A U.S. financial crime agency's plan to let foreign police seek information from American banks is drawing opposition from groups representing U.S. financial institutions.

The proposed rule by the Financial Crimes Enforcement Network (FinCEN), a division of the Treasury Department, would also permit U.S. state and local law enforcement authorities to make similar information-sharing requests of banks.

Regulations adopted after the 9/11 attacks in 2001 allow only federal law enforcement agencies, through FinCEN, to request such information.

FinCEN can require U.S. financial institutions to search their records to determine whether they have done business with individuals suspected, based on credible evidence, of terrorism or money laundering.

Written comments on the proposed expansion of the rule were due December 16, and more than half a dozen organizations, including the American Bankers Association (ABA) and the Credit Union National Association, said the plan is intrusive.

In a 13-page letter, ABA Vice President Robert Rowe called the proposal premature and unfounded and said it represented a dangerous broadening of the information-sharing process.

There is absolutely no indication that the extraordinary power available under the 314(a) data-match program was ever intended by Congress to be put at the service of foreign countries, he wrote, referring to FinCEN regulations that are part of the U.S. Patriot Act of 2001.

The Credit Union National Association, a trade organization that represents thousands of state and federal credit unions, said it was worried about the burden the rule would impose on its members.

FinCEN has estimated that information requests under the rule would require no more than 72 additional hours per year per institution to process. The association said many of its small members cannot afford to automate their processes.

As a result, search requests would take significantly longer in a manual environment, it said.

FinCEN would review the banks' comments before deciding how to proceed, spokesman William Grassano said. As with all comment letters FinCEN receives on proposals, we carefully review and consider the points made and perspective brought to the discussion, he said.

FinCEN in November proposed adopting screening procedures to assure that foreign law enforcement agencies use the information-sharing program only in significant situations and only if unable to find needed information through traditional investigative means.

This program for sharing information with the financial industry is a proven tool, and these changes will help further protect the integrity of our national financial system, FinCEN Director James Freis said in a statement last month.

Although comment periods on proposed rules often last as long as 180 days, FinCEN limited the period in this case to 30 days. The agency said the timing of the proposal was prompted by international treaty obligations.

(Reporting by Dan Margolies. Editing by Robert MacMillan)