The US treasury has warned banks on Libyan transfers

Washington - The Treasury Department has warned US banks to be vigilant of transfers linked to Libya's political leaders, as the international community moves to slap sanctions on top government officials.

The Treasury's Financial Crimes Enforcement Network told banks to be aware of "the potential increased movement of assets that may be related to the situation in Libya," in a statement released Friday.

It also demanded financial institutions "apply enhanced scrutiny for private banking accounts held by or on behalf of senior foreign political figures."

Under US law banks are required to report transactions that could be linked to diverted state assets, proceeds of bribery or other public corruption.

But the notice came as the United States, France and Britain appeared to be edging toward sanctions against Libyan leader Moamer Kadhafi that could include a freeze on assets held abroad.

Western nations have drawn up a UN Security Council resolution proposing sanctions including an arms embargo, travel ban and assets freeze against Kadhafi which could be voted on this weekend, diplomats said Friday.

Libya and its leaders are suspected of holding billions of dollars in foreign bank accounts, cash largely gleaned from the country's vast oil wealth.

According to a 2010 message from the US embassy in Tripoli, obtained by WikiLeaks, Libya's sovereign wealth fund holds $32 billion in cash and "several American banks are each managing $300-500 million."

As international anger grows over Kadhafi's brutal crackdown on protesters, some of those assets abroad could become targets of international sanctions.