The Treasury Department has proposed a rule designed to seal off the U.S. financial system from Liberty Reserve, the digital currency issuer authorities charged Tuesday with laundering more than $6 billion for criminal groups.

The rule would prevent U.S. financial institutions from maintaining correspondent or payable-through accounts for foreign banks that are being used to process transactions for Liberty Reserve, the Treasury's Financial Crimes Enforcement Network said Tuesday.

It would also require U.S. institutions to perform special due diligence to ensure that correspondent accounts held by foreign banks are not used for transactions involving Liberty Reserve.

The proposed rule "would effectively cut off Liberty Reserve from the U.S. financial system," Fincen said in a press release. The public will have 60 days to comment on this proposal.

Federal prosecutors in New York indicted Liberty Reserve and seven of its principals for their roles in the alleged $6 billion laundering scheme and for operating an unlicensed money-transfer business. The indictment alleges that the firm, which is registered in Costa Rica and has been operating since 2001, has become the "financial hub of the cybercrime world" by allowing users to transfer funds anonymously anywhere in the world.

The rule would apply to an estimated 5,000 U.S. institutions, and would prohibit them from "establishing, maintaining, administering, or managing in the United States any correspondent account for or on behalf of a foreign bank if such correspondent account is being used to process transactions involving Liberty Reserve," including any of its subsidiaries.

It would also require banks to put in place "appropriate" controls to identify transactions involving Liberty and to notify account holders that process transactions for Liberty that they may no longer do so.

Liberty Reserve is the twelfth financial institution that Fincen has targeted since 2002 under a provision to the USA PATRIOT Act allowing the bureau to take special action against foreign entities it suspects of laundering money.

The entity Fincen took action against most recently prior to Liberty was the Halawi Exchange in Beirut, which it sanctioned in April; it has also sanctioned JSC CredexBank of Belarus and Lebanese Canadian Bank of Beirut in recent years.

Fincen has also designated the countries of Burma, Iran, Ukraine and Nauru as "jurisdictions of primary money laundering concern" under the statute.  The orders against Ukraine and Nauru were later rescinded.