FACTBOX - U.S. sanctions legislation against Iran

Iran's President Mahmoud Ahmadinejad gestures during a news conference after his address to the Durban Review Conference on racism at the United Nations European headquarters in Geneva April 20, 2009.

REUTERS - U.S. President Barack Obama will sign a law on Thursday imposing tough new sanctions on Iran's banking and energy sectors, hoping to curb nuclear work that Tehran says is for energy production but Washington suspects is aimed at bomb-making.

The measure, which goes beyond recent U.N. Security Council and European Union sanctions, will penalize companies from other countries that do business with Iran.

U.S. companies are already prohibited from trading with and investing in Iran. Foreign companies that invest in Iran's energy sector can be sanctioned under existing U.S. law. But no penalties have ever been imposed under this law.

Following are key provisions of the measure, which Obama is scheduled to sign into law at 6:15 p.m. EDT/2215 GMT:

FOREIGN BANKS

The legislation attempts to make foreign banks choose between doing business with Iran or with the United States.

Under the measure, the U.S. Treasury Department would require American banks to prohibit or impose strict conditions on "correspondent" or "payable through" accounts of any foreign banks working with key Iranian entities, especially its Revolutionary Guard Corps.

This targets foreign banks that deal with Iranian companies sanctioned by the U.N. Security Council, as well as those that launder money to aid Iran's nuclear program or are already blacklisted by the U.S. Treasury Department. It also targets foreign banks that facilitate what the United States calls Tehran's support for terrorist activity.

U.S. BANKS

Penalties will be imposed on U.S. banks if their foreign subsidiaries are doing any business with the Revolutionary Guard or its "front companies" or affiliates.

These U.S. banks may be subjected to civil penalties of up to $250,000 or an amount twice the value of the actual transaction. Criminal penalties may be up to $1 million per transaction and include prison sentences of up to 20 years.

GASOLINE SUPPLIERS, ENERGY SECTOR DEVELOPERS

The legislation would sanction any company worldwide that exports gasoline or other refined petroleum products to Iran, or that provides Iran with goods or services that help it expand its own output of these products.

Companies that finance, broker or underwrite the shipments or deliver the gasoline also would be subject to sanctions. Likewise, companies that sell Iran goods, services, or know-how that assists it in developing its energy sector would be sanctioned.

The U.S. president would choose from a menu of possible sanctions to impose against violators, including:

-- Foreign exchange: Companies could not engage in currency exchanges through U.S. banks.

-- Banking transactions: Companies could not use U.S. financial institutions for credit transactions or payments.

-- Property transactions: Companies could not engage in property transactions with U.S. citizens or companies.

PRESIDENTIAL WAIVER

The U.S. president could waive sanctions on a company for 12 months on a case-by-case basis, if the company is from a country that is cooperating with multilateral efforts to isolate Iran.

The president must certify to Congress that the waiver is necessary to U.S. national security interests.

DIVESTMENT

State and local governments and private asset fund managers could divest from firms that invested million of dollars in Iran's energy sector without being sued by fund shareholders.

HUMAN RIGHTS

The measure requires the U.S. president to compile a public list of individuals in Iran who are complicit in human rights violations. They would then be banned from getting U.S. visas and would have their financial assets frozen in U.S. banks.

COMMUNICATIONS MONITORING

Companies that supply Iran with technology used to restrict free speech, such as communications monitoring technology, could not get U.S. government contracts under the bill. The Iranian opposition movement's communications have been disrupted by the government.

CONTROLS ON SENSITIVE TECHNOLOGY

The bill would strengthen export controls to try and stop the illegal black market export of sensitive technology to Iran through other countries and allow the U.S. president to impose severe export restrictions to countries that will not cooperate.

(Reporting by Susan Cornwell, Editing by Xavier Briand and Vicki Allen)