Key takeaways:

• • • Stability is the story — The OBBB’s main value has been predictability for business planning, not sweeping new rules — a sharp contrast to the disruption of prior major tax legislation like the TCJA.

    • Section 1202 is a live opportunity — The expanded QSBS exclusion has reopened planning conversations around corporate structuring that had cooled in recent years.

    • Plan for both today and tomorrow — Practitioners should help clients capitalize on current certainty while preserving flexibility, and they should help clients build tax positions that can hold up to increasingly AI-powered IRS scrutiny.

When major tax legislation lands, the instinct is to brace for upheaval. But one year after the passage of the (OBBB) Act, the consensus among practitioners is notably different: The OBBB didn’t rewrite the rules so much as confirm them, and that distinction has mattered more than it might sound.

Certainty over seismic change

Unlike the (TCJA) — which was passed in 2017, mostly took effect the following year, and forced practitioners to relearn much of the code — the OBBB’s significance lies less in what it changed and more in what it settled. It gave businesses a stable set of rules to plan against, rather than a moving target to which to react.

“From a purely tax lens, it was… easier to unpack than in prior years because there are fewer seismic changes,” says , Partner at Plante Moran, reflecting on the past year under the OBBB. “It was providing a lot of clarity that just [meant], at least for the next several years, we had the rules.”

That clarity is not a small thing. Multi-year business decisions — around such big-ticket items as entity structuring, capital investment, and succession planning — depend on practitioners being able to tell clients that the rules will hold. Thus, OBBB’s real contribution was buying back that predictability.

Section 1202 comes back to life

If one provision captures the OBBB’s practical impact, it’s the revitalization of — the qualified small business stock (QSBS) gain exclusion. The expansion of this program has done more than simply adjust a technical detail; indeed, it has reopened a whole category of planning conversations that had gone quiet.

“The action around the qualified small business stock gain exclusion… has really reinvigorated the Section 1202 planning conversations,” Eckert explains. “Ultimately, what we got was an expansion of the program. So, what that has done is reinvigorated those conversations around planning into corporate structures.”

For founders, investors, and the tax advisors who serve them, that means is back on the table — and often earlier in a company’s lifecycle than before, since the incentive to structure correctly from the outset is now more valuable.

A new kind of advisory opportunity

Of course, stability doesn’t mean passivity. If anything, the OBBB has expanded what tax professionals can offer clients. With a known set of rules, advisors can move beyond compliance and into genuine strategy by helping clients maximize their position under current law while still preparing for the fact that today’s certainty has a shelf life.

That balance — seize the moment, but don’t get comfortable — is a concept that isn’t lost on many tax specialists. “Maximize your opportunities today but also have a long-term view while having flexibility and preserving flexibility wherever you can, and knowing and anticipating that there could be future changes,” Eckert says, framing this moment as a broader opening for the profession, not just a technical one.

Legislative clarity, he argues, gives practitioners a reason to go deeper with clients than simply processing the next filing. “From a practitioner lens, I think [legislative changes] are a huge opportunity… giving us an opportunity to really bring value to our clients and to also get to know our clients better,” he notes. “It’s been, in a certain sense, a great opportunity to just build deeper relationships.”

In other words, the firms getting the most out of this environment aren’t the ones treating the OBBB as a compliance checklist; rather, they’re the ones using it as a reason to have a better conversation with clients about where they’re headed.

The IRS isn’t standing still either

The one area in which practitioners should definitely not get comfortable is enforcement. A smaller IRS workforce doesn’t mean lighter scrutiny — it likely means a different kind. As the agency leans more heavily on AI-driven tools, its ability to examine returns at scale is set to expand even as headcount contracts.

“I think across the board, we’re certainly aware of that and are counseling clients on the need to establish and build positions and think carefully about it,” Eckert explains. “In a world of AI-enabled tools, the scrutiny may actually increase, and the ability for the IRS to quickly and efficiently examine lots of data is something that could certainly exist.”

That means that tax advisors need to help their clients build positions that can withstand more sophisticated review, not less. Meticulous documentation and defensible reasoning matter more, not less, in an environment in which fewer human examiners can still cover more ground with better tools.

One year in, the OBBB’s legacy isn’t a story of dramatic reform, but rather it’s a story of tax firms and their clients finally getting room to plan. The tax advisors making the most of that room are the ones using it to build sharper strategies and deeper client relationships, all while keeping an eye on an IRS that’s quietly getting more capable of deeper examination.

You can find more ofĚýour coverage of the One Big Beautiful Bill ActĚýhere

Key takeaways:

• • • The wash sale loophole is likely closing — For clients that have been harvesting crypto losses and immediately repurchasing the same asset should know that “wash sale” strategy may soon work exactly like it does for stocks — with a mandatory 30-day waiting period.

    • Non-compliant holders have a potential off-ramp — A proposed voluntary disclosure program would let clients that haven’t properly reported digital asset income to get into compliance with reduced penalties — but it’s only available for a limited time.

    • Staking and mining income treatment is changing — Proposed legislation would allow taxpayers to elect to defer recognizing newly minted digital assets as income, which could be a meaningful planning opportunity for active miners and stakers… or a trap, depending on their situation.

Walk into any conversation with a cryptocurrency-owning client right now and you’re navigating the same awkward reality: The rules are genuinely unclear, have been unclear for years, and yet the IRS has increasingly expected compliance anyway. Now, however, the U.S. House Ways and Means Committee is trying to resolve that tension.

And crypto legislation is one piece of a much larger shift reshaping the tax profession and potentially impacting clients right now. The recent 2026 State of Tax Professionals Report from the Thomson Reuters Institute maps the challenges and opportunities defining the profession this year, including AI adoption, advisory pricing, talent constraints, and the growing gap between what clients want and what firms are charging for it.

Add to that list now, the changes coming for crypto asset owners and their tax, audit & accounting advisors.

New legislative changes for crypto owners

The package of crypto legislation — a collection of seven separate bills — currently under consideration by Ways and Means is serious enough that their tax advisors need to start thinking now about what it means for clients.

