IV Macro Policy & Sovereign Debt South Asia

The long arm of the dollar: what the Adani case says about US jurisdiction

Institution: Valdai Discussion Club
Author: Ivan Timofeev
Country · language: Russia · English
Affiliation: State-affiliated platform

Summary

Timofeev examines the 275 million dollar settlement the US Treasury reached with Adani Enterprises on 18 May. The company imported LPG presented as originating in Oman and Iraq but actually sourced from Iran; all 32 transactions, totalling 192.1 million dollars, were paid in dollars. The author stresses that even when a transaction takes place entirely outside the US, payment passing through an American bank's correspondent account gives the US jurisdiction.

Adani's direct counterparties were not on the sanctions list; the company was nonetheless held liable for ignoring clear red flags. In Timofeev's sample of 311 firms covering 2009–2026, 105 are wholly foreign or based outside the US, and Adani ranks in the top ten by penalty amount. According to the author, the case did not affect US–India relations; third-country governments leave the risk to companies, and large companies comply with US rules even when their own governments do not join the sanctions. The 311/105 sample is the author's own dataset. The piece was republished on the RIAC website dated 16 September.

Blind spot

What the West misses: the case is read as a compliance success, yet companies from friendly countries such as India are also, in practice, bound to the US sanctions regime through dollar infrastructure. Weakness of this reading: the author indirectly advocates non-dollar payment channels, and Adani's misconduct recedes into the background.

Talay assessment

Bottom line

Timofeev's legal finding is sound: although the 32 transactions worth 192.1 million dollars took place entirely outside the US, dollar payments routed through a correspondent account were enough for a 275 million dollar settlement. But the case is less clear an example of overreach than the author implies; the Iranian LPG with disguised origin and the ignored red flags place the primary responsibility on the company. His indirect case for non-dollar channels contradicts the case's own lesson: even companies from friendly countries comply with US rules. The most likely path is continued enforcement against third-country firms and companies over-complying irrespective of their governments.

Likely effects

Third-country companiesNegativeWeeks
Working with intermediaries not on sanctions lists no longer offers adequate protection; commodity importers must budget additional compliance costs for origin verification, vessel tracking and supplier screening.
TürkiyeNegativeWeeks
On 8 September the US Treasury designated three Turkish companies over links to Mahan Air. The Adani precedent heightens correspondent account access and secondary sanctions risk for intermediaries and banks in Türkiye; banks are expected to tighten compliance.
Non-dollar payment channelsUncertain6 months+
The case strengthens the incentive to avoid dollar infrastructure, but the risk of large firms losing access to global settlement keeps the scale of alternative channels narrow.
Governments and companiesUncertain1–6 months
The case did not affect US–India relations, indicating governments will keep leaving the risk to companies and that political ties and compliance obligations will operate separately.

Possibilities, ranked

1
Enforcement continues, companies over-comply75%
The US keeps fining and settling with third-country firms that facilitate Iran-origin trade; banks and large companies prefer to exit risky transactions altogether.
Watch: New OFAC settlement and sanctions announcements covering companies based in India, Türkiye and the Gulf
2
Non-dollar channels grow to a limited extent20%
Part of Iran-linked energy and commodity trade moves to local currencies and non-dollar settlement systems; large companies nevertheless remain within the dollar system.
Watch: Official or corporate statements on local-currency payments in Iran-origin energy trade
3
Government-level counter-regulation5%
A major economy adopts a binding blocking rule shielding its companies from extraterritorial US sanctions enforcement.
Watch: A G20 country announcing legislation restricting compliance with US sanctions

Probabilities are calibrated judgement based on the sources, not measurement, and are revised as new information arrives. Not investment advice.

Original publication: valdaiclub.com · 15 September 2026

This page summarises the institution's view and does not reflect the view of Talay Insight. No direct quotation is used.