The initiative, as conceived by a working group within the Treasury Department, would vastly expand the government's database of financial transactions by gaining access to logs of international wire transfers into and out of American banks, The Times said in its online edition on Saturday.
Such overseas transactions were used by the 11 September hijackers to wire more than $130,000, officials said, and are still thought to be vulnerable.
Government officials told The Times in interviews that the effort, which grew out of a brief, little-noticed provision in the intelligence reform bill passed by Congress in December, would give them the tools to track leads on specific suspects and, more broadly, to analyse patterns in terror financing and other financial crimes.
The provision authorised the Treasury Department to pursue regulations requiring financial institutions to turn over "certain cross-border electronic transmittals of funds" that may be needed in combating money laundering and terror financing.
The plan for tracking overseas wire transfers is likely to intensify pressure on banks and other financial institutions to comply with the expanding base of provisions, to fight money laundering.
The US government's aggressive tactics since the attacks of 11 September 2001, have caused something of a backlash among banking compliance officers - and even some federal officials, whom The Times quoted as saying that the effort had gone too far in penalising the financial sector for lapses and had effectively criminalised what were once seen as technical violations.
The US government adopted
aggressive tactics since 9/11
The initiative, still in its preliminary stages, reflects heightened concerns by administration and Congressional officials about the government's ability to track and disrupt financing for terrorist operations by al-Qaida and other groups.
Planning and operations for the attacks on 11 September were thought to have cost al-Qaida $400,000 to $500,000 with no unusual transactions found, according to the 9/11 commission, and the 1998 embassy bombings in East Africa cost only $10,000.
While counterterrorism officials have made some inroads in tracking terror money, clear successes have been few. Senior officials throughout the Bush administration have emphasised repeatedly that they want the financial sector to be a full partner in the stepped-up efforts to deter terror financing.
'Lack of clarity'
But The Times said in a letter in January to Treasury Department officials that 52 banking associations around the country said a "lack of clarity" by the government in explaining what was expected of them in complying with regulations to deter terrorist financing and money laundering had "complicated, and in some cases undermined" those efforts.
The result, banking officials say, is that many banks, now in a defensive mode, are sending the government more reports than ever on "suspicious activities" by their customers - and potentially clogging the system with irrelevant data - for fear of being penalised if they fail to file the reports as required, The Times said.
"It seems like the rules keep changing on us, and there's a lot of confusion and anxiety in the industry about what constitutes a proper compliance programme"
"It seems like the rules keep changing on us, and there's a lot of confusion and anxiety in the industry about what constitutes a proper compliance programme," John Byrne, who oversees compliance issues for the American Bankers Association, told The Times.
By sharply increasing prosecutions against banks over compliance failures, "law enforcement is shooting the messenger," said Herbert Bierne, a senior enforcement official with the Federal Reserve System's board of governors, told The Times. "You shoot the messenger, you stop getting the messages."