OFAC has announced a settlement of alleged violations of the Iranian Transactions and Sanctions Regulations (ITSR) with Adani Enterprises Limited (AEL) of India.  The enforcement originated in AEL’s purchase of cargoes of liquefied petroleum gas (LPG) from a Dubai-based trader purporting to supply Omani and Iraqi gas. In these transactions, AEL was the consignee for LPG cargoes bound for India. It had contracted with a Dubai supplier as shipper and vessel charterer and took title to each cargo at Mundra Port. The Dubai supplier controlled all shipping arrangements — chartering the vessels, loading the Iranian-origin LPG, and issuing the falsified certificates of origin that misrepresented the cargo as Omani or Iraqi. AEL, as the receiving terminal operator with no direct relationship with the shipowners, relied on those documents for its knowledge of cargo origin.

At the time of the dealings, AEL followed its affiliates’ 2020 OFAC sanctions compliance program, which prohibited Iranian and/or sanctioned vessels and Iranian-origin cargo from entering AEL-affiliated ports. AEL conducted its standard Know Your Customer (“KYC”) process on the Dubai Supplier and its affiliates, which identified no matches with OFAC’s List of Specially Designated Nationals (SDN) and Blocked Persons (the “SDN List”).  None of the parties involved in AEL’s LPG imports were sanctioned at the time of the LPG shipments, and none of the documentation provided to AEL contained any information explicitly pointing to Iranian origin of the LPG. Yet unbeknownst to AEL, an affiliate of the Dubai Supplier had been designated by OFAC in March 2023 pursuant to E.O. 13846 for purchasing LPG from Iran-based SDN Persian Gulf Petrochemical Industries for resale. AEL sanctions compliance program, and its affiliates’, did not include other measures to account for risks arising from its dealings.

OFAC determined that during the dealings in 2023-2025, AEL learned of concerns that cargoes supplied by the Dubai Supplier may have originated in Iran. OFAC found that for the period in which the apparent violations occurred, vessels carrying the Dubai supplier’s cargoes routinely engaged in suspicious behavior, including (1) Automatic Identification System (AIS) manipulation, including spoofing and prolonged unexplained AIS dark periods; (2) uneconomic or illogical vessel movements or port calls; and (3) frequent name, ownership, and/or Flag State changes.  OFAC further found fault with the documentation provided by the Dubai Supplier, which was indicative of falsification, including: (1) illogical and nonsequential numbering of certificates of origin, (2) repeated unexplained delays in post-shipment issuance of documents, and (3) use of outdated document templates.

Finally, OFAC considered the prices offered by the Dubai supplier, which it concluded were sufficiently below the predominant market rate and should have prompted greater due diligence by AEL. According to the Enforcement Release, AEL did not demonstrate that it took sufficient steps to investigate the red flags beyond reviewing shipping documentation and obtaining assurance from the Dubai Supplier that it was not selling Iranian-origin LPG.

Based on OFAC’s investigation, with which AEL cooperated, thirty-two (32) apparent violations of § 560.203(a) of the Iranian Transactions and Sanctions Regulations (ITSR), 31 C.F.R. part 560 were identified exposing AEL to a maximum penalty of $384,208,088.  The violations were pursued on a causation theory: OFAC characterized AEL’s violations as having “caused U.S. financial institutions to process 32 U.S. dollar (USD) denominated payments totaling approximately $192,104,044 for the shipments.”  After weighing the applicable aggravating and mitigating factors in OFAC’s Enforcement Guidelines, the office agreed to settle the enforcement action for $275,000,000.

OFAC’s imposition of liability on a non-US commodity buyer based on “red flags” associated with the loading of the cargo and vessel operations is significant.  OFAC’s view that “Red flags should have put AEL on notice that the LPG actually originated from Iran” demonstrates the serious compliance risk exposure to non-US cargo interests, particularly in the oil and gas trade and underscores the importance of its recent Guidance on Sham Transactions and Sanctions Evasion issued March 31, 2026.

This update is provided for general information and is not legal advice.  To further discuss the above or how this enforcement may affect your interests, please contact us at info@chaloslaw.com.