FTI Consulting, Inc. has agreed to pay $1,050,000 to settle potential civil liability for apparent violations of U.S. sanctions on Russia’s financial sector, the Treasury Department’s Office of Foreign Assets Control (OFAC) announced Monday.

The Washington, D.C.-based consulting firm indirectly dealt in prohibited debt of VTB Bank OAO, a Russian state-owned bank subject to sectoral sanctions, on six occasions between April 2019 and May 2021, according to OFAC. The violations occurred when FTI extended debt of more than 14 days maturity to VTB by indirectly issuing invoices that went unpaid or were paid well past the two-week deadline set under Executive Order 13662, the agency said. 

The consultancy continued to perform services for VTB’s benefit and issue new invoices despite the fact that earlier ones remained outstanding, OFAC said.

According to the enforcement release, FTI was engaged by an unnamed global law firm to provide expert economic consulting services in support of VTB in a civil suit in Singapore. To manage sanctions risk, FTI’s compliance officials structured the arrangement so that FTI invoiced the law firm rather than VTB directly. The law firm would pay FTI only after receiving payment from VTB.

But the structure did not shield FTI from liability, OFAC said. The law firm explicitly told FTI it did not assume the credit risk of VTB’s non-payment, meaning VTB remained the ultimate obligor. FTI issued six invoices totaling approximately $353,862. As of March 2020, only one partial payment of roughly $57,000 had been received.

FTI stopped pursuing collection after the law firm terminated its relationship with VTB in May 2021, and subsequently submitted a notification of a potential violation to OFAC.

In assessing its monetary settlement, the office determined that FTI’s senior management recklessly disregarded multiple warning signs despite awareness of VTB’s sanctions status at the outset. The enforcement ultimately underscores the fact that “U.S. persons cannot structure around sanctions prohibitions by having another party transact with a sanctioned entity on behalf of the U.S. person,” OFAC said.