Some of these new proposals include:

The wash sale rule: A strategy that may be changing

Of all the provisions in the package, extending wash sale rules to digital assets will have the broadest practical impact. Currently, crypto investors can sell at a loss, immediately buy back the same position, and still claim the deduction — a strategy unavailable to stock investors. The proposed legislation would change that, applying to digital assets the same 30-day before-and-after window that governs stock transactions.

For clients with active portfolios, this isn’t just a planning consideration — it’s a recordkeeping one. Every transaction would need to be evaluated against a rolling 60-day window across potentially multiple wallets and exchanges. The change to this rule was hardly unexpected — the question was never really whether the wash sale rule would come to crypto, but when. Tax advisors should begin their honest conversation with clients by acknowledging that.

Mining and staking: A choice with consequences

For clients who mine or earn staking rewards with crypto, the proposed gives crypto miners and stakers the ability to elect to defer income recognition, which would treat newly minted digital assets more like self-created property than an immediate taxable event.

In practice, the calculus is complicated. Deferring income means the cost-based question gets pushed forward, not eliminated. If the asset appreciates significantly before sale, a client who deferred income recognition could face a larger ordinary tax event later. If the asset depreciates, owners have lost the ability to recognize the loss in the year of receipt.

Making the right choice — with the advice of a tax professional — depends almost entirely on the client’s individual circumstances, such as their marginal tax rate, their expectations for the asset’s trajectory, and their liquidity needs. This is exactly the conversation that tax professionals need to be having with clients around this issue.

The voluntary disclosure program: A limited window

Perhaps the most immediately actionable provision for many tax advisors is the proposed one-time voluntary disclosure program, which gives taxpayers who haven’t properly reported crypto income the opportunity to get into compliance with reduced penalties and a clean slate.

The IRS has run these programs before, and the pattern is consistent — the best terms are early, enforcement pressure increases after the deadline, and clients that wait because they hope the problem will disappear tend to regret it.

Simplification and opportunity

Not everything in the package adds complexity. would exclude gains or losses on network fees and regulated US dollar stablecoins by removing a reporting headache that has made crypto compliance so cumbersome for everyday users. And the Charitable Deductions for Digital Asset Donations Act would eliminate the qualified appraisal requirement for donated digital assets when market prices are readily available, lowering the friction on a strategy that has always made good tax sense for clients that holding appreciated crypto with charitable intent.

The tax advisors that will offer their clients the most value in a post-legislation world are the ones already holding these proactive conversations, and reviewing which clients have crypto exposure, identifying which may have unreported income, flagging which miners and stakers should be thinking about the deferral choice, and identifying charitable giving opportunities before the appraisal requirement disappears.

In addition, the voluntary disclosure program is the clearest example of how proactive advisory work can pay off. Clients that have quietly hoped their unreported crypto transactions would stay below the radar need someone to tell them plainly that a window for clean resolution is likely opening — and that waiting for it to close is not a strategy. That conversation is uncomfortable, of course, but it’s also exactly what a trusted advisor is for.

Beyond compliance, the considered package of crypto legislation creates the need to have genuine planning conversations that didn’t exist before. For example, the wash sale question is time-sensitive, and the staking deferral election requires modeling. None of this requires tax advisors to wait for final regulations; rather, it requires they know their clients well enough to know which ones have exposure, which have opportunity, and which needs a conversation they haven’t thought of requesting.

Right now — in the space between a Congressional hearing and a presidential signature — that is the most valuable thing a tax professional can offer.

You can download a copy of the Thomson Reuters Institute’sĚý2026 State of Tax Professionals Report here

Key findings:

• • • Workloads grow, while staffing stays flat — Many government legal department professionals say their work keeps increasing while staffing remains stagnant; and many are turning to AI tools to improve capacity.

    • AI adoption is surging — Over the past year, AI adoption among government legal departments has spread rapidly, with federal and state agencies leading the way.

    • Unfortunately, AI oversight hasn’t surged — Many legal departments report that their AI governance is lagging behind adoption, with 20% of agencies having no AI use policy in place at all.

Government legal departments are facing an all-too-familiar problem: more work, more complexity, and the same number of staff to do the job, according to the Thomson Reuters Institute’s 2026 Government Legal Department Report, which captures the insights from 200 government legal department professionals at varying levels.

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2026 Government Legal Department Report

Threaded through these insights, some clear trends emerged. For example, technology — especially AI and other advanced tools — is increasingly serving as an extension of staff, expanding agencies’ capacity to manage rising workflow demands.

Increasing pressures across all levels

More than one-third of respondents report that their workload increased by more than 10% in the past year, with many handling between 21 and 50 legal matters per week. At the same time, workloads are becoming more complex, with more than one-third of respondents saying that more than half of the legal issues they face are complex, which is particularly notable at the state and federal levels.

Staffing shortages, a top concern in recent years, continue to persist. Three-quarters of respondents say their agencies experienced staffing shortages over the past two years, and almost two-thirds say they anticipate shortages into 2027.

Indeed, despite an increase in complexity and workload, attorney staffing levels have stayed the same for almost 40% of agencies, the report shows. And at the federal and state level, departments were more likely to have experienced a reduction of more than 10% of their staff.

AI adoption skyrockets, making governance more necessary than ever

More than one-quarter of respondents say their agency or department is now using AI tools, up from a meager 5% last year, with this increase taking hold at the federal and state level much more quickly. Among the different groups of respondents, one-third of federal and state government legal professionals report using AI tools compared to just 19% of those at county and city departments. Resistance to AI is diminishing, too; however, more than one-third of county and city legal departments still report having no plans to use AI.

Optimism toward AI is rising alongside implementation, the report shows. More individuals at the federal and state level feel optimistic than pessimistic about AI technology, which is an inversion of last year’s sentiment. Among county and city legal professionals, pessimism still remains more common. Among all respondents, confidential data exposure remains the top evaluation criterion when assessing these advanced tools.

