This is the first in a series that takes one recent enforcement release and reads it closely: what the regulator says happened, how the penalty was reached, and what it credits and criticises. Every statement below comes from the release itself, which is linked from the sources.
What the release says happened
FTI Consulting, a Washington-based advisory firm, agreed on 1 June 2026 to pay OFAC $1,050,000. Between April 2019 and May 2021, the release says, it “indirectly dealt in prohibited debt” of VTB Bank, a Russian state-owned bank, on six occasions.
The prohibition is narrow. VTB was on OFAC’s sectoral sanctions list, under Directive 1, which bars US persons from dealing in new debt of more than 14 days’ maturity of a listed bank. It is not an asset freeze, and the release itself says organisations “may engage in certain transactions” with entities subject to less-than-full blocking. The rule is about how long VTB could leave a US firm unpaid.
The structure, and why it did not work
A law firm asked FTI to provide expert economic analysis for a lawsuit in Singapore in which VTB was the law firm’s client. According to the release, FTI’s chief compliance officials recognised the sanctions risk in early 2019 and advised a payment structure: FTI would contract with the law firm, invoice the law firm, and be paid by the law firm once the law firm had been paid by VTB. FTI had no recourse against the law firm if VTB did not pay.
OFAC’s position is that this changed nothing. Its guidance says that invoicing by a US person is new debt, and that debt may not be extended to a non-sanctioned party if a sanctioned entity is the indirect borrower. The release says that by “indirectly issuing invoices that VTB was ultimately responsible for paying, FTI extended new debt to VTB”.
The record it lays out is a sequence of small warnings:
- Two invoices totalling about $54,000 went out in April 2019 and were still unpaid when work began on a second engagement.
- The second engagement used the same structure with a retainer of about $90,000, invoiced in June 2019. VTB did not pay it, and FTI began work anyway.
- By the fourth invoice, in July 2019, the first three had been outstanding for 99, 92 and 35 days. FTI kept working and issued a fifth.
- In September 2019, VTB paid about $57,000 towards the retainer invoice, 90 days after it was issued. In June 2020 it paid about $19,400 on another, 198 days after issue.
- By March 2020, six invoices worth about $353,862 had produced one partial payment.
- FTI took part in a call with the law firm and VTB about the late payments. The law firm told FTI that it “did not take on the credit risk” of VTB’s non-payment.
Several of these are what the release later lists as warning signs.
How the penalty was reached
The release applies the Enforcement Guidelines directly.
- Egregious or not. OFAC found the case non-egregious.
- Self-disclosed or not. It found that FTI “did not voluntarily self-disclose”, “notwithstanding its notification to OFAC”. FTI did tell OFAC about a potential violation, but only after the conduct had ended and, by the release’s account, after investigating it.
- Base amount. Non-egregious and not self-disclosed means the base is the applicable schedule amount, here $525,000.
- Adjustment. The settlement is $1,050,000, exactly double the base. The release says the amount, “aggravated above the base penalty”, reflects the general factors, “in particular the importance of anticipated impact of promoting future compliance by similarly situated persons”.
That last step is the unusual one. The Guidelines say each general factor may be mitigating or aggravating, but the adjustments they list are mostly reductions. This release uses the general-factors analysis to go up, and says why: to deter other firms from treating a pass-through arrangement as protection.
What OFAC criticised and what it credited
Criticised: senior managers “recklessly missed multiple warning signs”; the indirect arrangement caused harm “by obscuring transaction activity that, under a direct payment arrangement, could have successfully been screened against by intermediary parties”; and FTI is a large, sophisticated company.
Credited: a statute-of-limitations tolling agreement and comprehensive documentation, including waiving privilege; volumes that were very small compared with the firm’s overall payments; upgrades to its compliance programme, including training on sectoral sanctions and on law-firm engagements; and no penalty or finding of violation in the previous five years.
The point the release makes
OFAC states the principle as “it is prohibited to do indirectly what one cannot do directly”, and says it “will look closely at the underlying economic and practical realities governing formal arrangements”. It adds that a sanctioned entity’s failure to make expected payments “may create significant sanctions risks”. The compliance team had seen the exposure, designed around it, and the design was judged on what actually happened to the money.
What this note does not do
It does not say the firm intended to evade anything: the release describes senior managers as reckless and does not allege intent. Nor does it claim the structure was unusual. The release does not say how common such arrangements are.
It is not the only Directive 1 case on this site, either. The State Street / Charles River case describes the same debt-tenor mechanism worked from the other direction: instead of structuring a payment arrangement around the maturity limit, the company at the centre of that case simply redated invoices so late payments would appear to fall inside it.