Advisory Firms Beware: OFAC Slaps FTI Consulting $1.05M Over VTB Bank Debt Deals

On June 1, 2026, the U.S. Department of the Treasury's Office of Foreign Assets Control (OFAC) announced a $1,050,000 settlement with FTI Consulting, Inc. ("FTI"), a global advisory and consulting firm.

• This case is a reminder that even sophisticated advisory firms with in-house compliance can err on Russia-related sectoral sanctions.
• It underscores OFAC's Framework for OFAC Compliance Commitments (risk assessment, internal controls, testing, training, etc.).
• This enforcement action promotes greater scrutiny of advisory services in complex international matters.
• Staying proactive on sanctions compliance protects both advisers and clients from civil penalties, reputational harm, and operational disruptions.

Executive Summary

Key lessons from the OFAC settlement with FTI Consulting, Inc. (a global advisory/consulting firm) for $1,050,000 relate to

• FTI agreed to pay this amount to settle its potential civil liability for six apparent violations of Russia-related sectoral sanctions (Directive 1 under EO 13662, implemented in the Ukraine-/Russia-Related Sanctions Regulations).
• Between April 2019 and May 2021, FTI indirectly engaged in prohibited new debt (with maturities longer than 14 days) of VTB Bank OAO, a Russian state-owned bank on OFAC's Sectoral Sanctions Identification (SSI) List.

Key details:

• FTI was engaged (via a global law firm) to provide expert economic consulting services in support of VTB in Singapore litigation.
• FTI issued invoices routed through the law firm, but VTB's delayed or partial payments created extended credit far beyond the 14-day limit.
• FTI continued providing services despite unpaid invoices, effectively extending prohibited debt. OFAC viewed the violations as non-egregious and not voluntarily self-disclosed (though FTI later cooperated and notified OFAC).
• The settlement amount was doubled from the base penalty to emphasise compliance awareness.

Lessons Learned for Lawyers, Advisers, and Clients

• Indirect dealings are fully prohibited: You cannot do indirectly what you cannot do directly. Structuring through intermediaries (e.g., law firms) does not protect you if the economic reality involves prohibited benefits or credit to a sanctioned party.
• Issuing invoices to sanctioned entities can create prohibited "new debt": Delayed payments amplify this risk. Continuing work while invoices remain unpaid for extended periods is highly risky.
• Ongoing monitoring is critical: Initial compliance structures are insufficient if not followed by continuous reassessment, especially when red flags (late payments, direct interactions with the sanctioned party) appear.
• OFAC looks at economic realities, not just formal contracts.
• Post-incident remediation helps mitigation: FTI's later enhancements to policies, training, and risk assessments were noted positively.
• Voluntary self-disclosure is strongly incentivised: It can significantly reduce penalties.
• Advisory and consulting firms face real exposure in Russia/Ukraine-related work, even for seemingly routine services like expert testimony or consulting.
• Clients should demand robust sanctions due diligence from advisers on payment flows and counterparty risks.

Longer read…..

Core Facts of the Violation

• Between April 2019 and May 2021, FTI indirectly dealt in new debt of VTB (a Russian state-owned bank subject to debt restrictions longer than 14 days' maturity) on six occasions.
• FTI provided expert economic consulting services in support of VTB in Singapore litigation, engaged via a global law firm.
• To try to manage risk, FTI structured payments through the law firm (invoices issued to the law firm, with payment contingent on the law firm receiving funds from VTB). However, VTB's delayed or partial payments resulted in extended credit (well beyond 14 days).
• FTI continued performing services and issuing new invoices despite unpaid prior ones, effectively extending prohibited credit to VTB.
• OFAC emphasised that issuing invoices for ultimate payment by a sanctioned entity constitutes "new debt."

OFAC viewed this as

• Non-egregious (no voluntary self-disclosure, though FTI cooperated and later notified OFAC) and
• Doubled the base penalty to $1.05M, partly to promote compliance awareness among similar firms.

