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AI copyright claims, tougher crypto sanctions, and a new warning over AI-driven financial stability risks. This edition of Risk Wrap highlights six developments shaping compliance, governance, and insurance exposure across high‑risk industries.
Sony and Warner sue Anthropic over copyrighted AI training data
Anthropic faces another copyright infringement lawsuit, this time from Sony Music and Warner Music. The companies allege that Anthropic used hundreds of protected works to train Claude AI models, including lyrics and sheet music from artists like The Beatles and Michael Jackson. They claim the material was obtained through downloading torrents and that Claude can recite copyrighted lyrics word for word.
The complaint also alleges that Anthropic used copyrighted lyrics to “generate vast quantities of purportedly ‘new’ AI-generated song lyrics, which compete with Music Publishers’ legitimate copyrighted works as harmful market substitutes.”
Anthropic previously agreed to a $1.5 billion settlement with authors who accused it of using their copyrighted works. Sony and Warner argue that the settlement failed to discourage further infringement and are seeking damages of up to $150,000 for each individual infringement. They’re also pursuing a court order to prevent Anthropic from using their music.
Implications for brokers and their clients:
- Review whether existing media liability policies respond to allegations that copyrighted works were improperly used in AI training, model development, or outputs.
- Review whether tech E&O coverage responds to claims alleging that infringing content was produced due to a fault in an AI system.
- Investigate dedicated AI insurance that covers firms against the sector’s emerging risks across jurisdictions.
Source: Reuters (August 31, 2026). Sony, Warner Music sue Anthropic over songs used in AI training.
Emerging insurance industries mentioned: Artificial Intelligence Insurance.
Lines of business mentioned: Tech E&O Insurance, Media Errors and Omissions Insurance.
Iran sanctions put crypto firms on compliance alert
On August 24, 2026, the US Department of the Treasury launched an economic campaign targeting the Islamic Republic of Iran and the networks that enable it. Known as Operation Economic Outcast, the initiative is designed to cut off the financial channels that support the Iranian regime and the Islamic Revolutionary Guard Corps. This includes cryptocurrency payment rails, which are increasingly forming part of that infrastructure.
Among the most significant measures is a sectoral determination covering Iran’s digital assets sector. It allows the Office of Foreign Assets Control to sanction individuals and entities worldwide that operate in or provide support to Iran’s digital asset industry. OFAC has also targeted actors assisting Iran through crypto-enabled trade payments and theft.
Executive Order 13902 allows OFAC to impose sanctions on a foreign person found to be operating in a designated sector of the Iranian economy. Connections to terrorism, weapons proliferation, or another sanctioned entity don’t need to be established for this to be enforced.
The initiative expands the reach of secondary sanctions considerably. Crypto firms that knowingly enable transactions that support Iran’s digital asset sector could now face OFAC designation themselves, which could jeopardize their access to the US financial system.
Chainalysis advises crypto firms to review their exposure to Iran-nexus counterparties, especially OTC brokers, exchanges, and intermediaries operating in regions known to facilitate the Iranian oil trade. They also suggest preparing for potentially rapid enforcement by OFAC.
Implications for brokers and their clients:
- Review D&O coverage for potential claims against executives arising from alleged failures in sanctions compliance, counterparty due diligence, oversight, or risk management.
- Assess regulatory coverage for investigations, enforcement actions, or third-party claims arising from alleged failures to identify or prevent prohibited transactions.
- Consider business interruption insurance in case operations are suspended due to enforcement actions.
Source: Chainalysis (August 25, 2026). OFAC Targets Ministry of Intelligence, Crypto-for-Oil Payments in Latest Iran Sanctions.
Lines of business mentioned: Directors and Officers Liability Insurance, Business Interruption Insurance.
Bank of England governor warns AI has become the financial system’s most pressing stability threat
Andrew Bailey, Bank of England governor and chair of the Financial Stability Board, has warned G20 finance ministers that AI is now the most pressing threat to global financial stability. His comments came during G20 meetings in the US on August 31 and September 1.
Bailey referred to two key risks: The power that sophisticated AI systems are giving malicious actors and the financial system’s growing reliance on a small group of frontier providers.
This concern is not new. An FSB report published in November 2024 identified cyber vulnerabilities and dependence on third-party technology providers as potential channels for causing systemic financial weaknesses. It suggested the sector implements stronger governance and better coordination around the use of AI in finance.
The European Systemic Risk Board reinforced that warning on June 25, 2026, raising concerns about autonomous AI systems independently identifying and exploiting vulnerabilities. This would mean the threat is no longer simply that hackers can become more effective thanks to AI, but that AI itself could become the hacker. This threat materialized in July when an OpenAI model independently hacked the Hugging Face platform.
The International Monetary Fund has also been involved in broader regulatory discussions surrounding how AI may affect financial stability.
Implications for brokers and their clients:
- Review whether existing cyber liability insurance covers AI-related threats, including autonomous exploitation.