The report underscores that this all points to a need for the establishment of strong governance models before adoption. Nearly two-thirds of government agencies and departments have an AI use policy in place or are developing one, respondents say. However, 1-in-5 departments and agencies are still without an AI use policy, risking unofficial use of prohibited AI tools.

Those agencies hesitant to implement AI technology are encouraged to view AI technology as a way to increase staff capacity amid flat staffing, rising workloads, and growing matter complexity. AI tools can help reduce strain on employees, contributing to better-managed workloads while reducing employee burnout. When appropriately vetted, however, AI technologies can reduce administrative burdens, increase legal research efficiency, and help those organizations facing trying to manage more work with the same staffing levels.

An actionable path forward

As the report makes clear, AI is no longer a future challenge; rather, it’s a present reality in a rising percentage of government legal departments. Indeed, the report outlines ways departments and agencies can move forward in this space, by beginning with lower-risk foundational tools like legal research and case management systems; and then investing time in developing thoughtful AI use policies and evaluation protocols. With responsible staff training and a thoughtful evaluation process, AI technologies can protect the valuable time and work-life balance of government legal professionals.

Increasing workloads are not optional for government legal departments, but how department leaders empower their staff to manage these workloads is becoming the differentiator.

You can download

a full copy of the Thomson Reuters Institute’s “2026 Government Legal Department Report” by filling out the form below:

Key insights:

• • • Sect. 301 and IEEPA tariffs operate on fundamentally different legal foundations — The IEEPA tariffs flow from an executive emergency declaration that can be unwound overnight, while Sect. 301 findings are built on a formal evidentiary record that can survive numerous administrations.

    • Those manufacturers that diversified away from China now face compounded exposure — The countries to which many manufactured moved their trade operations — including Vietnam, India, Bangladesh, and Malaysia — are now named in the recent Sect. 301 action.

    • Managing this complexity without purpose-built tools is no longer realistic — The need for access to quality vendor data, tariff classifications, country-of-origin mapping, and duty layering requires systems that can be updated continuously, not spreadsheets that are reviewed quarterly.

Since early 2025, manufacturers have lived in a tariff environment defined by volatility that’s been dictated seemingly at the whim of the United States. Rates announced one week were paused the next, country-specific deals emerged from diplomatic calls, and 90-day exemptions became the operating rhythm. For supply chain teams, the rational response was to treat every new tariff as provisional — something to monitor, not necessarily something to plan around.

That logic does not apply to the of the U.S. Trade Representative (USTR), underĚýSection 301 of the Trade Act of 1974Ěýthat a list of 60 economies — comprising the largest US trading partners — had failed to enforce a ban on goods produced with forced laborĚýare therefore wereĚýrestrictive to US trade.

To understand why, it actually requires and how it compares to the International Emergency Economic Powers Act (IEEPA), which the Trump Administration had used as its authority behind the 2025 reciprocal tariffs until that was disallowed .

Unlike the IEEPA, Sect. 301 is not an executive power that turns on or off depending on when a national emergency is declared. Rather, it is a statutory framework that requires the USTR to conduct a formal investigation, gather evidence, hold public hearings, and build a record before making an actionability determination. In the June 2 action alone, the USTR received testimony from nearly 60 witnesses and almost 500 public comments before issuing its findings.

That record matters, because it is what makes tariffs issued in response to Sect. 301 findings structurally resistant to reversal. Unwinding them requires either a new formal determination, a negotiated bilateral resolution in which the trading partner actually changes its practices, or Congressional action. A new administration cannot simply issue a presidential order lifting them because the legal bar is categorically higher.

And this distinction is no longer theoretical. After the Supreme Court ruled his tariffs invalid, President Trump immediately pivoting to Section 122 of the Trade Act of 1974, which permits a temporary global surcharge of up to 15% for no more than 150 days. That took effect February 24, and is set to expire July 24, unless extended by Congress. Tariffs imposed because of the June 2 Sect. 301 findings were never exposed to the same legal vulnerability and is now the administration’s primary vehicle for building durable tariff authority.

There is also a political dimension that compounds the durability. The June 2 findings are grounded specifically the failure of the named economies to prohibit the importation of goods made with forced labor. That framing carries broad bipartisan support in Washington, and neither party is positioned to argue against forced labor prohibitions, which means the political incentive to reverse these tariffs is far weaker than it was for the IEEPA-based tariffs.

The compounded exposure problem

For manufacturers that spent 2024 and 2025 diversifying their supply chains away from the tariff-heavy China, the June 2 findings create a specific and uncomfortable problem. The most common destinations for that diversification — Vietnam, Bangladesh, India, Malaysia, Thailand, and Indonesia — are all named in USTR’s recent action. Proposed additional duties of 10% to 12.5% would layer on top of existing duties and any Sect. 122 tariffs still in place during the transition period.

In other words, the move that looked like risk mitigation then may now carry its own tariff exposure now — and unlike the situation in 2025, there is no obvious alternative jurisdiction.

That means vendor management systems that integrate tariff data in real time — pulling current duty rates by code, flagging country-of-origin changes, modeling landed cost across multiple sourcing scenarios — are no longer a competitive advantage. Now they are a baseline operational requirement. The same applies to supplier compliance documentation. As forced labor attestations become relevant to exclusion eligibility under Sect. 301, having those records organized, current, and accessible is not an audit-readiness question, rather, it’s a cost-of-goods question.

Then, the practical challenge for manufacturers becomes an operational one, not just a strategic one. Tracking tariff exposure across dozens of suppliers, multiple countries of origin, layered duty structures, and evolving classification rules is not a task that can be easily scaled with traditional tools. For example, in the 24 hours following the Supreme Court’s tariff ruling, the US terminated one tariff regime, enacted a replacement under a different statute, and announced the launch of multiple new Sect. 301 investigations. A manufacturer’s spreadsheet that’s updated monthly cannot keep pace with a regulatory environment moving at that speed.

The durable lesson

The IEEPA tariff experience trained supply chain teams to stay nimble — and then demonstrated exactly how fragile executive-action tariffs can be when the Supreme Court invalidated them. That instinct toward flexibility still has value, of course; however, the Sect. 301 framework requires a parallel capability that requires manufacturers to recognize when a tariff is structural, model its long-term cost impact, and adapt sourcing and vendor strategies accordingly.

