Sanctions 2026

INDIA Law and Practice Contributed by: Ayush Mehrotra, Upkar Agrawal and Varsha Goel, Khaitan and Co

connected to terrorism financing; attachment and confiscation of proceeds of crime. 2.2.3 Civil Enforcement Action India’s civil enforcement landscape for sanctions- related breaches is shaped by the multi-agency character of its regulatory framework. As regulators undertake these proceedings against private entities, they involve confidential regulatory information and are generally not published. Based on press releases and public reporting, key civil enforcement actions include the following. • On 19 May 2025, the DGFT issued an order against an exporter who exported triethanolamine 85% to Syria without obtaining the required export authori - sation. The exporter contended that the intended end use was the manufacture of cosmetics and personal-care products and the UAE purchaser had diverted the goods without their knowledge. The office of DGFT concluded that the transaction in a dual-use item triggers the mandate of prior authorisation, which, in the present case, was not obtained. Based on the above, civil implications in the nature of pecuniary penalties were confirmed against the exporter. • FIU-IND, through its order dated 19 June 2024, imposed a penalty of approximately USD2 million on a VDA service provider for failures to comply with PMLA registration and reporting framework. • The ED has intensified civil enforcement through provisional attachment orders (PAOs) under the PMLA. In its Annual Report 2025-26, the ED has reported 712 provisional attachment orders, attaching assets valued at approximately USD9.7 billion (INR81,422 crore) and filed 657 prosecution complaints. The PAOs reportedly include actions against unlawful activities defined under the UAPA. 2.2.4 Criminal Enforcement Action In the past three years, no significant criminal enforce - ment actions have been reported in the public domain concerning sanctions breaches. Notable designation actions include: • in February 2023, the MHA banned two organisa - tions, the Jammu and Kashmir Ghaznavi Force

(JKGF) (43rd group banned) and the Khalistan Tiger Force (KTF) (44th group banned); and • in May 2025, the UAPA Tribunal upheld the noti - fication issued by the MHA declaring the United Liberation Front of Asom (ULFA), along with all its factions, wings and front organisations, as a so- called unlawful association. 2.2.5 Mitigation The following steps are recognised as mitigating fac - tors in the event of a sanctions breach. • Demonstrating lack of knowledge and exercise of reasonable caveats and care are considered as a valid defence and result in mitigation of exposure. • Voluntary disclosure of violations, particularly under the FTDR Act and FTP for export of SCOMET items and under Section 28 (2) of the Customs Act for duty-related matters helps mitigate penalty exposure, both for civil and criminal implications. ‘Voluntary’ nature of disclosure is thoroughly scru - tinised. • Proactive co-operation and necessary disclosure to investigating authorities during inquiries and pro - ceedings, including preservation and production of relevant records and documents, is often helpful in mitigating the exposure. • Establishing reasonable care and caveats by way of robust: (a) an Internal Compliance Programme (ICP) approved by the DGFT; (b) demonstrating a culture of compliance; (c) remedial action/measures taken after discov - ery, including strengthening of compliance systems, training programmes and disciplinary action against responsible personnel, is also helpful in establishing credibility and bona fide intent to comply. 2.2.6 Strict Liability Most offences under the relevant legislation that entail personal or criminal implications are subject to the test of knowledge and/or intentional involvement. Few violations (mostly related to legal persons) entail strict liability in the nature of pecuniary fines.

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