What Lawyers, Advisers, and Their Clients Should Learn

1. Indirect dealings are treated the same as direct ones — "You can't do indirectly what you can't do directly."

• Structuring through a law firm or intermediary does not shield you if the economic reality is that you're providing services to, or extending credit benefiting, the sanctioned party.
• OFAC looks at underlying economic and practical realities, not just formal contract language. Here, the law firm explicitly did not assume VTB's credit risk, so FTI bore the exposure.

2. Sectoral sanctions (like debt/equity restrictions on SSI entities) still carry major risks — they are not "light touch."

• Even non-SDN (specially designated national) entities like VTB under Directive 1 prohibit new debt >14 days.
• OFAC explicitly notes that invoice issuance can create prohibited debt. Delayed payments by sanctioned parties significantly amplify this risk.
• Lesson for advisers: Do not assume "it's just consulting" or "through counsel" is automatically safe. Scrutinise every dealing.

3. Robust risk assessment and ongoing monitoring are essential, especially when warning signs appear.

• FTI's compliance team was involved initially and designed a payment structure they thought was compliant — but failed to reassess as payments went unpaid for months (e.g., 99+ days) and FTI kept working.
• Aggravating factors included recklessly missing repeated red flags, such as joining calls with VTB about late payments and continuing services.
• Practical takeaway: Implement controls for ongoing engagements (e.g., payment milestones, automatic pauses on work if payments are delayed beyond permitted terms, re-screening).

4. Understand the full scope of "debt" and "dealings" under sanctions.

• This includes extensions of credit via unpaid invoices.
• Continuing to provide value (services) while credit is outstanding harms sanctions objectives by benefiting the target entity.

5. Compliance program enhancements matter for mitigation.

• OFAC noted FTI's post-incident improvements (better training on sectoral sanctions, law firm engagements, updated policies, risk assessments, and resources post-2022 Ukraine invasion) as mitigating.
• Lawyers/advisers should ensure programs address indirect arrangements, third-party intermediaries, and Russia/Ukraine-related risks specifically.

6. For clients and those engaging advisers:

• Clients (especially in cross-border litigation or deals involving sanctioned jurisdictions) should expect advisers to flag these risks upfront.
• Avoid arrangements that obscure the sanctioned party's involvement or shift credit risk inappropriately.
• Due diligence on counterparties and payment flows is critical — "appearance of compliance" is insufficient.

7. Cooperation helps, but self-disclosure is better.

• FTI's cooperation (including waiving privilege) helped, but lack of voluntary self-disclosure was a factor. OFAC strongly incentivizes early notification and remediation.

Broader Takeaways

• This case is a reminder that even sophisticated advisory firms with in-house compliance can err on Russia-related sectoral sanctions.
• It underscores OFAC's Framework for OFAC Compliance Commitments (risk assessment, internal controls, testing, training, etc.).
• This enforcement action promotes greater scrutiny of advisory services in complex international matters.
• Staying proactive on sanctions compliance protects both advisers and clients from civil penalties, reputational harm, and operational disruptions.

Recommendations:

• Conduct holistic sanctions risk assessments for any Russia-related (or other sanctioned jurisdiction) work.
• Train teams on indirect prohibitions and debt rules.
• Use technology and policies for real-time payment monitoring in high-risk engagements.
• Consult specialists early when engaging with or on behalf of parties in sanctioned sectors.

Official OFAC Sources:

• Main Announcement Page: https://ofac.treasury.gov/recent-actions/20260601_33
• Detailed Enforcement Release (PDF): https://ofac.treasury.gov/media/935651/download?inline

Additional Reliable Reporting:

• GRC Report: https://www.grcreport.com/post/ofac-fines-fti-consulting-1-05-million-over-prohibited-dealings-with-russian-state-owned-bank-vtb
• Washington Trade & Tariff Letter: https://www.wttlonline.com/stories/ofac-settles-with-fti-consulting-over-indirect-dealings-in-vtb-debt,15220

These are the primary authoritative sources for the settlement details. Let me know if you need more analysis or a formatted version for internal use.