FTI Consulting, Inc. OFAC Settlement: $1.1M (2026)

FTI was engaged by a global law firm to provide expert economic consulting services on behalf of VTB Bank OAO for a civil suit in Singapore. VTB was designated on OFAC's Sectoral Sanctions Identification (SSI) list and subject to Directive 1 under Executive Order 13662, which prohibits U.S. persons from dealing in new debt of more than 14 days maturity of any designated person and from engaging in any transaction that evades or avoids those prohibitions. OFAC guidance confirms that issuance of an invoice by a U.S. person constitutes new debt subject to Directive 1 restrictions, including where an SSI entity is an indirect borrower.

FTI's compliance officials structured the engagement through the law firm as an intermediary: FTI would issue invoices to the law firm, and the law firm would pay FTI only upon receiving payment from VTB. FTI had no recourse against the law firm unless the law firm first received payment from VTB, and no recourse against VTB directly.

Between April 2019 and November 2019, FTI issued six invoices totaling approximately $353,862. The first two, sent in April 2019 and totaling approximately $54,000, were forwarded by the law firm to VTB. FTI then issued a retainer invoice of approximately $90,000 on June 7, 2019; VTB did not make the retainer payment, yet FTI commenced work on a second engagement. By July 13, 2019, when FTI issued its fourth invoice, the first three invoices were outstanding for 99, 92, and 35 days respectively. FTI issued a fifth invoice on July 24, 2019, and a sixth and final invoice on November 26, 2019. FTI also joined a call with the law firm and VTB to discuss overdue payments. The law firm confirmed it did not bear the credit risk of VTB's non-payment.

By March 2020, FTI had received only one partial payment of approximately $57,000, made 90 days after that invoice was issued. A second payment of approximately $19,400 followed in June 2020, 198 days after its invoice was issued. FTI continued pursuing outstanding amounts until May 2021, when the law firm notified FTI it was no longer representing VTB.

OFAC determined that by indirectly issuing invoices that VTB was ultimately responsible for paying, FTI extended new debt of longer than 14 days maturity to VTB on six occasions, appearing to violate §§ 589.202 and 589.213 of the Ukraine-/Russia-Related Sanctions Regulations (URSR), 31 C.F.R. part 589.

OFAC determined that FTI did not voluntarily self-disclose the apparent violations, notwithstanding its notification to OFAC, and that the apparent violations constitute a non-egregious case. Under OFAC's Economic Sanctions Enforcement Guidelines, 31 C.F.R. part 501, app. A., the base civil monetary penalty applicable in this matter equals the applicable schedule amount of $525,000.

The settlement amount of $1,050,000, aggravated above the base penalty, reflects OFAC's consideration of the General Factors under the Enforcement Guidelines, in particular the importance of anticipated impact of promoting future compliance by similarly situated persons.

This case highlights how OFAC regulations apply to prohibited dealings conducted indirectly just as they do to those committed directly. Transacting indirectly through another party does not make permissible what is otherwise prohibited, regardless of whether the relevant OFAC program broadly proscribes dealing with a sanctioned person or restricts specified transactions. Indirect dealings risk engaging in evasion or avoidance rather than achieving compliance. U.S. persons cannot structure around sanctions prohibitions by having another party transact with a sanctioned entity on behalf of the U.S. person.

This case also underscores that U.S. persons must exercise caution when dealing with sanctioned persons who are subject to less-than-full-blocking measures. Such prohibitions can still be expansive in their application. While organizations may engage in certain transactions with less-than-fully blocked entities, it is imperative that they scrutinize each dealing to ensure that the underlying activity as well as any related transactions do not violate OFAC prohibitions.

When assessing risks, firms should scrupulously account for the economic and practical realities of a proposed dealing or transaction and use appropriate controls to avoid arrangements that may merely create the appearance of compliance or unintentionally result in prohibited conduct. OFAC prohibitions extend to efforts to evade or avoid restrictions as well. In the case of debt restrictions, a sanctioned entity's failure to make contracted or expected payments may create significant sanctions risks.

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