OFAC’s August 12, 2026, fine of more than $60,000 on Rice Lake Weighing Systems demonstrates how U.S. companies can be penalized for actions of a non-U.S. subsidiary.
In 2016, Rice Lake, a Wisconsin company, acquired Dini Argeo, an Italian company which distributed weighing systems to customers including in Iran. At the time, such Iranian sales were permissible under General License H. However, in 2018, after the U.S. withdrew from the Joint Comprehensive Plan of Action with Iran and revoked GL H, Rice Lake informed Dini that sales to Iran were no longer permissible. Rice Lake, however, failed to ensure that its English communication with Dini employees was comprehensive, including that such sales could not be done through a third party, or that the prohibitions were understood.
Although Dini terminated direct sales to Iran, it filled eight orders of weighing equipment to a distributer based in the UAE knowing that the equipment would be diverted to Iran. This knowledge was based on the fact that (i) an employee of the Iranian company with whom Dini had the prior direct relationship sent several emails to Dini asking about Rice Lake’s products, (ii) other emails from the same Iranian company referenced Iran, and (iii) the UAE distributor later disclosed that the goods were destined for Iran.
Importantly, Rice Lake disclosed the violations, initiated an internal investigation and cooperated with OFAC which accounts for the reduced penalty under the Iranian Transactions and Sanctions Regulations.
But OFAC reiterated in its “Compliance Considerations” how critical it is for firms to ensure their foreign-owned entities, including management, fully understand and comply with U.S. sanctions regulations the same as the U.S. parent.
See OFAC Settlement: https://ofac.treasury.gov/media/936706/download?inline