The US has imposed sanctions on an Iran-based foundation which issued a multimillion dollar bounty for the killing of novelist Sir Salman Rushdie.

The 75-year-old Satanic Verses author, who was stabbed as he was about to give a lecture in New York this year, has been the target of a decades-old fatwa by the late supreme leader Ayatollah Ruhollah Khomeini calling for his death.

The 15 Khordad Foundation, which is affiliated with the supreme leader, has committed millions of dollars to anyone willing to carry out the act, and has raised the reward for targeting the author since placing a bounty on his life in 1989, the US Department of the Treasury’s Office of Foreign Assets Control (OFAC) said on Friday.

Brian E Nelson, under secretary of the treasury for terrorism and financial intelligence, said: “The United States will not waver in its determination to stand up to threats posed by Iranian authorities against the universal rights of freedom of expression, freedom of religion or belief, and freedom of the press.

“This act of violence, which has been praised by the Iranian regime, is appalling.

“We all hope for Salman Rushdie’s speedy recovery following the attack on his life.”

The edict came amid a violent uproar in the Muslim world over the novel, which some viewed as blasphemously making suggestions about the Prophet Muhammad’s life.

The sanctions will result in all property and interests in property in the foundation’s name, including direct and indirect entities of 50% ownership or more, individually or with other blocked persons that are in the US or in the possession or control of US persons, being blocked and reported to OFAC.

Exemptions will only apply if authorised by a general or specific licence issued by OFAC or otherwise.

OFAC said in its statement that regulations “generally prohibit all transactions by US persons or within the United States (including transactions transiting the United States) that involve any property or interests in property of designated or otherwise blocked persons”.

They also said that engaging in “certain transactions” with the 15 Khordad Foundation could carry a risk of secondary sanctions.

The 15 Khordad Foundation generally provides aid to the disabled and others affected by war, but like other foundations known as “bonyads” in Iran funded in part by confiscated assets from the shah’s time, often serves the political interests of the country’s hardliners.

The bounty placed on Sir Salman was reportedly boosted from 2.8 million dollars (£2.4 million) to 3.3 million dollars (£2.8 million).

Last week Sir Salman’s literary agent Andrew Wylie was quoted as telling Spanish language newspaper El Pais that the author had lost sight in one eye and the use of a hand following the attack.

In the interview, Mr Wylie said Sir Salman had suffered “serious wounds” to his neck and “15 more wounds to his chest and torso”.

US secretary of state Antony Blinken tweeted: “The United States rejects the efforts of Iran’s leaders to stifle the fundamental freedom of expression and threaten members of the press.

“Today, we sanctioned the Iranian entity that issued a bounty on the life of author Salman Rushdie.”

Sir Salman began his writing career in the early 1970s with two unsuccessful books before Midnight’s Children, about the birth of India, which won the Booker Prize in 1981.

He was knighted in 2008 and earlier this year was made a member of the Order of the Companions of Honour as part of the Queen’s Birthday Honours.