In a case that highlights how costly direct and indirect sanctions risks can be, OFAC fined a multi-national utility corporation headquartered in India, and its subsidiaries, $275 million for 32 civil violations of the Iranian Transactions and Sanctions Regulations which could have easily been avoided.
In its May 18, 2026, Settlement Order, Treasury described how the company engaged in numerous transactions involving the importation of liquified petroleum gas (“petroleum”) from Iran.
The interesting part of this case is that the company DID screen direct parties against sanctions lists as part of their Know Your Customer processes and did not identify any matches or apparent dealings with Iran.
However, they failed to include in their due diligence a consideration of the high risk industry in which they were involved (petroleum), or that dealing with a third party supplier in a country known to be a conduit for Iranian products (the UAE) required more scrutiny, and they overlooked red flags relying on representations made by the Dubai supplier that its imports were from countries other than Iran.
The red flags the company learned of but ignored included:
- The Dubai supplier operated through many affiliates, including one designated by OFAC during the time the company made its purchases;
- The purported origin of the petroleum was suspicious as some jurisdictions (e.g., Sohar, Oman) were not typical for such exports or equipped to facilitate such exports;
- Documents as to certificates of origin and when issued suggested they were fudged;
- The company used the same vessel it knew had transported petroleum from Iran for another customer of the Dubai supplier;
- The vessels used by the Dubai supplier routinely changed names/ownership/flags, switched off their tracking/identification systems and made frequent uneconomic port calls about which the company, considered sophisticated, should have been aware;
- The price given the company for the shipments was considerably below the market rate;
- At least one of the company’s payments to the Dubai supplier was flagged by a bank for sanctions concerns after which the Dubai supplier changed banks.
This case spotlights the importance of maintaining controls that consider indirect sanctions risks and not to rely solely on screening names against sanctions lists. It is also a reminder that regulators expect companies, especially those with global reach and sophistication, to investigate red flags and will fashion penalties accordingly for those who do not. As OFAC noted, “if a deal is too good to be true, it probably is.” See the full U.S. Treasury Settlement Agreement here: https://ofac.treasury.gov/media/935631/download?inline.