BAGHDAD - American officials have warned Iraqi leaders that they might have to curtail aid to the Interior Ministry police because of a U.S. law that prohibits the financing of foreign security forces that commit "gross violations of human rights" and are not brought to justice.

The Interior Ministry, dominated by Shiites, has long been accused by Sunni Arabs of complicity in torture and killings.

The American ambassador to Iraq, Zalmay Khalilzad, said in an interview on Friday that "at this point" Iraq had not been formally notified that its national police were in violation of the legislation, known as the Leahy Law. He said he remained optimistic that Iraqi officials would "do the right thing" and resolve the matter. Nonetheless, he said American officials had begun reviewing programs that might have to be ended.

The issue centers on one of the most sensitive subjects within the Iraqi government: the joint Iraqi-American inspection in May and subsequent investigation of a prison in eastern Baghdad known as Site Four.

The inspection team found clear evidence of systematic abuse and torture, including victims who had "lesions resulting from torture" as well as "equipment used for this purpose," according to the United Nations.

The prison, run by an Interior Ministry national police unit, had more than 1,400 prisoners crowded into a small area. An American officer said some had been beaten or bound and hung by their arms. At least 37 teenagers or children were in the prison.

In another sign of Iraq's security problems, the Iraqi government late on Friday banned all vehicle and pedestrian traffic in Baghdad until Sunday. No reason was given, but the decision followed news that the U.S. military had arrested an Iraqi employee of a leading Sunni politician on suspicions he was helping to plan an attack inside the Green Zone.

The controversy over Site Four has become emblematic of the problems of militia members infiltrating the Interior Ministry's security forces and fears that Iraqi leaders are unwilling to take action against rogue groups.

A number of high-ranking officials have been implicated, including one division commander, an American official said. According to U.N. officials, as many as 52 arrest warrants have been issued, though none have been executed. And shortly after the Site Four inspection the government ceased allowing joint Iraqi-American prison inspections.

American officials have long warned about the dangers of militia influence, and had hoped the new government of Prime Minister Nouri al-Maliki would crack down on the groups.

Lately, though, senior American military officials have been voicing increasing concerns about the government's reluctance to take action against militia members in powerful positions, including in the Interior Ministry. One senior American military official acknowledged last week that "there's a political piece to this to see if they deal with these guys."

Named for its author, Sen. Patrick Leahy, D-Vt., the Leahy Law requires that assistance to foreign military and police forces cease if the secretary of state has "credible evidence" implicating them in human rights abuses, unless effective measures are taken to bring offenders to justice.

The law covers money in the foreign operations budget and Defense Department training programs.