On 18 May, the Office of Foreign Assets Control (“OFAC”) imposed an eye-popping $275,000,000 penalty against Adani Enterprises Limited (“AEL”), an Indian conglomerate, alleging that the company remitted $192mn for Iranian LPG. This settlement is notable, beyond the quarter-billion dollar price tag, for a variety of reasons; (a) it was conducted at record speed by the agency, reflecting a sense of urgency, (b) it was unusually descriptive about the red flags AEL missed, and (c) it involved conduct by vessels that had yet to be sanctioned by OFAC.
What is in the enforcement action?
In its enforcement release, OFAC alleges that after starting an LPG trading business in July 2023, AEL engaged in a series of at least 32 U.S. dollar transactions involving the importation of Iranian-origin LPG through its terminals. While the sellers obfuscated the origin of their cargo by manipulating the carrying vessels’ AIS and through documentary fraud, OFAC alleges that AEL ignored obvious red flags, including:
- AEL’s head of LPG trading knew that the seller, a Dubai-based entity, dealt with Iran and the steep discounts they were being offered were not commercially reasonable.
- OFAC notes that the documents were replete with red flags, including sequentially numbered documents and Omani certificates of origin from ports that don’t export LPG.
- At one point a financial institution declined to process a payment (likely) out of compliance considerations, which does not appear to have been investigated.
“Oftentimes, OFAC uses settlements not just to penalize companies that violate U.S. sanctions, but also as a teach lesson to the industry,” says David Tannenbaum, the director of Deep Blue Intelligence, our premier threat intelligence program. “In this case the message is pretty clear – companies dealing in energy-related transactions need to be able to spot suspicious vessel behavior and documentary red flags.”
Indeed, the conduct described on the seller’s part, from disabling and manipulating their vessels’ AIS to providing doctored documents, is in line with the common behavior of the Dark Fleet. What sets this penalty apart from others is that neither the seller nor the vessels carrying the cargo had been designated by OFAC at the time. Instead, OFAC expects that AEL would have had sufficient compliance processes in place to detect whether a vessel was acting deceptively or whether there were irregularities in the transaction or shipping documents.
What else was notable about this settlement, and what happens next?
Based on how the agency came across the information – it was not voluntarily self-disclosed – and the Dark Fleet’s trading activity at other Indian LPG terminals, this penalty will almost certainly not be the last against Indian refiners dealing in Iranian goods. OFAC initially identified the conduct in this settlement when they sanctioned the Vina1 (IMO 9157478) after delivering its Iranian cargo at an Adani-owned terminal, but an analysis by the Deep Blue Intelligence team at the time of the designation showed that Vina’s fifteen sister ships had delivered Iranian LPG to many of India’s other key terminals.
“After the Vina was designated, the DBI team received multiple inquiries about which other terminals were receiving Iranian LPG in India,” Tannenbaum says. “Our answer – there were plenty more.” OFAC knows which other vessels in this fleet have been carrying Iranian LPG and can determine who they delivered the goods to based on the terminal they discharged it at. “It’s not hard to reconstruct who may have received this LPG and for the agency to subpoena that refiner,” says Tannenbaum.
Another thing to note is that OFAC appears to be in a hurry to deter this kind of activity with Iran. This investigation was conducted over the period of a year, which may sound like a lot of time until you realize the average OFAC settlement takes seven years. Another novel aspect is that the agency determined this conduct was egregious, based on OFAC’s own enforcement guidelines, because AEL’s conduct was reckless – meaning they proceeded into the transactions without due care – rather than willful, which the agency typically seeks to prove. This may indicate that the agency may focus in the future on what a company should have known about a transaction, rather than whether someone at the company ultimately knew it was illegal.2
What does this mean for commodities traders, shipping companies, and financial institutions?
OFAC made its compliance expectations clear throughout their enforcement release. In a written afterword to the compliance community, OFAC notes [emphasis added]:
“Energy importers must be familiar with and monitor for typologies associated with Iran’s reliance on a shadow fleet of vessels to transport its energy exports. Indeed, a majority of the vessels involved in the Apparent Violations were later designated by OFAC…Examples of common shadow fleet activity include non-commercially viable activity like successive STS transfers, deliberate vessel position information manipulation, fraudulent vessel identity claims, use of older, poorly maintained vessels, and nexuses to sanctioned actors or activity through opaque vessel management and ownerships structures, among others. Energy importers should continuously monitor for new trends in sanctions evasion and proactively adapt compliance protocols to prevent violations.”3
Quality maritime intelligence is now more important than ever. Indeed, OFAC notes the need for better maritime intelligence, including considering as a mitigating factor for the penalty that AEL deployed “information technology solutions for maritime intelligence specifically designed to mitigate risks in the marine transportation sector.”4
PurpleTrac and Deep Blue Intelligence were specifically designed to address these risks by using our “Tools, Targeting, and Training” approach:
Tools: OFAC notes, at four different points in the enforcement release, that companies should be able to not only screen vessels and their owners and managers against sanctions lists, but also detect deceptive shipping practices such as disabling a vessel’s AIS, spoofing its location to broadcasting a fake position, and engaging in high-risk ship-to-ship transfers. PurpleTrac, Pole Star’s award winning vessel due diligence tool, is designed from the ground up to detect this activity and is relied upon by compliance officers globally.
Targeting: OFAC notes that sanctions screening is not enough, and companies must be prepared to identify a vessel’s illicit conduct before they are placed under sanctions. Our Deep Blue Intelligence team maintains a watchlist of over 1,500 vessels engaged in the trade of Russian, Iranian, and Venezuelan oil and petroleum products, including comprehensive information on their management and movement history. Our team has identified 95% of all relevant tanker vessels designated by OFAC before the agency sanctioned them, often over a year in advance. Our clients remain well protected from the teapot risk because they know exactly which vessels are high risk before engaging in a transaction with them.
Training: OFAC ended the settlement agreement by saying “[t]his case also embodies the adage ‘if a deal is too good to be true, it probably is.'” The agency’s intent is explicit – all parties should be prepared to review the transaction and relevant documents for signs of red flags. These documents can be investigated in conjunction with the vessel to substantiate – or disprove – them. From showing how Iran forges invoices and bills of lading, blends Iranian products onshore in Iraq and the UAE to issue new certificates of origin, or how Dark Fleet vessel masters are contractually obligated to provide fraudulent documents, the Deep Blue Intelligence team has been on the frontline educating over a thousand compliance officers on how to detect these red flags. Notably, DBI has trained compliance officers on each of the red flags mentioned in this settlement agreement.
There is no silver bullet to sanctions compliance. But companies can harden their controls and reduce the risk of a similarly sized penalty by combining proven vessel screening and tracking tools, maritime intelligence from experts in the field, and training for both compliance officers and frontline staff.
Footnotes
- At the time the Vina went by the name Neel, but we prefer the name before that – SMS Bros. See e.g., Office of Foreign Assets Control. Treasury Targets Diverse Networks Facilitating Iranian Oil Trade. 3 July, 2025.
- Sanctions are predicated on strict liability, meaning that a person can violate the regulations even if they were unaware of the conduct or whether it was illegal. Nonetheless, OFAC generally reserves major penalties for when the conduct was egregious, which as defined in their enforcement guidelines, includes both reckless and willful behavior.
- Office of Foreign Assets Control. Adani Enterprises Limited Settles with OFAC for $275,000,000 Related to Apparent Violations of Iran-related Sanctions. 18 May, 2025.
- Ibid.