America’s Sweeping Jurisdiction: What Does the Adani Enterprises Case Tell Us?

The penalty imposed by the US Treasury on the Indian company Adani Enterprises is bound to become one of the most talked-about administrative investigations the American regulator has ever conducted against a foreign company. Although Adani is nowhere near the record fines levied on the likes of Binance, UniCredit or BNP, the sum involved is substantial enough to draw attention in its own right. The Adani case sheds valuable light on the particular character of US enforcement action against foreign violators of American sanctions regimes, as well as on how business—and the governments of the countries in which such firms are registered—tend to respond, writes Ivan Timofeev, Programme Director of the Valdai Discussion Club.

On 18 May 2026, the US Treasury announced a settlement agreement with the Indian company Adani Enterprises. Under its terms, the company undertook to pay the American regulator a fine of 275 million dollars for alleged violations of the US sanctions regime against Iran. This is not, admittedly, a record-breaking fine. Even so, Adani has broken into the top ten companies by fine amount for sanctions violations, out of a sample of 311 firms covering the period from 2009 to 2026.  i The author’s calculations apply here and throughout.  It is worth noting that this top ten is made up almost entirely of banks and financial companies, whose hefty fines are readily explained by the sheer volume of financial transactions they handle. Adani, by contrast, is a rare case of a company from the real economy being hit with such a substantial penalty. What is more, over the period in question, it became only the second Indian company ever to face a fine of this kind—the first being Godfrey Phillips India, which was held liable in 2023 over alleged tobacco shipments to North Korea. So what exactly happened, and what patterns does the Adani case reveal?

Let us start from the fact that, as the world’s foremost architect of financial sanctions, the United States naturally works hard to stamp out any circumvention of its restrictive measures. Within its own jurisdiction, it holds violators to both criminal and administrative account. The US Treasury has the authority to conduct administrative investigations, which frequently result in a civil penalty. The size of the fine is calculated according to the gravity of the offence, which may be classified as either “egregious” or “non-egregious.” In setting the fine, a whole range of aggravating and mitigating factors is taken into account. Aggravating factors include, for instance, wilful or reckless violations; involvement of company management in the wrongdoing; attempts to conceal it; the absence of risk-control measures; and harm done to the US sanctions regime, among others. Mitigating factors include cooperation with the regulator during the investigation, voluntary disclosure of the violations, the absence of any history of repeat offences, and the absence—or negligible scale—of any financial gain, and so forth. Where intent or other aggravating circumstances are present, a criminal case may well also be opened by the US Department of Justice, exposing those involved to court-imposed fines or prison terms.

As a rule, the Treasury’s administrative fines fall on American companies and individuals proper. Yet the United States interprets its jurisdiction fairly broadly, extending it, in particular, to dollar-denominated transactions carried out by foreign parties. The Treasury’s reasoning is that a link to US jurisdiction arises simply because a dollar transaction, even one conducted entirely outside the United States, still passes through the correspondent account of an American bank. If that transaction is carried out for the benefit of a sanctioned party, or otherwise breaches the restrictive measures, it is automatically classed as unlawful use of the US financial system. Because the American dollar remains one of the principal currencies of international settlement, deals with a sanctions-related element—whether knowingly or unknowingly—fall under US jurisdiction with some regularity. The same holds for transactions involving parties operating outside the United States but with American shareholders or owners. Of the 311 parties referred to above, 105 were either wholly foreign or based outside US territory. Dollar transactions are one of the most common reasons foreign firms find themselves under US investigation.

It was by this very mechanism that the Indian conglomerate Adani came to the attention of the US financial authorities. The company is a large holding group with assets spanning a range of economic sectors, one of its lines of business being the import of foreign energy resources. It should be noted that Adani had previously been careful to observe the US sanctions regime, including with respect to Iran. In 2023, however, according to the US Treasury’s account, the company received an offer from intermediaries in the UAE to import liquefied petroleum gas (LPG) at a discount. The gas was marketed as Omani and Iraqi, though it was in fact of Iranian origin. The company went on to carry out 32 transactions under this scheme, worth a total of 192.1 million US dollars, every one of them conducted in American currency. Neither the immediate counterparties nor the vessels carrying the LPG appeared on any sanctions lists. Even so, the US Treasury took the view that the company could have made further efforts and would readily have been able to uncover the sanctioned status of the deals. Both the choice of intermediaries and a number of technical inconsistencies pointed to something being amiss. In short, the company simply turned a blind eye to obvious red flags, declining to exercise due diligence. Once it learned of the US investigation, the company halted the imports, but this was not credited to it as voluntary disclosure, since the Americans had already learned of the violations by that point. Such a heavy fine was driven by the sheer scale of the transactions, together with a range of aggravating factors. Alongside the lack of due diligence and the absence of voluntary disclosure, the US authorities also took into account the size of the company, which meant it could reasonably have been expected to have an adequate risk-control system in place.

Several further points are worth noting. First, the company cooperated actively with the Americans throughout the investigation—a typical response, since almost everyone caught up in cases of this kind chooses to cooperate. The alternative is a heavier fine, criminal prosecution, or, in the case of foreign parties, being caught up in blocking financial sanctions. Second, the company strengthened its risk controls in order to avoid further violations, in effect raising its level of compliance with American law even while operating in a different jurisdiction. Third, the investigation led to no complications whatsoever in relations between the United States and India. This, too, is the typical picture: third countries generally shift the risk onto business and refrain from politicising investigations of this kind, which in turn encourages compliance with US sanctions across third-country jurisdictions.

The Adani case is a vivid illustration of the strategy pursued by a large company in a country friendly towards Russia that is closely integrated into global supply chains.

Compliance with sanctions is thus encouraged both by the size of the potential fine and by the prospect of losing access to global settlement systems and services. That said, this strategy may not work on companies with a high appetite for risk, whose business model is instead built around operating in sanctioned jurisdictions—for these, the scale of potential profit outweighs any consideration of risk. Such companies, however, tend to be small. Cases of secondary sanctions against large firms are exceedingly rare, which suggests that such firms manage this kind of risk well in advance. The key takeaway for Russia is that even in a friendly jurisdiction, large businesses may well continue to comply with the requirements of the American sanctions regime, regardless of the fact that their own government has not formally joined those sanctions.