One email in the wrong language: the Rice Lake OFAC settlement.
What a Wisconsin scale manufacturer’s Italian subsidiary settlement means for U.S. parents with European operating companies.
Enforcement · 11 Oct 2026
On 8 August 2018 a coordinator at a Wisconsin scale manufacturer emailed the general manager of its Italian subsidiary to say sales to Iran were now prohibited. The email was in English and excerpted the regulation, with no further explanation or translation. OFAC described inadequate explanation of indirect Iran trade and insufficient follow-through after that instruction. On 12 August 2026 Rice Lake Weighing Systems agreed to pay $60,764 to settle eight apparent violations of the Iranian Transactions and Sanctions Regulations — a failure almost any U.S. group with a European operating company can reproduce.
What happened
Rice Lake acquired Dini Argeo S.r.l. in November 2016. According to the release, Dini already sold to an Iranian weighing systems company and continued those sales under General License H, then in effect. OFAC revoked that license on 27 June 2018 and provided a limited wind-down authorization through 4 November 2018, as described in its June 2018 final rule, 83 Fed. Reg. 30,335, 30,336, former § 560.537. Rice Lake’s response was the August 2018 email, telling Dini it was "prohibited from any transactions involving Iran," with no further explanation or translation, and Rice Lake did not appear to have taken sufficient steps to ensure the subsidiary understood or complied.
Dini did what it thought it was told: it stopped selling directly to Iranian customers. Between June 2019 and November 2021 it filled eight orders worth roughly $121,527 for a UAE-based distributor, knowing the goods would be re-exported to the same Iranian company. On at least five occasions a Pandtec employee emailed Dini staff with a signature block naming Iran. In late 2021, a tip prompted Rice Lake to investigate, halt the sales, disclose to OFAC, and remediate.
Why "no direct sales" was the wrong instruction
ITSR § 560.215(a) bars a U.S.-owned or -controlled foreign entity from knowingly engaging in a direct or indirect transaction with the Government of Iran or a person subject to Iranian jurisdiction when that transaction would be prohibited if undertaken by a U.S. person or in the United States, subject to applicable authorization. Section 560.204 prohibits covered supply from the United States or by a U.S. person wherever located, including supply to a third-country person with knowledge or reason to know the goods are intended for Iran. A UAE distributor is a person in a third country; the signature-block emails supplied reason to know. Section 560.206(a)(2) also prohibits a U.S. person’s covered dealings in goods for direct or indirect supply to Iran. Under § 560.215(b)(2), "knowingly" includes actual knowledge or reason to know. OFAC identified Dini’s knowledge or reason to know the destination as an aggravating factor even though it mistakenly believed the indirect sales were permissible.
The restriction needed practical explanation. OFAC identified Dini’s reckless disregard and Rice Lake’s failure to exercise due caution or care by not sufficiently explaining indirect Iran dealings or the prohibition’s practical application. Making instructions understandable to transaction-facing staff is a practical recommendation; it should not be confused with a separate OFAC finding that translation alone would have prevented the violations.
The parent is liable by design. Note 4 to § 560.215 makes a U.S. person subject to civil penalties when a foreign entity it owns or controls violates the section — and the control test reaches beyond a majority stake to anyone who otherwise controls the entity’s actions, policies, or personnel decisions.
The penalty
Voluntary self-disclosure and a non-egregious finding put the base penalty at one-half of transaction value: $60,764, and Rice Lake settled at exactly that — 100% of base. The mitigation was close to a model response: no enforcement action in the five years preceding the earliest transaction, a very small share of sales, prompt remediation with outside counsel, high cooperation, an agreed tolling. The final settlement remained equal to base; the release does not quantify the effect of any individual factor. This outcome does not establish how remediation will affect another case; the Guidelines permit remediation to mitigate a penalty.
What this means for you
Clear language can improve a control, and training should reach the people who touch the order — not just the general manager who read the email. Treat a counterparty’s signature block as evidence: OFAC described emails from Pandtec employees in 2019 and 2020 whose signature blocks referred to Iran. And check whether you sit inside § 560.215 at all — the control test can catch a minority investor with negotiated management rights, not just a majority owner.
The practical lesson is to explain how the prohibition reaches indirect orders and check that transaction-facing staff can apply it. We help U.S. groups and their European subsidiaries assess how a prohibition applies to the orders their staff handle. Contact Zimmermann Law to talk it through.
This post provides general information, not legal advice. Sanctions analysis is fact-specific and changes over time.
Sources: OFAC Rice Lake release, August 12, 2026, pp. 1–4; 31 C.F.R. § 560.215, note 4; Enforcement Guidelines § III.F and § V.B.2(b). Federal requirements are mandatory within scope; the Guidelines describe enforcement approach. Historical GL H rule cited above. Regulations and anchors checked October 9, 2026 (eCFR Title 31 through October 7; amended October 6). This historical account establishes no current transaction permission.
This post is for general information and is not legal advice.
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