During execution of an iterative project a mandatory compliance requirement affecting the project software is introduced. The team is aware of the requirement. What should the project manager do next?

The project manager should update the product backlog item with this new requirement. In an iterative (agile) project, the product backlog is the single source of truth for all work to be done. A mandatory compliance requirement directly impacts the product, so it must be captured and prioritized within the backlog to ensure it is addressed. Escalating to the product owner might be a subsequent step for prioritization, but the immediate action is to document it. Escalating to the project sponsor is premature; the team needs to assess the impact first. Updating the stakeholder register is not the primary action for incorporating a new requirement into the project work.