UPDATE 1-US targets two UAE firms for dealing with blacklisted Iran banks

(Adds details of sanctions; testimony by State Department official, background)
WASHINGTON, May 15 : The United States blacklisted an exchange house and a trading company based in the United Arab Emirates on Wednesday, saying they had dealt with Iranian banks that Washington has declared off limits.
The US Treasury Department said Al Hilal Exchange and Al Fida International General Trading had provided financial services to Iran’s blacklisted Bank Mellat.
The US Treasury’s action bars US individuals and companies from dealing with the two UAE-based firms, effectively cutting them off from the US financial system, and requires the freezing of any assets the companies may have under US jurisdiction.
In addition, it also exposes them to the possibility of criminal penalties, ranging up to 20 years in prison, $500,000 in fines for a corporation and $250,000 for an individual. Civil penalties of up to $50,000 per violation may also be imposed administratively.
The step is the latest by Washington to try to choke off funding for Iran’s nuclear program, which the West says is being used to develop weapons. Iran says the program is for civilian purposes.
Meanwhile, US Under-Secretary of State Wendy Sherman told US lawmakers Iran’s unelected Guardian Council were using “vague criteria” to eliminate potential candidates for the country’s June 14 presidential poll.
“Without a transparent process, it is difficult for us to say whether Iran’s elections will be free, fair, or represent the will of the Iranian people,” Sherman told the Senate Foreign Relations Committee in testimony prepared for delivery.
“We take no sides in Iran’s presidential election,” she said. “But we do call on the Iranian authorities to conduct a free and fair election that not only conforms to international standards of transparency and accountability but is just and represents the will of the Iranian people.”
(Reporting by Arshad Mohammed; Writing by Lesley Wroughton; Editing by Vicki Allen and David Brunnstrom)