Good morning. Bank of America will pay $1.2 billion in penalties to settle violations of anti-money laundering and sanction laws. The Treasury Department said Tuesday the fine is the third-largest in its history and the biggest ever imposed by the Office of the Comptroller of the Currency.

• Chinese links: Bank of America failed to mitigate and report priority national security risks, including transactions that were indicative of Chinese money laundering networks, the Treasury said. The settlement includes a $750 million civil penalty for a “deficient and ineffective” anti-money laundering compliance program.

• Suspicious reports: There is also an $11.6 million charge to settle allegations the bank violated sanctions programs on Iran, Russia, narcotics and global terrorism. It also admitted that it didn’t conduct due diligence for correspondent accounts for foreign financial institutions or file suspicious activity reports.

• Willful violation: As part of the resolution, Bank of America admitted that it willfully violated the Bank Secrecy Act and failed to implement an anti-money laundering program that met the minimum standards of the law, Treasury said.

• Hard to stop: Although FinCEN pointed out genuine failures in Bank of America’s compliance program, the failures they pointed to were common in compliance departments at banks across the country, Jim Richards, a financial crimes expert, told Risk Journal (free link). “When you’re a $2.7 trillion bank, with hundreds of millions of customers and the volume and velocity of activity they have, and with AML generally as an afterthought in most financial institutions, it’s very very difficult to keep up,” Richards said.

CVS health unit to pay $315 million to resolve illegal opioid prescription claims.

CVS Pharmacy, a unit of CVS Health, agreed to pay $315 million to resolve allegations that it illegally filled opioid prescriptions and submitted false claims for Medicare to pay for them.

The U.S. government alleged that CVS knowingly filled prescriptions for controlled substances that lacked a legitimate medical purpose, weren’t valid or weren’t issued in the usual course of professional practice.

It also claimed that CVS dispensed prescriptions for dangerous and excessive quantities of opioids, or filled prescriptions too early. Many of these prescriptions were ultimately billed to or reimbursed by federal healthcare programs, the Justice Department claimed.

U.K. fraud watchdog sets out new guidance for self reporting.

The U.K.’s Serious Fraud Office is setting out new guidance for companies to self-report on bribery, fraud and corruption issues, Risk Journal reports. (free link)

The SFO said that under new changes, legal representatives of companies will be able to discuss with and report directly to the director of legal services and general counsel at the Serious Fraud Office, Matthew Wagstaff, through a new direct channel, before committing to a formal report.

“We believe a swifter, clearer path to enter negotiations for a deferred prosecution agreement is in the best interests of everyone and so we’ve taken this feedback on board,” said Wagstaff.

• Federal and state regulators asked a federal judge Tuesday to hold Martin Shkreli in contempt, saying he has traded pharmaceutical stocks on YouTube for years in violation of a lifetime ban from the drug industry.

• Federal prosecutors accused OpenAI engineer Abdulrahman Alfozan of hiding a recording device in a company conference room.

• The European Union extended its sanctions framework related to the proliferation and use of chemical weapons until October 2031, describing the move as “the first time ever that a sanctions regime is renewed for such a long period.”

• The U.S. has sanctioned more than a dozen individuals and businesses allegedly connected with Mexico’s Cartel del Noreste, continuing a crackdown on drug cartels.

• The European Union’s antitrust body said it accepted Sanofi’s concessions to settle a competition investigation into the French drugmaker’s marketing campaign for a flu vaccine.

• Swisscom won an appeal at Switzerland’s Federal Administrative Court against a decision by the country’s antitrust regulator to fine the company over its fiber-network expansion plans.

The total damages in 2025 from disasters costing at least $1 billion, nearly four times the annual average in the 1990s, according to a Ceres study.

Drone attacks on ships sailing near NATO waters present fresh threat for the alliance.

Drones struck two commercial ships sailing just outside Bulgaria’s territorial waters on Tuesday, posing a fresh test for NATO as the alliance confronts a growing number of suspected Russian attacks at its land and sea borders.

Bulgarian Prime Minister Rumen Radev summoned the Russian ambassador over the incident, the second such assault on commercial shipping in the area in a week. In both cases, Radev said that there was no conclusive evidence to blame a specific actor but that logic pointed to Russian involvement.

U.S. defense startups flock to Taiwan to build China-free drones.

American drone-tech startups like HavocAI are swarming into Taiwan and—with the encouragement of U.S. government matchmakers—finding partners who can help them turn blueprints into reality.

The emerging industry has the potential to serve the U.S. military’s demand for a secure drone supply chain that steers clear of China, while providing Taiwan with an arsenal that it sees as essential to its survival as a self-ruled democracy.

• Iran is fortifying its defenses, rallying loyalists and threatening a wider, harsher response against the U.S. and its Gulf allies as it prepares for potential American attacks after the midterms and seeks to deter them.

• Yemen’s Houthi militants struck a building at the headquarters of Saudi Arabia’s state oil giant in the eastern city of Dhahran, people familiar with the matter said, as fighting intensified between the kingdom and the Iran-backed group.

• Big banks are still raking in higher profits on the strength of a resilient U.S. economy and volatile markets that have led to a surge in trading. But they warned rising interest rates could spoil the fun.

• Theme-park operator Six Flags Entertainment has closed multiple rides after a man died and several others were injured aboard one of its r