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updated 9/27/2010 4:16:54 PM ET 2010-09-27T20:16:54

The Obama administration is proposing that banks report all electronic money transfers in and out of the country, expanding its anti-terrorism requirements for financial institutions.

Officials at the Treasury Department's Financial Crimes Enforcement Network said Monday that the new requirement would boost their ability to track the source of funding for terrorists.

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Currently banks are required to only report cash transactions above $10,000. They are also required to keep records on all electronic transfers of money in and out of the country above $3,000 and provide that information to law enforcement officials if asked to do so.

James H. Freis Jr., the director of the Treasury agency, said that widening the reporting requirement would provide benefits with only a "modest cost to industry."

"This regulatory plan will greatly assist law enforcement in detecting and ferreting out transnational organized crime, multinational drug cartels, terrorist financing and international tax evasion," Freis said in a statement announcing that the proposed rules were being published in the Federal Register for public comment.

The proposed expansion of reporting requirements would not take effect until 2012.

Bank of America said in a statement that the proposed rule would be analyzed to determine the impact it will have on the bank and its customers.

The new policy would fulfill requirements under the 2004 intelligence law, which gave federal agencies greater authority to monitor potential terrorist threats.

Video: Feds seek easier wiretaps online (on this page)

Critics contend that requiring banks to report all money transfers involving foreign wire transactions would represent a massive expansion in government access to personal data.

"It is an extraordinary overreach by the U.S. government," said Marc Rotenberg, executive director of the Electronic Privacy Information Center, a Washington-based organization on privacy rights. "This looks like a big electronic fishing expedition."

He said the proposal would raise serious concerns in many European countries where banking customers have greater privacy rights with regard to their financial transactions.

Under current requirements, financial institutions each year file about 14 million reports on cash transactions in excess of $10,000.

The proposed rule will not apply to credit card or ATM transactions, the most common ways that banking customers gain access to their funds when they are in another country.

Copyright 2010 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Video: Feds seek easier wiretaps online

  1. Closed captioning of: Feds seek easier wiretaps online

    >>> federal officials with seeking to pull in the virtual reigns on the internet. they say their ability to drop is compromised by communicating electron click instead of picking up a phone. they are planning to submit a bill calling for all communication services, including your blackberry, skype and facebook to be technically able to comply with wired tap orders. pete williams joins me from d.c. the first question might be what is the problem this is aimed to solve?

    >> here's the problem. in the old days in the 1930s or '40s if the fbi wanted to listen in to some organized crime fighter's call. they'll find the copper wires and take some alligator clips and clip onto his line and listen to it. then when the telephone companies went to electronic switching, congress passed a bill in the 1990s that said you still have to give the fbi and other law enforcement agencies to ability to listen in. nowadays every time you pick up the phone , it could be routed to the central office in a dozen different ways. that problem was solved. now people are using skype to communicate by voice. companies like vonage, or entirely texting in ways that completely bypass the telephone company . not just e-mail, but things like blackberry devices that don't use the telephone company at all. so the problem is these companies say they're willing to help, this is when law enforcement knocks at the door and says we have a judge's order, a judge has said we could wiretap this person's communications. give us that tap. the company often says, well, we would like to help, but we don't know how to do that. so this is a bill that would require any communications provider to have the ability to give that access to law enforcement . now, it's one thing to just listen in. it's another thing to decode communications that are often decrypted. so the companies also have to figure out how to decode the messages so the fbi can monitor them when they have a judge's order allowing them to do it.

    >> they may concern some in terms of privacy. i want to go to an fbi official and what he said to "the new york times". he said we're talking about lawfully authorized intercepts here. we're not talking expanding authority. we're talking about preserving our ability to execute our existing authority in order to protect the public safety and national security . but in order to accomplish this, when we're thinking of this issue, that goal here, don't you have to change the fundamental structures of the way the internet is working now?

    >> well, the fbi , and this is not just an fbi issue, this is a big deal for local law enforcement, too. well over 5 half of the wiretaps in america every year are doene at the local level. people looking for kidnaps and bank robbers , and all the usual crimes for which you could get a wiretap. they say, no, the fundamental structure of the internet wouldn't change, but some would argue that there's a reason people go to the different areas for communication because they do want to bypass the phone company . some people who do that do it because they want to evade detection and what the law enforcement community is confirmed about is do you want safe havens to plot crimes and potentially terror attacks and the government would never know it?

    >> pete williams , thank you.

    >> you bet.

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