The Obama administration wants to let non-U.S. law enforcement agencies ask financial services companies to check to see whether they may have done business with suspected terrorists or money launderers.

The Obama administration also wants to let state and local U.S. law enforcement agencies ask for record checks, and to make it clear that the Financial Crimes Enforcement Network — the Treasury Department agency in charge of overseeing efforts to shut down the financial networks of terrorists and money launderers — has a right to initiate record checks.

The Treasury Department has asked for the expansion of record check authority in a notice of proposed rulemaking that appears today in the Federal Register.

The proposed expansion would affect 17 life insurers, as well as about 20,000 banks, savings associations, credit unions, securities brokers and futures commission merchants, officials say in a preamble to the proposed rule.

The FinCEN and the rest of the Treasury Department developed “special information sharing procedures” for financial institutions in 2002, in the wake of the Sept. 11, 2001, attacks.

Law enforcement officials are supposed to ask affected financial institutions to check their records only in cases of suspected terrorist activity or “significant” money laundering. A law enforcement agency also is supposed to show that it tried to locate the information sought through traditional methods before making a “314(a)” query.

The 314(a) program has turned out to work well, and it seems as if financial institutions have come up with procedures for complying with 314(a) record checks efficiently, FinCEN officials write.

New agreements with European countries call for the United States to give those countries’ investigators access to financial institution record searches, officials write.

State and local law enforcement agencies also need access, and, if FinCEN can initiate searches, then it can help groups of law enforcement agencies that are coordinating investigations, by initiating a centralized record check for the group, officials write.

Easing the rules governing multi-agency and cross-border investigations would be helpful, because “money laundering and terror-related financial crimes are not limited by jurisdiction or geography,” officials write.

FinCEN estimates that the typical financial institution subject to the record check program gets about 120 search requests per year, and that it would get about 7 requests per year from foreign agencies, U.S. state and local agencies, and FinCEN.

The typical requester asks for about information about 9 subjects, and the search for each subject takes an average of about 4 minutes, officials estimate.

A copy of the FinCEN notice is available here.