Banking and Finance Law Daily Wrap Up, ENFORCEMENT ACTIONS: OFAC reaches $275M settlement with Adani over apparent Iran sanction violations, (May 19, 2026)

By Justin Marcus Smith, J.D.

OFAC urges hydrocarbon industry participants to proactively and carefully review transaction details for “red flag” indicia of products and cargoes originating from Iran.

The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) announced a $275 million settlement to resolve allegations that an Indian multinational, Adani Enterprises Limited (AEL), violated Iran-related sanctions. According to the May 18, 2026, OFAC press release announcing the settlement, AEL bought shipments of liquified petroleum gas (LPG) from a trader based in Dubai that purported to sell Oman or Iraqi gas. OFAC said AEL should have been on notice, based on red flags, that the LPG came from Iran. OFAC said the case highlights the risks and potential costs that non-U.S. companies run when using the U.S. financial system for transactions that come with a high risk of sanctions evasion activity. Restricting Iran’s energy imports has been a “core objective” of U.S. sanctions targeting Iran across successive administrations. The purpose of the sanctions is to thwart the financing of terrorism and proliferation of nuclear weapons. Deals that are facially “too good to be true” probably are, OFAC said.

Apparent violations.According to OFAC, AEL caused U.S. financial institutions to process 32 payments totaling over $192 million for Iranian LPG shipments. The $275 million settlement amount was said to simultaneously reflect the OFAC determination that the apparent violations were “egregious,” but that AEL adopted remedial measures after discovery of the conduct and willingly cooperated with OFAC.

According to OFAC, AEL sought discounted LPG in 2023 to aid its entry into the Indian LPG market. AEL conducted its standard Know Your Customer (KYC) verification process for the Dubai supplier it identified and that supplier’s LPG affiliates. However, that KYC process “identified no hits” against the OFAC List of Specially Designated Nationals (SDN) and Blocked Persons (SDN List). There was no hit even though one of the Dubai supplier’s affiliates was listed pursuant to executive order 13846 as of March 2023. It did not appear that AEL was aware of that SDN List designation at the time. While the Dubai supplier held itself out as an aboveboard middleman that supplied LPG mainly from Oman, “in reality the company served as a conduit” for illicit Iranian LPG.

The sanctions compliance program AEL had in place at the time did not include other measures to account for risks arising from its dealings. OFAC contended a number of red flags should have prompted AEL to question the true origin of the Dubai supplier’s LPG, including:

• third-party concerns about Iranian origin, as stated in inquiries posed to AEL, including by an Indian state-owned entity;

• carrier vessels that engaged in suspicious behavior, including Automatic Identification System (AIS) manipulation, uneconomic movements, and frequent name, ownership, and flag state changes;

• indications that cargoes did not originate from jurisdictions identified in certificates of origin, based on mis-matched port infrastructure;

• transaction documentation bearing indicia of falsification;

• LPG prices sufficiently below-market to seem commercially unreasonable in light of other costs; and

• bank payment stops.

OFAC said AEL did not appear to have taken sufficient steps to investigate such red flags. As for inquiries made by third parties that might have tipped AEL off, AEL appears to have believed they were part of a hostile rumor campaign to discourage AEL from entering the Indian LPG market.

Active response. After public reports in June 2025 alleging that AEL was involved in importing Iranian-origin LPG, AEL immediately suspended all LPG imports and hired counsel in the U.S. to perform an internal investigation. AEL “extensively cooperated” with the OFAC investigation and also implemented “extensive enhancements” to its sanctions compliance program.

Aggravating and mitigating factors. OFAC found that several aggravating factors supported the $275 million settlement amount: (1) AEL acted “recklessly” with reason to know of apparent violations based on red flags; (2) AEL caused substantial harm to sanctions program objectives by contributing revenue to the Iranian energy sector; and (3) AEL is a large and sophisticated international company.

OFAC also noted the following mitigating factors: (1) AEL did not receive an OFAC penalty notice or Finding of Violation in the five previous years; (2) the LPG business was only a small portion of AEL’s overall revenue at the time of the apparent violations; (3) AEL substantially cooperated with OFAC; and (4) AEL implemented “significant remedial measures” including a robust risk-based sanctions compliance policy, consideration of hydrocarbon shipping risks as identified in OFAC published guidance; and deploying better maritime intelligence to mitigate marine shipping risks.

Several of the mitigating factors were memorialized as part of the terms of settlement with OFAC. Among other things, AEL promised to expeditiously alert OFAC of any apparent sanctions violations identified through internal audits. AEL will also ensure its sanctions-related training program provides adequate information and instruction to employees and stakeholders, including clients, suppliers, partners, and counterparties, as appropriate. AEL agreed to fully cooperate with OFAC and provide an annual certification to OFAC annually for the next five years.

Companies: Adani Enterprises Limited

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