diff --git a/apps/facilitator/src/__tests__/config.test.ts b/apps/facilitator/src/__tests__/config.test.ts
new file mode 100644
index 0000000..9a7abea
--- /dev/null
+++ b/apps/facilitator/src/__tests__/config.test.ts
@@ -0,0 +1,42 @@
+import { describe, it, expect, afterEach } from "vitest";
+import { loadConfig } from "../config.js";
+
+const BASE_ENV = {
+  DATABASE_URL: "postgres://user:pass@localhost:5432/db",
+  SOLANA_PRIVATE_KEY: "test-key",
+};
+
+describe("loadConfig boolean env vars", () => {
+  const original = { ...process.env };
+
+  afterEach(() => {
+    process.env = { ...original };
+  });
+
+  function load(extra: Record<string, string>) {
+    process.env = { ...BASE_ENV, ...extra };
+    return loadConfig();
+  }
+
+  it.each([
+    ["false", false],
+    ["0", false],
+    ["FALSE", false],
+    ["true", true],
+    ["1", true],
+    ["TRUE", true],
+  ])("parses SUPABASE_SMTP_CONFIGURED=%s as %s", (value, expected) => {
+    expect(load({ SUPABASE_SMTP_CONFIGURED: value }).SUPABASE_SMTP_CONFIGURED).toBe(expected);
+    expect(load({ OFAC_ENABLED: value }).OFAC_ENABLED).toBe(expected);
+  });
+
+  it("defaults both flags to false when unset", () => {
+    const config = load({});
+    expect(config.SUPABASE_SMTP_CONFIGURED).toBe(false);
+    expect(config.OFAC_ENABLED).toBe(false);
+  });
+
+  it("rejects values that are not a recognized boolean", () => {
+    expect(() => load({ SUPABASE_SMTP_CONFIGURED: "yes" })).toThrow(/SUPABASE_SMTP_CONFIGURED/);
+  });
+});
diff --git a/apps/facilitator/src/config.ts b/apps/facilitator/src/config.ts
index 0b48238..50a0715 100644
--- a/apps/facilitator/src/config.ts
+++ b/apps/facilitator/src/config.ts
@@ -1,5 +1,13 @@
 import { z } from "zod";
 
+/**
+ * Boolean env var. Unlike z.coerce.boolean(), which treats any non-empty
+ * string (including "false") as true, this accepts only true/false/1/0.
+ */
+const envBoolean = z
+  .enum(["true", "false", "1", "0", "TRUE", "FALSE"])
+  .transform((v) => v === "true" || v === "1" || v === "TRUE");
+
 const envSchema = z.object({
   PORT: z.coerce.number().default(4402),
   NODE_ENV: z.enum(["development", "production", "test"]).default("development"),
@@ -45,7 +53,7 @@ const envSchema = z.object({
   SHUTDOWN_TIMEOUT_MS: z.coerce.number().default(10_000),
 
   /** Enable OFAC compliance screening on settlement routes */
-  OFAC_ENABLED: z.coerce.boolean().default(false),
+  OFAC_ENABLED: envBoolean.default("false"),
   /** OFAC SDN list refresh interval in milliseconds (default: 24 hours) */
   OFAC_REFRESH_INTERVAL_MS: z.coerce.number().default(86_400_000),
 
@@ -60,7 +68,7 @@ const envSchema = z.object({
    * When false, /signup returns 503 instead of falsely reporting that an OTP
    * email was sent (Supabase's built-in email service silently drops mail).
    */
-  SUPABASE_SMTP_CONFIGURED: z.coerce.boolean().default(false),
+  SUPABASE_SMTP_CONFIGURED: envBoolean.default("false"),
 }).refine(
   (data) => data.SOLANA_PRIVATE_KEY || data.KORA_RPC_URL,
   { message: "At least one of SOLANA_PRIVATE_KEY or KORA_RPC_URL is required", path: ["SOLANA_PRIVATE_KEY"] },