These new Sect. 301-based tariffs are not a negotiating position waiting to be resolved. They are a legal determination, built on a formal record, grounded in a cause — the elimination of forced labor from global supply chains — that has strong consensus across the political spectrum.

Those manufacturers that plan around them as permanent while investing in the tools to manage that complexity in real time will be better positioned than those waiting for the next exemption announcement.

You can find out more about how tariffs continue to impact global trade here

Key insights:

• • • Protecting SNAP requires modernization and accountability — This includes providing chip-enabled cards, stronger monitoring, recipient education, retailer oversight, cross-agency coordination, and fair reimbursement for victims.

    • Skimming is a growing problem — In the context of financial fraud, skimming refers to the illegal capture of personal data, typically through concealed electronic devices placed over legitimate card readers.

    • The harm can be immediate and severe — If their food benefits are stolen through skimming, vulnerable households can lose essential food funds, deepening food insecurity in their community.

Electronic Benefit Transfer (EBT) cards serve as a critical resource for the millions of Americans who depend on the nation’s Supplemental Nutrition Assistance Program (SNAP) to keep food on the table. The typical SNAP household is low-income and often includes children, seniors, or individuals with disabilities, who have earnings that fall at or below the federal poverty level. Based on household size, income, and other qualifying factors, these families receive monthly monetary assistance to help cover basic nutritional needs at authorized retailers.

Think of an EBT card as a debit card specifically designed for food benefits. Recipients use it to access their monthly balance at approved stores, making the process straightforward and dignified. However, like any electronic payment system, EBT is not immune to exploitation. One of the most pressing threats is a type of fraud known as skimming, which puts vulnerable households at serious financial risk.

What is EBT skimming?

Skimming, in the context of financial fraud, refers to the illegal capture of personal data, typically through concealed electronic devices that are placed over legitimate card readers. In the case of EBT fraud, criminals generally install tampered card terminals to steal EBT card information, including account numbers and PINs.

Unlike most modern credit and debit cards, EBT cards still rely on magnetic stripe technology, not more secure embedded chips. This outdated system makes them especially vulnerable to cloning, or the creation of counterfeit cards that contain the victim’s account number and PIN. Once a thief captures the data, they can create these counterfeit cards and drain benefits almost immediately, often within minutes of the monthly benefit deposit.

The result is that much needed food benefits, meant to last an entire month, are stolen without warning or recourse.

Why is EBT skimming so devastating

The consequences of EBT skimming go far beyond financial loss. For recipients, the theft of SNAP benefits can have immediate and severe impacts on their household food security and well-being. Other reasons why this form of fraud is particularly harmful include:

• • • Irreplaceable funds — For low-income households, SNAP benefits represent a critical portion of their monthly food budget. Once stolen, these funds are often impossible to replace. Families may be forced to skip meals, rely on emergency food pantries, or divert money from other essential needs like rent or medicine.
    • Outdated security technology — Despite advances in payment security, most EBT cards still use magnetic stripes, which can be easily copied with inexpensive skimming devices. By contrast, EMV chip technology, standard on most consumer credit and debit cards, makes cloning significantly more difficult.
    • Speed and precision of theft — Thieves often time their attacks to coincide with the monthly benefit deposit cycle. Once benefits are loaded, stolen card data is used rapidly, sometimes within minutes, making recovery nearly impossible.
    • Targeting vulnerable populations — EBT skimming preys on some of the most vulnerable members of society, including seniors, disabled individuals, and families living paycheck to paycheck. Many recipients may not have the resources or knowledge to monitor account activity regularly or to lock their cards after use, leaving them at greater risk.

Beyond skimming: A broader challenge of fraud, waste & abuse

While skimming is a serious and visible form of EBT fraud, it is only one symptom of a larger systemic challenge that fraud, waste & abuse cause in federal benefit programs.

Other forms of fraud include: retailers trafficking in EBT benefits for cash, which is a violation of SNAP rules; misrepresentation of income or household size during application; duplicate or ineligible benefit issuance; and administrative errors that lead to overpayments.

Each instance, whether intentional or not, erodes public trust in the entire benefit system, strains limited program budgets, and diverts resources from those individuals who need them most.

With federal funding for social programs under constant scrutiny and subject to periodic budget constraints, it is imperative that every dollar is protected and used appropriately. Preventing fraud is not just about saving money — it’s about ensuring that limited public resources serve their intended purposes of reducing hunger and supporting economic stability.

How to prevent fraud, waste & abuse in SNAP

Addressing EBT skimming and broader program vulnerabilities requires a well-rounded strategy that features technology, policy, education, and oversight working together.

On the technology side, one of the most impactful steps forward would be transitioning EBT cards from outdated magnetic stripes to EMV chip technology. This upgrade alone would significantly reduce skimming risks, and federal investment in that infrastructure is a necessary part of making it happen. Alongside that, state and federal agencies should be leveraging data analytics and real-time transaction monitoring to flag suspicious activity, like multiple withdrawals across different locations within a short window of time.

Education also plays a bigger role than many people realize. A large portion of EBT users simply do not know how to protect themselves. Basic habits like covering the keypad when entering a PIN, routinely checking account balances, and reporting lost or stolen cards right away can go a long way in reducing exposure.

One of the most pressing threats is a type of fraud known as skimming, which puts vulnerable households at serious financial risk.

From an oversight perspective, the U.S. Department of Agriculture — the government agency that oversees SNAP — and state agencies need to conduct regular audits of authorized retailers and hold them accountable. Any retailer found engaging in trafficking or enabling skimming should face deauthorization and legal consequences as well. Equally important is making sure that victims of confirmed fraud are not left without recourse. Clear and consistent policies for replacing stolen benefits can help restore trust in the program and prevent the food insecurity that this type of fraud directly causes.

Finally, none of this works in isolation. Effective fraud prevention depends on strong coordination between state human services departments, law enforcement, financial institutions, and technology providers. Information sharing and joint task forces strengthen the ability to detect threats early and respond quickly when issues arise.

