation among financial service institutions, not resisting it.

• • • Regulation is being refocused, not removed 鈥� Priorities may change with each administration, but oversight remains, and crypto is increasingly central.

    • Compliance is a growth requirement 鈥� Regulations around the BSA, sanctions, and KYC still apply, so durable controls and experienced teams do matter, even with AI.

Shortly after being named Acting Director of the Comptroller of the Currency in early 2025, Rodney E.听Hood in the financial sector. Hood spoke about improving bank-fintech partnerships and providing regulatory frameworks for digital asset activities.

As expected, the Hon. Jonathan V. Gould was sworn in as the 32nd on July 15, 2025. Under his leadership of the Office of the Comptroller of the Currency (OCC), the spigot of technology-enabled financial innovation is set to remain wide-open, with blockchain-based products at the forefront.

In his speech to the , Comptroller Gould laid out a road map to a future that includes more de novo charters, with many of them coming from the ranks of blockchain and digital or virtual asset service providers (VASP). He refuted notions that these things cannot be done under current rules and reaffirmed the agency’s ability to regulate such institutions.

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Institutions that fail to embrace these emerging technologies as they arise risk falling behind, Gould said, describing how any legal framework that treats digital assets differently than existing electronic means is risking 鈥渁 recipe for irrelevance.鈥� Such an antiquated approach keeps companies, institutions, and indeed the nation鈥檚 entire financial system, mired in the past, he added.

Digi-mon go!

In word and deed, the current OCC continues to offer a green light to VASPs as well as to traditional financial institutions that are looking to dabble with blockchain, stablecoins, and the like. Regulatory action in the past year mostly served to end prior enforcement against traditional institutions while putting ancillary companies in check. For example, of US/Mexican border casinos, crypto ATM-style terminals, and armored car companies demonstrates the regulatory shift that takes place after each change in administration.

Government rarely gives up its authority, but it does shift the focus. Border cash is out, crypto is in. Clear regulation for this sector is important, necessary, and will continue to create an entirely new set of financial products & services.

Institutions that fail to embrace these emerging technologies as they arise risk falling behind… [and] any legal framework that treats digital assets differently than existing electronic means is risking ‘a recipe for irrelevance.’

Normally I advocate more caution but, in this case, having any regulation is better than having no regulation. Blockchain is here to stay and having any kind of clarity around it is the right way to begin. Those who legislate have an opportunity to improve the regulatory framework over this technology as it evolves 鈥� as long as a framework exists. It’s sort of like the slippery slope argument in reverse: When we build a foundation on regulations that encourage innovation while protecting consumers, including the companies themselves, we create a healthier economy. These rules can always be improved and adjusted as we understand better what we have unleashed upon the world.

Compliance is on the 鈥渃an鈥檛 cut鈥� list

Rumors are swirling of cuts to many corporate compliance budgets. Many compliance pros think this administration will let companies do as they please! Let a professional risk manager urge caution here instead. The power of the Bank Secrecy Act (BSA), the extraterritorial reach of sanctions, and the requirements to know your customers (KYC) are not going anywhere. Regulations are refocused, not removed. A proliferation of nouveau financial institutions will provide a target-rich environment for the regulators of today and tomorrow to find things they dislike and prosecute those offenses. A business that hopes to make it big should be built to withstand the winds of change and weather different regulatory conditions over time.

Therefore, smart compliance professionals will keep an eye on the horizon and keep their risk controls tight. Yes, it may be a good time to start a crypto company; but no, that does not mean you can process drug cash, ignore sanctions, or fail to collect basic personally identifying information.

With increasingly ubiquitous AI tools, your humans in the loop are more important than ever. As entry level jobs become automated, depth of experience becomes more valuable. Retain talent and institutional knowledge on your compliance teams because those individuals will train the AI as well as the investigators of tomorrow.

Indeed, no matter who is in charge of the government鈥檚 regulations, enforcement will come when you let your guard down and ignore basic risk management principles.

You can find more about how government agencies are managing various risk, fraud, and compliance issues here