Rice Lake Weighing Systems OFAC Settlement: $60.8K (2026)

In November 2016, Rice Lake acquired an Italian company, Dini Argeo S.r.l. (“Dini”), which manufactures and distributes a variety of products used in weighing equipment. At the time, Dini had a business relationship with an Iranian weighing systems company, Pand Weighing Control (“Pandtec”), to which it had sold products prior to being acquired by Rice Lake. Dini continued such sales after the acquisition, as authorized under General License (GL) H, then in effect.

Following the May 8, 2018 announcement of the United States’ withdrawal from the Joint Comprehensive Plan of Action with Iran and the revocation of GL H, Dini, an entity owned or controlled by a U.S. person, was no longer authorized to sell its goods to Iran directly or indirectly. On August 8, 2018, Rice Lake’s Import Export Coordinator emailed Dini’s General Manager to convey that sales to Iran by Rice Lake’s foreign subsidiaries were now prohibited. The English-language email stated, in part, “you are prohibited from any transactions involving Iran, or a citizen of Iran, no matter where located,” and excerpted language from the Iranian Transactions and Sanctions Regulations (ITSR). Rice Lake did not include any further explanation or translation. Moreover, Rice Lake does not appear to have taken sufficient steps to ensure its subsidiary understood the prohibitions, took steps to comply with them, or monitor their adherence to the renewed restrictions.

In keeping with the instruction from Rice Lake, Dini stopped selling directly to Iranian customers at that time. Dini personnel, however, do not appear to have understood that selling goods indirectly to Iran was also prohibited, as would become evident the following year. Between June 2019 and November 2021, Dini fulfilled eight orders of weighing and scale equipment and components worth approximately $121,527 to a United Arab Emirates (UAE)-based distributor of weighing equipment with the knowledge that the UAE distributor would reexport them to Iran. Although sales documents did not identify Pandtec as the ultimate recipient of the goods, there were numerous indications that the goods in question were continuing to reach Pandtec in Iran. For example, on at least five occasions in 2019 and 2020, a Pandtec employee emailed Dini employees with questions about Rice Lake’s products they were potentially interested in or with technical questions about products they had previously purchased. Additionally, all emails from the Pandtec employees throughout this period included references to Iran in the signature block. Dini personnel thus knew or had reason to know that these goods would be reexported to Pandtec, the Iranian company with which Dini had previously had a direct relationship. In addition, the UAE distributor eventually revealed that the goods were ultimately intended for Pandtec.

In late 2021, Rice Lake received a tip that its products were being sold in Iran and immediately initiated an investigation. Rice Lake soon found that the sales by Dini to the UAE distributor were likely being diverted to Iran and promptly directed Dini to cease all future sales to the UAE distributor. Rice Lake subsequently disclosed the violations to OFAC and began implementing compliance enhancements.

Dini’s indirect exportation of weighing equipment on eight occasions between June 2019 and November 2021 with the knowledge that those goods were ultimately destined for Iran appears to have violated ITSR § 560.215(a) because Dini knowingly engaged in trade-related transactions with a person subject to the jurisdiction of the Government of Iran that would be prohibited by ITSR §§ 560.204(a) and 560.206(a)(2) if engaged in by a U.S. person.

OFAC determined that the Apparent Violations were voluntarily self-disclosed and constitute a non-egregious case. Accordingly, under OFAC’s Economic Sanctions Enforcement Guidelines, 31 C.F.R. part 501, app. A, the base civil monetary penalty applicable in this matter equals the sum of one-half of the transaction value for each apparent violation, which is $60,764. The settlement amount of $60,764 reflects OFAC’s consideration of the General Factors under the Enforcement Guidelines.

This enforcement action highlights the sanctions risks U.S. companies with global operations face for the activities of their subsidiaries or affiliates. This is especially the case with sanctions programs like Iran that require foreign entities owned or controlled by U.S. persons to comply to nearly the same extent as their U.S. parent. These considerations are separate and apart from the liability foreign companies face under other prohibitions that can apply to non-U.S. persons, such as for causing U.S. persons to violate sanctions. U.S. individuals and entities should ensure that any foreign subsidiaries that they own or control understand and fully comply with the sanctions prohibitions that apply to them. The compliance failures of a foreign subsidiary can create liability for its U.S. parent. This case also highlights the ongoing risk of goods or items being re-exported to Iran by the non-U.S. subsidiary of a U.S. company.

U.S. companies should ensure their foreign subsidiaries implement effective, risk-based controls to mitigate any sanctions risks. This includes making sure that all relevant personnel, not just management, within foreign subsidiaries understand how OFAC sanctions might impact their day-to-day operations. Misunderstandings can give rise to liability, and enforcement action may be appropriate where reasonable steps were not taken to avoid them. Clear guidance to and regular training of all relevant personnel, not just managers, are essential core elements of any effective sanctions compliance program. Guidance and training should be designed to empower employees who encounter the risks and should be tailored to take into account key differences such as local language and business customs. Oversight controls, such as centralized monitoring and regular testing and auditing, also provide critical opportunities to identify weaknesses and take corrective action before violations occur. Controls should also take into account the specific risk factors facing a given entity. For example, companies with counterparties located in jurisdictions known to be of high risk for diversion, such as the UAE, should pay particular attention to the risks of indirect dealings with parties subject to sanctions.

Finally, this case underscores the importance of paying careful attention to developments in the sanctions programs OFAC administers and enforces. Sanctions risk is dynamic and can change quickly for numerous reasons, including because the prohibitions themselves can shift.

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