Financial Regulation: OFAC Penalizes Overdue Invoices as Prohibited Credit Extensions

Providing professional services to a restricted entity carries high regulatory risks, but allowing that entity to fall behind on payments can lead to severe enforcement actions. FTI Consulting recently demonstrated this vulnerability by agreeing to a $1.05 million settlement with the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) regarding Russian trade restrictions.

Between 2019 and 2021, the consulting group provided economic advisory services to Russia’s sanctioned VTB Bank. To manage the compliance hurdles, both the underlying engagement and the billing streams were routed through a third-party intermediary law firm. However, OFAC enforcement highlighted two critical compliance failures. First, shifting the payment structure through a legal intermediary offers no shield, as regulatory bodies focus entirely on the ultimate end-beneficiary of the services. Second, FTI continued to perform work despite multiple invoices remaining unpaid for extended periods. OFAC determined that carrying these overdue balances effectively amounted to an unauthorized extension of indirect credit to a blocked entity.

This enforcement case delivers a vital message for global organizations: commercial payment delays are closely monitored and can be reclassified as prohibited financial support. To mitigate these risks, implementing a routine corporate audit of account receivables is no longer just a financial necessity, but a core compliance requirement. Organizations must enhance their internal screening protocols to ensure that transactional flows and outstanding credit lines with foreign counterparties strictly adhere to current international regulations.