Washington ? The top senators on the powerful Senate Finance Committee are openly questioning a key federal agency’s ability to block terrorist money, citing examples in which U.S. officials failed to freeze the money of people identified as terrorist financiers by American allies.

“Other nations rightly look to the United States for leadership and information in the war on terrorism. We should not be playing catch-up,” Sens. Charles Grassley, R-Iowa, and Max Baucus, D-Mont., wrote the Treasury Department’s Office of Foreign Assets Control in a letter just before Christmas.

Grassley, the committee chairman, and Baucus, its senior Democrat, cited numerous concerns about OFAC’s performance, including evidence of sloppy record keeping, failure to provide required information to Congress and reliance on voluntary compliance by banks to impose sanctions against suspected terrorists.

Though an internal investigation in 2002 recommended OFAC make changes to ensure it has the legal authority to test banks’ compliance with sanctions, the agency hasn’t taken steps to do so, according to the letter obtained by The Associated Press.

“The dangers of terrorism financing operating unhindered are too great to take a passive approach,” the senators wrote.

OFAC is an obscure office that plays a key role in the war on terrorism. It is charged with freezing the bank accounts and other financial assets of countries, companies and individuals who are deemed enemies of the United States — everyone from Saddam Hussein to Osama bin Laden.

Based on orders from Congress and the president or just raw intelligence, OFAC names people to a “specially designated nationals” list that requires all financial institutions to block their money. It is one of the most powerful tools for choking off terrorist finances.

In 2002, the Treasury inspector general issued a report questioning OFAC’s effectiveness in the war on terror.

Some concerns cited by Grassley and Baucus stem from that report, but the two lawmakers also questioned why OFAC had failed to block the assets of several people designated by allies as terrorist financiers and publicly reported by the news media.

In one case, AP reported that the United Nations and European Union in 2001, before the Sept. 11 suicide hijackings, had ordered their members to freeze the assets of several high-ranking al-Qaida leaders, including bin Laden’s brother-in-law and a security coordinator. OFAC did not.

A recent money laundering newsletter divulged that three people listed in a December 2002 U.N. report as terrorist financiers weren’t blacklisted by OFAC, even though some of the financiers’ groups were blocked — leaving a potential loophole for terror financing.

“While the UN report identified these persons as being involved in terrorist financing, OFAC apparently had not,” Grassley and Baucus said.