Protecting the safety net

SNAP is one of the nation’s most effective tools in the fight against hunger. However, its success depends on both integrity and accessibility. Skimming and other forms of fraud not only steal from individuals, but they also undermine confidence in the entire system.

Policymakers, administrators, and citizens must prioritize modernization, accountability, and victim protection. By addressing vulnerabilities like EBT skimming and reinforcing safeguards against waste and abuse, we can ensure that SNAP remains a reliable and secure resource for the millions of individuals who rely on it.

You can find out more about how public agencies are working to fight fraud in government benefit programs here

Key insights:

• • • Getting at the core legal question — In a case brought by defendant Ongkaruck Sripetch, the Supreme Court is deciding whether the SEC must prove investors suffered measurable financial loss before courts can order disgorgement, which would require fraudsters to give up illegal profits.

    • Why it’s high-stakes — Disgorgement is a major SEC enforcement tool — representing billions of dollars annually — so a new requirement to prove investor losses could sharply limit when and how much the SEC can recover.

    • How the justices seemed to lean (so far) — Questions at the argument before the Court suggested skepticism toward Sripetch’s position, with several justices asking why it would be an unfair penalty to take back ill-gotten gains and noting the practical difficulty of proving each investor’s exact loss.

If you’ve ever wondered how the U.S. Securities and Exchange Commission (SEC) actually gets money back after it catches a fraudster, one of its biggest tools, disgorgement, is now under the microscope. This week, the U.S. Supreme Court heard arguments in a case, Sripetch v. SEC, that sounds technical on paper but has at its core a simple question: When the SEC makes a fraudster give up illegal profits, does it have to prove that investors suffered measurable, out-of-pocket losses first?

The case centers on Ongkaruck Sripetch, who the SEC says pocketed illicit proceeds through a classic pump-and-dump scheme from 2013 to 2017. Pump-and-dumps often involve penny stocks in which a person will hype up the price of these thinly traded stocks, then sell into the price spike they caused and walk away richer. Other stock traders who bought into the hype are the ones left holding the bag.

Sripetch admitted violating securities law and, in his subsequent criminal case, was sentenced to 21 months in prison. Separately, in the SEC’s civil action, a federal court in California ordered Sripetch to repay more than $3 million in ill-gotten gains plus interest.

The Supreme Court case isn’t a serious argument against the SEC’s ability to seek disgorgement — numerous courts have recognized the remedy for years, and Congress has since written the SEC’s ability to pursue it into federal law. The core question in the case is narrower, yet crucial for the SEC’s mission. It asks whether the SEC must show that victims suffered pecuniary or economic harm before a court can order disgorgement. Federal appeals courts have split on that point, which is why the Supreme Court agreed to take the case.

What is disgorgement, exactly?

Think of disgorgement as a legal give it back order. If a person or company makes money by breaking the securities laws — say by manipulating prices, lying to investors, or running a Ponzi-style scheme — disgorgement is designed to strip the profits away from that wrongdoing and the wrongdoers. In theory, it’s not about punishing someone for being bad, rather it’s about making sure crime doesn’t pay.

In real markets, harm can be scattered across thousands of trades, mixed up with normal price swings, and hard to trace to one bad actor. Disgorgement, on the other hand, gives securities regulators a way to focus on the part that’s often the clearest: How much ill-gotten profit the fraudster made.

Indeed, that not a punishment framing is important because the SEC has other ways to punish those convicted of securities law violations — such as civil penalties, disbarment from serving as an officer or director, industry suspensions, and more. Disgorgement is supposed to be different — an action that aims at profits, not pain. The government’s position in the Sripetch case puts it bluntly: Disgorgement is meant to strip ill-gotten gains from wrongdoers, not to compensate victims for their losses.

And disgorgement is not a niche tool. The SEC regularly collects big sums of seized money through disgorgement. According to recent figures, the SEC obtained about $1.4 billion through disgorgement in fiscal 2025 (excluding certain amounts), and $6.1 billion the year before, which represented nearly three-quarters of its total financial penalties for that year.

Those numbers may help explain why this Supreme Court fight is being watched so closely: The outcome could either keep the SEC’s playbook intact or force it to do a lot more legwork before it can ask courts to order payback.

The arguments before the Court

Earlier this week, both sides argued before the Supreme Court as to the potential future use of disgorgement and what requirements the SEC might have to meet when requesting court to order it.

Sripetch’s argument — Lawyers for Sripetch told the Court that the SEC shouldn’t be able to get disgorgement unless it can show that investors actually suffered financial harm, such as a price drop caused by the fraud or some other measurable loss. If the SEC can’t prove that kind of harm, the lawyer argues, then making Sripetch pay money looks less like giving it back and more like an impermissible penalty that the SEC is not allowed to levy.

The government’s argument — Lawyers for the U.S. Justice Department, defending the SEC, said the proof-of-loss requirement makes no sense. Disgorgement, in their view, is about the defendant’s gains, not the victim’s losses. One government lawyer summed it up as a straightforward principle: Disgorgement is intended to ensure a defendant does not profit from their own wrongdoing.

At this week’s argument, the justices sounded (at least generally) more sympathetic to the government than to Sripetch. Justice Amy Coney Barrett pressed the defense on its basic logic: If the court is only taking away ill-gotten gains — money the wrongdoer was never entitled to — why is that a penalty at all? Justice Ketanji Brown Jackson made a similar point, suggesting disgorgement would only feel like punishment when someone is forced to pay money that was rightfully theirs.

When Sripetch’s lawyer suggested the SEC should have to identify and prove each victim’s dollar loss, Justice Sonia Sotomayor’s response was basically, Why would anyone bother? If the SEC has to run a mini-trial on every investor’s exact harm just to reclaim the fraudster’s profits, disgorgement would be unworkable in many cases.

