The US is concerned that India hid the origin of Russian oil that was shipped to New York.
The deputy governor of monetary policy at the Reserve Bank of India said that the country was informed of the case by the US Treasury Department.
An Indian vessel met a Russian tanker at sea to pick up oil, according to the department. The shipment was processed at a port in Gujarat on the west coast of India.
The refined output was put back on the ship and it sailed away. He said that it was in the mid-sea that it received a destination.
The US imposed a ban on imports of Russian energy products.
The origin of Russian oil has been a topic of discussion recently as reports suggest traders are refining it in other countries before it reaches the US market. Russian oil arrived in New York and New Jersey in April according to the Wall Street Journal.
India is being used as a back door for Russia's crude in Europe.
Unlike much of the Western world, India and China have not criticized Russia for its actions in Ukraine. To that effect, the two countries have been enthusiastic buyers of Russian oil for its cheap prices.
Thanks to oil prices at multi-year highs, Russia earned $24 billion in three months from energy sales to India and China, and is on track to surpass last year's revenue by 20%.