- Consider business interruption insurance in case breach remediation requires downtime.
- Investigate specialized fintech insurance that covers the sector’s established and emerging exposures.
Source: Crypto Briefing (August 31, 2026). Financial Stability Board warns AI-driven cyber risk threatens global stability.
Emerging insurance industries mentioned: Fintech Insurance.
Lines of business mentioned: Cyber Liability Insurance, Business Interruption Insurance.
FDA rethinks oversight of generative AI medical devices
The US Food and Drug Administration has opened a public consultation on how medical devices powered by generative AI should be regulated. The FDA has already approved more than 1,000 AI-enabled medical devices, but most rely on conventional AI rather than generative models.
The difference with gen AI is its adaptive nature. For example, it can handle open-ended prompts and may produce varied outputs based on similar inputs. A device that assists clinical decision-making, summarizes patient records, and suggests treatment plans, may therefore behave inconsistently. Hallucination is also a risk.
In addition, many systems rely on third-party models, raising further questions around transparency, validation, and accountability.
The FDA has suggested a two-pronged approach, where systems that can make autonomous decisions are treated differently from less advanced ones that simply provide informational support, for example.
It also proposed a competency-based evaluation model for gen AI devices based on how healthcare professionals are trained and assessed. This would help to determine how effectively they perform under controlled conditions and whether they behave appropriately in clinical scenarios.
The FDA is accepting public comments until October 19, 2026.
Implications for brokers and their clients:
- Consider obtaining tech E&O coverage for claims arising from errors, failures, or defects in gen AI software used in medical devices, including issues involving third-party AI models.
- Review product liability coverage for claims alleging that an AI-enabled medical device was defective or malfunctioned and caused patient injury.
- Consider obtaining specialized AI insurance that addresses the risks associated with gen AI, including model errors, hallucinations, and regulatory exposures.
Source: DIGITAL JOURNAL (August 29, 2026). FDA seeks public input on regulating generative AI medical devices as healthcare enters a new era.
Emerging insurance industries mentioned: Artificial Intelligence Insurance.
Lines of business mentioned: Tech E&O Insurance, Product Liability Insurance.
Brazil cracks down on betting ads and influencer campaigns
Brazil’s Advertising Self-Regulation Code (CONAR) has announced changes to the country’s betting advertising framework, with a focus on protecting children and adolescents and strengthening operator accountability.
Advertisers are now discouraged from using visual elements that may attract the attention of young people, like humanized animals. This type of imagery may only appear on channels that have implemented age verification mechanisms.
Other changes are as follows:
- Ads must contain 18+ age-restriction warnings.
- Individuals shown to be betting in any ads must be at least 21 and look at their age.
- It’s prohibited for ads to imply guaranteed success, easy profits, or quick wealth accumulation.
- Responsible gambling warnings have to last at least 10% of an ad’s duration and take up 10% of its size.
- Influencer content will be monitored, and an accreditation program for these partners is under review.
- Operators will have to keep records of due diligence related to influencer and affiliate campaigns.
Implications for brokers and their clients:
- Consider media liability coverage in case of allegations that advertising was misleading or improperly targeted.
- Consider professional liability coverage for errors or omissions in advertising compliance, age verification processes, or influencer and affiliate due diligence.
- Investigate specialized gambling insurance to cover risks surrounding player liability, payment fraud, and regulatory compliance.
Source: World Casino News (September 1, 2026). CONAR Expands Controls on Betting Advertising in Brazil.
Emerging insurance industries mentioned: Gambling Insurance.
Lines of business mentioned: Media Errors and Omissions Insurance, Errors and Omissions Insurance.
Cronos halted after $75 million DeFi exploit
Cronos brought its blockchain to a halt after an exploit hit Tectonic, the chain’s largest lending protocol. The resulting losses are estimated to have reached about $75 million.
With Tectonic, users can deposit crypto and borrow other assets against it. One of the assets that can be used as collateral is TONIC, the protocol’s native cryptocurrency. The attacker manipulated its price, increasing it by 100 times in just 20 minutes, then used it to borrow assets of much higher value.
Data from DefiLlama shows that Tectonic held around $121.7 million in assets on August 26, representing nearly half of the total capital deposited across Cronos-based DeFi protocols. By Monday, that figure had dropped to around $3 million.
Implications for brokers and their clients:
- Investigate cyber insurance that covers blockchain exploits, including the manipulation of smart contracts, oracles, and other infrastructure, as well as incident response and financial losses.
- Review whether crime insurance responds to theft or fraudulent acts that may target digital assets following exploitation.
- Investigate digital asset and web3 insurance to mitigate the sector’s unique risks.
Source: CoinDesk (August 31, 2026). Cronos halts blockchain after $75 million lending exploit hits lending app Tectonic.
Emerging insurance industries mentioned: Digital Asset and Web3 Insurance.
Lines of business mentioned: Cyber Liability Insurance, Crime Insurance.