The practicality of that point is a big deal in securities fraud. In real markets, harm can be scattered across thousands of trades, mixed up with normal price swings, and hard to trace to one bad actor. Disgorgement, on the other hand, gives securities regulators a way to focus on the part that’s often the clearest: How much ill-gotten profit the fraudster made. The idea is deterrence-by-math — if you can’t keep the profits, the incentive to run the scheme shrinks.

The Supreme Court’s ruling, when it comes, could re-shape how the SEC negotiates settlements, litigates fraud cases, and talks about remedies and punishments going forward.

Still, some justices raised broader concerns about how disgorgement gets used in the real world, such as whether certain applications start to look punitive, or whether they raise questions about a defendant’s right to a trial by jury. However, the Court also seemed interested in deciding only the question of the requirement to prove victims’ losses and leaving those bigger constitutional debates for another day.

Why this matters (even if you aren’t the SEC)

If the Supreme Court agrees with Sripetch and requires proof of investor pecuniary harm, the SEC could face a higher hurdle in cases in which misconduct is real, but losses are tough to quantify on a trade-by-trade basis. That could mean fewer disgorgement awards, smaller ones, or more pressure to rely on classic penalties instead.

If the Court backs the government, however, disgorgement stays what it has largely been — a fast, flexible way to reclaim profits from securities fraud and a core part of how the SEC tries to keep the securities markets honest.

Either way, the ruling will shape how the SEC negotiates settlements, litigates fraud cases, and talks about remedies and punishments going forward. With the Court expected to issue its decision by the end of June, securities lawyers and stock market mavens will be keeping an eye on this case.

You can find more about the challenges facing the SEC here

Key takeaways:

• • • The FIFA World Cup is a catalyst, not the root cause — Mexico City’s housing affordability crisis predates the coming tournament. Rental prices have been rising uncontrollably for years, displacing thousands of families annually. The World Cup will accelerate and amplify an already existing problem.

    • The 2024 rental reform is a step in the right direction, but it has significant limitations — Capping rent increases at the annual inflation rate was a necessary measure, but its impact has been limited by grey areas in the law.

    • The real battle is formalization — No housing regulation can be fully effective if a large portion of the market operates outside of it. Until authorities find ways to make formal rental agreements genuinely attractive and accessible for both landlords and tenants.

On the eve of the 23^rd playing of the FIFA World Cup, Mexico stands as one of three host countries for one of the most significant sporting events in the world. It will feature matches in Mexico City, Guadalajara, and Monterrey, and it will be co-hosted alongside the United States and Canada.

Organizing such an event carries notable financial benefits, including a surge in tourism, job creation, and substantial foreign investment — all of which generate a local economic spillover that strengthens the national marketplace. At the same time, Mexico’s major capitals— especially its World Cup host cities — have been undergoing a level of urban transformation that has significantly altered the daily lives of its residents. Chief among these changes is the sharp rise in rental costs, which has been pushing residents toward the cities’ outskirts. According to government figures, are displaced each year due to the uncontrolled increase in housing prices in Mexico City alone.

Mexican authorities had to get to work

Legal changes to real estate regulation in Mexico City are not isolated, and what is implemented in the capital often sets a precedent for the rest of the country. Time and again, Mexico City has served as a laboratory for new policies, and when these are proven effective, they become models for nationwide reform.

According to government figures, more than 20,000 households are displaced each year due to the uncontrolled increase in housing prices in Mexico City alone.

That said, in August 2024 — after the city’s head of government noted that rentals costs in none of the boroughs of Mexico City fall below the city’s minimum wage, and that 9 out of 13 boroughs average rents that exceeded twice the minimum wage — the Official Gazette of Mexico City published a decree amending Articles 2448-D and 2448-F of the Civil Code for the Federal District, imposing limits on rent increases for residential properties. Previously, the monthly rent increase could not exceed 10% of the agreed-upon rent. That paragraph was amended to establish that rent increases shall never exceed the inflation rate reported by the Bank of Mexico for the previous year.

It is worth noting that the prior 10% cap was nearly three times the general annual inflation rate calculated by the Bank of Mexico in 2025, which stood at 3.69%.

More than a year after these reforms took effect, however, 2025 closed with an average increase in rental prices of . With the FIFA World Cup approaching, prices are expected to continue rising uncontrollably due to the influx of tourists drawn by the event. This concern is well-founded: Ahead of the 2022 World Cup in Qatar, empowered landlords to raise rents by more than 40%.

Mexico City’s rental reform also introduced additional measures. For example, a digital registry for lease agreements was established, to be immediately authorized and managed by the Government of Mexico City. Landlords now are required to register lease agreements within 30 days of their execution. Furthermore, landlords are prohibited from refusing to rent to tenants on the grounds that they have children or pets.

The registration requirement carries real consequences: Should a landlord fail to register a contract within the stipulated period, their ability to invoke legal protection mechanisms in the event of a dispute with a tenant becomes significantly more complicated.

Regardless of the efforts, it’s not all smooth sailing

That said, the reform contains certain grey areas that limit its scope. For instance, it only applies under specific conditions — most notably when a lease has been in place for three years or more. A landlord can effectively circumvent the cap by choosing not to renew an existing contract and instead requiring the tenant to sign a new one at a higher price.

A separate but equally significant obstacle to the reform’s effectiveness is the rapid growth of short-term rental platforms. In recent years, the proliferation of temporary accommodation services has steadily reduced the supply of traditional long-term rentals, as more properties are listed on platforms such as Airbnb, Vrbo, or others. Indeed, every 48 hours, three housing units in Mexico City are . And from a national perspective, the Tourism Gross Product reached approximately US $151.5 billion, equivalent to 8.7% of Mexico’s GDP.

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Every 48 hours, three housing units in Mexico City are converted into Airbnb listings.

This problem is further compounded by the scale of informal rental arrangements. According to the National Housing Survey conducted by Mexico’s National Institute of Statistics and Geography (INEGI), there are more than 200,000 informal rental agreements in Mexico City — none of which involve formal contracts.

