Rice Lake Weighing Systems Settles with OFAC for $60,764 Over Its Italian Subsidiary

OFAC announced a $60,764 settlement with Rice Lake Weighing Systems, Inc. on August 12, 2026. Rice Lake makes scales and weighing equipment in Wisconsin, and nobody in Wisconsin committed the apparent violations. An Italian subsidiary did, selling to a distributor in Dubai. Rice Lake had told that subsidiary to stop selling to Iran. The subsidiary stopped selling to Iran directly, kept selling indirectly, and OFAC held the U.S. parent responsible for the difference.

The penalty is small. The compliance failure behind it is one we see over and over in companies that own or control foreign subsidiaries.

What Rice Lake and Dini Argeo Did

In November 2016, Rice Lake acquired Dini Argeo S.r.l. (“Dini”), an Italian manufacturer of weighing products. Dini came with an existing customer in Iran: Pand Weighing Control, called “Pandtec” in the enforcement release.

Those sales were lawful when the deal closed. OFAC had issued General License H in January 2016, authorizing foreign entities owned or controlled by U.S. persons to engage in transactions with persons subject to the jurisdiction of the Government of Iran that 31 C.F.R. § 560.215 would otherwise prohibit. Dini fit that description and kept selling to Pandtec under GL H after Rice Lake bought it. Then the authorization went away.

The United States announced its withdrawal from the Joint Comprehensive Plan of Action on May 8, 2018. OFAC revoked General License H on June 27, 2018 and replaced it with a wind-down authorization that expired November 4, 2018. After that date, Dini was an entity owned or controlled by a U.S. person with no authorization to sell to Iran, directly or indirectly.

The Email That Was Not Enough

Rice Lake noticed the change. On August 8, 2018, its Import Export Coordinator emailed Dini’s General Manager to say that sales to Iran by Rice Lake’s foreign subsidiaries were now prohibited. The email quoted the Iranian Transactions and Sanctions Regulations (ITSR) and stated that “you are prohibited from any transactions involving Iran, or a citizen of Iran, no matter where located.”

It went out in English, with no translation and no further explanation of what the regulation meant in practice. OFAC found that Rice Lake did not appear to have taken sufficient steps to confirm that its Italian subsidiary understood the prohibition, was complying with it, or was being monitored for adherence. Dini did exactly what the email literally said: it stopped selling directly to Iranian customers.

Nobody there appears to have understood that routing the same goods to the same Iranian customer through a third country was just as prohibited.

Eight Shipments Through the UAE

Between June 2019 and November 2021, Dini filled eight orders for weighing and scale equipment and components worth roughly $121,527. Every one went to a distributor in the United Arab Emirates, and all of it was bound for Iran.

Sales documents did not name Pandtec. Everything else did:

• A Pandtec employee emailed Dini staff at least five times in 2019 and 2020, sometimes with pre-sale questions about Rice Lake products, sometimes with technical questions about products already purchased.
• A reference to Iran in the signature block, every time.
• The UAE distributor eventually revealed outright that the goods were intended for Pandtec.

In late 2021, Rice Lake received a tip that its products were turning up in Iran. It investigated, concluded the UAE sales were probably being diverted, cut Dini off from the distributor, disclosed to OFAC, and started closing the gaps.

The Rule Rice Lake’s Subsidiary Broke

OFAC concluded that Dini’s eight shipments apparently violated ITSR § 560.215(a). That provision reaches entities owned or controlled by a U.S. person and established or maintained outside the United States, and it prohibits them from knowingly engaging in transactions, directly or indirectly, with persons subject to the jurisdiction of the Government of Iran that would violate ITSR §§ 560.204(a) or 560.206(a)(2) if a U.S. person engaged in them.

Section 560.215 catches companies off guard in two ways, and both are in this record.

Start with its reach. An Italian company that manufactures in Italy, invoices in euros, and employs only Italian nationals answers to U.S. sanctions on Iran for one reason: who owns it. That test is not the “50 percent rule” that governs blocked-property analysis, which asks whether blocked persons hold the equity, and it is not the causing-a-violation theory that reaches non-U.S. persons with no American ownership. Ownership or control by a U.S. person is the whole trigger, and control alone is enough.

The second surprise is that “indirect” is no loophole. The ITSR prohibits the export or reexport of goods to Iran, including exports to a third country undertaken with knowledge or reason to know that the goods are intended for Iran. Selling to a distributor in Dubai does not launder the destination.

How OFAC Arrived at $60,764

OFAC determined the apparent violations were voluntarily self-disclosed and non-egregious. Under the Economic Sanctions Enforcement Guidelines at 31 C.F.R. part 501, app. A, that combination sets the base civil monetary penalty at one-half of the transaction value for each apparent violation.

One-half of the transaction value came to $60,764, and that is the settlement. Two things fall out of the arithmetic.

The voluntary self-disclosure did the heavy lifting. Without it, the base penalty for the same non-egregious conduct would have been the applicable schedule amount for each of the eight violations rather than half the value of the goods, capped at the statutory maximum per violation. The disclosure is why this case resolved in five figures.

Nothing else moved the number. The settlement landed on the base penalty exactly, which means the aggravating and mitigating factors offset each other.

Aggravating Factors

• Dini acted with reckless disregard for U.S. sanctions requirements, making indirect sales it should have known were as prohibited as direct ones. OFAC faulted Rice Lake here too, for never explaining the risks of indirect dealings with Iran or how the prohibition worked in practice.
• Whatever Dini believed about whether the sales were permitted, it knew or had reason to know the goods were ultimately destined for Iran.
• The equipment was of the kind used by commercial businesses and likely furthered economic activity inside Iran, and the sales ran for more than two years.

