When to Sanction, When to Enforce
The US Department of Treasury imposed a whopping $275m fine on an Indian company for violating the U.S.' Iran sanctions.
On May 18, the Office of Foreign Assets Control (OFAC) published an enforcement action against Adani Enterprises Limited (AEL), a multinational company based in India. The announcement, which you can read here, reflects a settlement between the US government and the company for $275 million.
According to the announcement:
From November 2023 to June 2025, AEL purchased shipments of liquified [sic] petroleum gas (LPG) from a Dubai-based trader purporting to supply Omani and Iraqi gas. Red flags should have put AEL on notice that the LPG actually originated from Iran.
U.S. civil enforcement matters typically involve a set of key numbers:
The value of the transactions that caused the enforcement action, in this case $192,104,044 or 32 U.S. dollar-denominated payments.
The statutory maximum penalty, in this case $384,208,088.
Sometimes there is a base civil monetary penalty, but in this announcement the base and the statutory maximum are equal.
What’s interesting in this case is that the value of the transactions is lower than the penalty imposed on AEL, and no discount was applied to the final settlement amount. This is likely because the violation was considered egregious and it was not voluntarily disclosed to OFAC. However, there is some breathing room between the statutory maximum and the final penalty amount imposed, which is due to cooperation with OFAC and AEL’s efforts to improve its compliance policy and compliance commitments.
What I find most interesting about this case is not the penalty itself but the timing of the penalty. How long did OFAC know of this violation, given that the violating transactions ended in June 2025, nearly a year ago? In a study that Bryan R. Early and I conducted on OFAC enforcement patterns in Security Studies, we noted that the enforcement of economic sanctions often shift to reflect an administration’s foreign policy goals around Iran.
A key foreign policy question that emerges is when to sanction and when to enforce. Listing people and businesses on the US’ Specially Designated Nationals (SDN) list and enforcing sanctions against companies (domestic or foreign) have different impacts:
Designations on the SDN list is going to complicate a business’ ability to transact in the US dollar, use correspondent banking, and generally do the things that businesses do. If you’re in the energy sector, this is likely to significantly raise the cost of doing business.
Sanctions enforcement creates regulatory headaches, but in previous work, Bryan R. Early and I note that there’s likely a reputational element to sanctions enforcement that OFAC seeks to leverage. Imposing a $275m fine on a major Indian company is not likely to severely impact its profits (according to its annual report, it appears to be doing fairly well). However, enforcement matters are going to send a signal that everyone will hear.
This isn’t to say that sanctions enforcement doesn’t matter; it does. In some cases, sanctions enforcement can also involve criminal penalties. When the Department of Justice and the Department of Treasury (through OFAC) are both imposing penalties, the criminal and civil fines and settlements that emerge can be materially punishing and reputationally costly. In this particular case with AEL, there do not appear to be any criminal matters.
If energy traders start to avoid Iranian energy exports because of fears of getting listed in the SDN or US sanctions enforcement, the impact on Iran’s economy could be profound. However, with the Strait of Hormuz largely closed and traffic at a fraction of pre-war levels, trading Iranian energy exports may be a necessary gamble some firms are willing to take.
As Charmaine Willis and I recently wrote in The Conversation, the global energy crisis created by the closure of the Strait and the market uncertainties is largely the United States’ own doing. The United States may need to recalibrate how it designs, implements, and enforces economic sanctions as efforts to evade and circumvent sanctions become more innovative.