Forcing the real estate market into formalization

This brings us to the central challenge facing city authorities with regard to housing: The need to incentivize the formalization of the real estate market. This is already complicated by the country’s low tax culture and the requirement for landlords to enter a specific tax regime that raises their tax burden. Additionally, rental contracts are not only essential for protecting tenants’ rights, but they also are equally important for landlords — because without a legally binding agreement, there is no guarantee that the terms of any arrangement will be honored.

Paradoxically, the recent reform may actually push the informal market further underground. By requiring landlords to formally declare their rental income, the regulation inevitably creates a sense of heightened oversight — one that informal landlords may seek to evade rather than comply with.

To the authorities of Mexico City, the message is clear — punitive measures alone will not bring the informal market into the fold. Tax benefits for landlords who register their contracts, streamlined and accessible digital registration processes, and legal protections that make formal agreements genuinely advantageous for both parties could go a long way toward building trust in the system.

The 2026 FIFA World Cup will come and go, of course, but the people of Mexico City will remain. They deserve a housing market that works for them — not one that treats their homes as a commodity to be priced beyond their reach every time the world turns its attention to their city.

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Key insights:

• • • Non-compliance is significantly more expensive than compliance — Data consistently shows the cost of non-compliance can be greater than proactive compliance investments.

    • Reputational damage and hidden costs often outweigh direct fines — Beyond financial penalties, the damage from legal fees, loss of customer trust, and operational disruptions from non-compliance can inflict long-term harm.

    • Strategic investment in compliance yields a competitive advantage — A robust compliance program builds trust, attracts investors, and demonstrates greater operational resilience in a complex regulatory landscape.

There’s a persistent myth in the business world that compliance programs are a necessary burden, a line item to be minimized and managed rather than invested in strategically. The data tells a very different story, however, and it has for quite some time. For organizations still treating compliance as an overhead expense, it’s time to reconsider the math and view the broader strategic picture.

The numbers don’t lie: Non-compliance costs more

Non-compliance costs are 2.65-times the cost of compliance itself, a finding that dates back to the of multinational organizations. While the average cost of compliance for the organizations in that study was $3.5 million, the cost of non-compliance was much greater. That means simply by investing in compliance activities, organizations can help avoid problems such as business disruption, reduced productivity, fees, penalties, and other legal and non-legal settlement costs.

According to a later report from from 2017 (the most recent set of analytical data on the subject), the numbers have only grown more striking. The study showed that average cost of compliance increased 43% from 2011 to 2017, totaling $5.47 million annually. However, the average cost of non-compliance increased 45% during the same time frame, adding up to $14.82 million annually. The costs associated with business disruption, productivity losses, lost revenue, fines, penalties, and settlement costs add up to 2.71-times the cost of compliance.

And these non-compliance costs from business disruption, productivity losses, fines, penalties, and settlement costs, among others aren’t simply abstract risks. They’re real, recurring, and measurable, and they don’t stop with the fine itself.

Beyond the fines themselves, legal costs are a significant and often underestimated component of non-compliance.

This gap between compliance and non-compliance provides evidence that organizations do not spend enough of their resources on core compliance activities. If companies spent more on compliance in areas such as audits, enabling technologies, training, expert staffing, and more, they would recoup those expenditures and possibly more through a reduction in non-compliance cost.

While the math here is straightforward, the strategic case is even clearer. Compliance isn’t overhead; rather, it’s an investment with a measurable, proven return.

The hidden costs: Legal fees, fines & reputational fallout

Regulatory fines get the headlines, but they represent only part of what non-compliance actually costs an organization — a cost that has only risen over time. As of February, a total of 2,394 fines of around €5.65 billion have been recorded in the database, which lists the fines and penalties levied by European Union authorities in connection with its General Data Protection Regulation (GDPR).

Beyond the fines themselves, legal costs are a significant and often underestimated component of non-compliance. Regulatory norms are shifting constantly and navigating them requires specialized expertise. As quickly as the rules change, outside counsel and compliance specialists must keep pace, and that knowledge comes at a price. Every alleged compliance violation triggers an immediate need to engage qualified counsel, adding to a cost burden that compounds quickly and unpredictably.

Then there is reputational damage, perhaps the most enduring consequence of all. The cost of business disruption, including lost productivity, lost revenue, lost customer trust, and operational expenses related to cleanup efforts, can far exceed regulatory fines and penalties. Consider , whose compliance failures around its anti-money laundering (AML) efforts became a cautionary tale for the industry. TD Bank’s massive $3 billion in fines from US authorities wasn’t just the result of a few missteps; rather, it was caused by years of deep-rooted failures in its AML program, pointing to a culture that prioritized profit over compliance.

The findings from both the 2011 and 2017 studies provide strong evidence that it pays to invest in compliance.

TD Bank’s failure to make compliance a priority not only led to a huge fine but also seriously damaged its reputation, with revising TD’s outlook to negative in May 2024, where it remains. This is the kind of a reputational stigma that can take years to repair.

Leveraging compliance as a competitive advantage

There is also a positive side of the ledger that often goes unacknowledged. A robust compliance program signals to investors, partners, and clients that an organization is well-governed and trustworthy. That reputation doesn’t just retain market value; it actively attracts it.

Organizations that cut corners in compliance risk engaging in a short-sighted, high-risk strategy that will ultimately result in a negative outcome for the organization. Businesses that take compliance seriously tend to operate with greater predictability, fewer surprises, and stronger stakeholder confidence.

The 2017 Ponemon and Globalscape and study found that, on average, only 14.3% of total IT budgets were spent on compliance then, not much of an increase from the 11.8% reported in 2011. This clearly indicates that organizations are underspending on core compliance activities in the short term and aren’t prepared to allot further resources as the years go on. That gap represents not just risk, but a clear missed opportunity.

“The findings from both the 2011 and 2017 studies provide strong evidence that it pays to invest in compliance,” explains Dr. Larry Ponemon, Chairman and Founder of the Ponemon Institute. “With the passage of more data protection regulations that can result in costly penalties and fines, it makes good business sense to allocate resources to such activities as audits and assessments, enabling technologies, training, and in-house expertise.”