Mitigating Factors

• Neither Rice Lake nor Dini had been the subject of an OFAC enforcement action in the five years before the earliest transaction at issue.
• The transactions were a very small portion of either company’s sales during the period.
• Rice Lake took prompt remedial measures: a comprehensive investigation with outside sanctions counsel, a search for other possible violations, and an expanded compliance program with training for subsidiary employees, vetting of end distributors, and reexport control warnings on commercial invoices.
• Rice Lake was highly cooperative, answering multiple OFAC inquiries and document requests on time and agreeing to toll the statute of limitations.

What U.S. Companies With Foreign Subsidiaries Should Take From This

The compliance considerations section of the release makes a point OFAC has repeated for years: a foreign subsidiary’s failures land on the U.S. parent. Under the Iran program and others like it, the foreign entities you own or control have to comply nearly as fully as you do.

Six things in this record are worth running against your own program.

Send the guidance in a language your people actually read. OFAC called out the English-only email; the release ties guidance and training to local language and local business custom. A quoted regulation sent across a language barrier documents that you tried. It proves nothing about whether anyone understood.

Training has to reach the people who touch the risk. OFAC’s language is direct: clear guidance and regular training for all relevant personnel, not just managers, are core elements of an effective sanctions compliance program. The Dini sales staff fielding Pandtec’s emails needed to hear it. The August 2018 email went to a General Manager.

Say the word “indirect” out loud. Rice Lake’s instruction never explained that routing an order through a UAE intermediary changes nothing. Guidance that skips transshipment, reexport, and end-user diversion invites exactly the misunderstanding Dini fell into.

High-diversion jurisdictions are high-risk counterparties. OFAC named the UAE as a jurisdiction known to be of high risk for diversion. Distributors there warrant end-user vetting and destination control language in the paperwork, plus somebody checking where the goods actually went, the step that went missing here for more than two years. A clean screening result is not diligence.

The file usually tells you before OFAC does. At least five emails from an Iranian company, references to Iran in the signature blocks, spread across two years. Catching that did not take a screening tool. It took centralized monitoring, testing, and auditing: somebody reading the correspondence, somebody checking what the subsidiary sold and to whom.

Re-paper the program when the rules move. General licenses get revoked, and wind-down periods end. This entire case flows from an arrangement that was lawful until 2018 and then was not, a pattern we saw again when OFAC revoked Iran General License X.

Voluntary Self-Disclosure Cut This Penalty in Half

The most valuable thing Rice Lake did was tell OFAC. For non-egregious conduct, a qualifying voluntary self-disclosure moves the base penalty off the applicable schedule and onto one-half of the transaction value, and it weighs in your favor as a General Factor on top of that. Compare OFAC’s $3.1 million settlement with Exodus Movement, another Iran case, where OFAC found the conduct was not voluntarily self-disclosed.

The requirements are unforgiving. A disclosure has to be genuinely voluntary, meaning OFAC or another agency has not already learned of the conduct through another channel. It also has to be complete, either when filed or through a follow-up report submitted within a reasonable time that gives OFAC a full understanding of the circumstances. In practice that means running a real internal investigation. The window can close from the outside too: FinCEN pays whistleblower awards for information leading to sanctions enforcement actions with penalties over $1 million, and a disclosure filed after somebody else’s report is not voluntary.

Companies lose the credit in both directions, by waiting until someone else reports and by going to OFAC before they understand their own facts. Counsel belongs in the room before the first call.

Frequently Asked Questions

Can OFAC penalize a U.S. company for what its foreign subsidiary does?

Yes, and the Iran program is the clearest example: ITSR § 560.215 applies directly to entities owned or controlled by U.S. persons and established or maintained outside the United States, and it makes the U.S. person civilly liable when an entity it owns or controls violates that prohibition. Rice Lake settled its own and Dini’s potential civil liability in a single agreement.

Does selling through a distributor in a third country avoid U.S. sanctions on Iran?

Routing goods through a third-country distributor does not avoid U.S. sanctions on Iran. Exporting to an intermediary with knowledge or reason to know that the goods are intended for reexport to Iran is prohibited, and OFAC treats a UAE distributor with an Iranian end user the same way it treats a shipment sent to Iran directly. That is what the eight Dini shipments were.

What does a voluntary self-disclosure to OFAC actually save?

For non-egregious conduct, a qualifying voluntary self-disclosure sets the base penalty at one-half of the transaction value for each apparent violation instead of the applicable schedule amount, and OFAC also weighs the disclosure as a mitigating General Factor. In Rice Lake’s case that framework produced a $60,764 settlement on roughly $121,527 of sales.

Talk to an OFAC Sanctions Attorney

Rice Lake got the hard parts right. It investigated as soon as it heard something, brought in sanctions counsel, disclosed, and repaired the program. The one thing it never did was confirm that a subsidiary on another continent understood a prohibition the parent had already spotted. The gap cost $60,764 and several years of an OFAC investigation.

At Sanctions Law Center, our OFAC attorneys build and stress-test sanctions compliance programs for companies with foreign subsidiaries and distributor networks, prepare voluntary self-disclosures, and represent clients through OFAC enforcement and investigations. If you have found something in your own supply chain that looks like the Rice Lake facts, the clock on a voluntary disclosure is already running.

Contact us today or call (202) 888-9011 to schedule a consultation.