The organizations that recognize compliance as a strategic function, not a reactive one, are the ones that will earn the trust of clients, the confidence of investors, and the operational resilience to weather an increasingly complex regulatory environment. The data is clear, and the choice is a critical one.

You can find out more about the challenges faced by corporate compliance professionals here

Key highlights:

• • • Tax credit transferability survived intact— The OBBBA preserved Section 6418 transferability rules despite earlier proposals to sunset or repeal them.

    • AI-driven data center boom may revive renewable energy tax credits— With data centers projected to consume 12% of all US energy by 2028, large operators have strong incentives to advocate for preserving and expanding renewable tax credits to meet massive energy demands through solar, geothermal, and battery storage solutions.

    • 2026 market conditions favor buyers due to supply-demand imbalance—Increased supply of tax credits (particularly Section 45Z clean fuel production credits) combined with reduced buyer competition from provisions like Section 174 and bonus depreciation has created advantageous pricing.

At the start of the current Trump administration, green energy tax credits were expected to be slashed or disappear altogether. In reality, significant changes emerged instead of ceasing to exist. More specifically, the One Big Beautiful Bill Act (OBBBA), passed in July 2025, kept the transferability rules around green energy tax credits intact.

As a result, the market for these credits remains robust in 2026 and 2027, says , an energy tax authority and principal at accounting firm CliftonLarsonAllen (CLA). In addition, multiple credits still have runway, and near-term dynamics in 2026 may favor buyers.

OBBBA’s changes result in shifts in marketplace conditions

When the OBBBA bill passed, the specifics revealed a more optimistic picture than many understand. According to Hill, specific examples include:

• • Wind and solar projects — Developers that begin construction by July 4, 2026, still have a four-year window to complete their projects and still claim credits. Even projects that miss this construction deadline can qualify if they’re placed in service by December 31, 2027.
  • Clean fuel production credits — Clean fuel production credits, detailed in OBBBA’s Section 45Z, received an extended runway through 2029.
  • Tax credit transferability — The tax credit transferability aspect under Section 6418 remained whole, despite previous versions of the bill proposing either a sunset date or outright repeal of transferability. This fact provides a level of marketplace certainty that can act as critical liquidity for developers that typically lack the tax liability to use credits themselves.

In addition, the legislation altered the buyer and seller environment. Provisions including OBBBA’s Section 174 and bonus depreciation generated additional deductions for certain companies, and as a result, reduced those companies’ 2025 corporate tax liability. Simultaneously, Section 45Z clean fuel production tax credits came into force and created a supply-demand imbalance that favors buyers.

Overall, in the latter half of 2025, Hill describes the marketplace as favorable for buyers because of an increased supply of tax credits that were for sale previously with fewer buyers. Into 2026 and beyond, both developers and corporate buyers still have significant opportunities to participate in the tax credit marketplace, explains Hill.

AI-related data center demand may spur new proposals for renewables tax credits

The explosive proliferation of data centers because of the growing AI demand across the United States may become the unexpected champion for renewable energy tax credits. Hundreds of facilities are currently under construction, and the energy demand implications are staggering. In fact, the projects that by 2028, data centers will consume 12% of all US energy.

Renewable energy technologies are emerging as essential solutions to meet these demands. Solar power, as a tried-and-true technology, offers ideal supplementation for data center operations; and geothermal heating and cooling systems directly address the massive temperature control challenges these facilities face. Perhaps most significantly, battery storage is rapidly becoming standard operating procedure, with both grid-based and solar-array-tied battery systems providing critical backup power.

These developments carry substantial policy implications. In fact, large data center operators have incentives to become vocal advocates for preserving and expanding renewable tax credits, says , a leader in federal tax strategies at CLA. “We want our AI, we want our cloud-based services. To do that… we need massive data centers and massive computing demands,” DePrima explains. “And that in turn requires massive amounts of energy consumption, which renewables can certainly supplement.” This, in turn, creates the potential for a renewable energy tax credit “comeback” within two to three years, he adds.

Guidance for buyers and sellers

Looking ahead to 2026 and beyond, both buyers and sellers of renewable energy tax credits should recognize that significant opportunities remain despite regulatory changes. More specifically:

For buyers — Buyers should act now to capitalize on favorable market conditions. With increased credit supply and reduced buyer competition due to provisions like Section 174 and bonus depreciation, pricing has become more advantageous. Buyers of renewable energy tax credits should consider structuring 2026 transactions to directly offset estimated tax payments throughout the year, thereby improving cash flow by making payments to sellers rather than the IRS. Financial institutions remain particularly well-positioned as buyers, as many have explored tax credit carryback opportunities to increase their tax savings even further.

For sellers and developers — Renewable energy tax credits sellers and energy project developers can use tax-credit monetization as a critical component of project financing because the ability to convert credits into immediate cash proceeds is essential for paying down debt and funding new projects. Despite initial concerns, substantial opportunities remain with credits outlined in Sections 45Z, 45X, 48E, and 45Y which are transferable and viable through 2029 and beyond.

In either case, tax credit transferability under Section 6418 offers key opportunities in the marketplace. Whether buyers are looking to reduce their corporate tax burden while supporting clean energy goals, or developers are seeking to monetize renewable projects — tax credits offer incentives to move forward.

The information contained herein is general in nature and is not intended, and should not be construed, as legal, accounting, or tax advice or opinion provided by CliftonLarsonAllen LLP to the reader. The reader also is cautioned that this material may not be applicable to, or suitable for, the reader’s specific circumstances or needs, and may require consideration of nontax and other tax factors if any action is to be contemplated. The reader should contact his or her CliftonLarsonAllen LLP or other tax professional prior to taking any action based upon this information. CliftonLarsonAllen LLP assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect the information contained herein.

You can find out more about renewable energy tax credits here

Key insights:

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

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

    • Conflict zones enable black market expansion — 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 — 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 — 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 Ěý(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’s 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’ risk & compliance teams should respond

First, all financial institutions’ risk & compliance departments need to assess their institutions’ 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’s 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 aboutĚýthe geopolitical and economic outlook for 2026Ěýhere