NEW DELHI — Pakistan is not doing enough to curb terrorism financing and money laundering, a global financial watchdog said Friday in a stern warning that reflects renewed scrutiny of the country’s links to militant groups.
The Financial Action Task Force, a watchdog based in Paris, hinted that Pakistan could face consequences — like being placed on the group’s black list — if it had not taken specific steps by May.
Even remaining on the watchdog’s gray list would have consequences, complicating Pakistan’s ability to raise money on international markets at a time when its economy is sputtering and it is in dire need of loans. A blacklisting could lead to sanctions by Western countries, including the United States.
The warning comes a week after India threatened to retaliate against Pakistan for a bombing that killed at least 40 Indian soldiers in Kashmir. The militant group that claimed responsibility, Jaish-e-Muhammad, or Army of Muhammad, operates in Pakistan, where it raises money under aliases, according to American and Indian officials.
Khurram Hussain, a columnist with Dawn, Pakistan’s leading English-language newspaper, said the statement by the Financial Action Task Force was its “most strident one” in 10 years.
“It seems like somebody somewhere has run out of patience with Pakistan, and FATF is channeling it,” he said. “Previous governments have tried to take the same actions to list these groups as terrorist entities and limit their activity but have failed to do so.”
The watchdog’s statement named Jaish-e-Muhammad specifically — a rare call-out for the group — as well as the Islamic State, Al Qaeda, the Taliban and Lashkar-e-Taiba, which India and the United States accuse of orchestrating the 2008 Mumbai attacks that killed more than 160 people.
The statement provided a laundry list of actions that it sought from Pakistan by May, accusing local law enforcement of failing to investigate or crack down on terrorists.
Pakistan has not shown a “proper understanding” of the risks that terrorist groups pose and needs to undertake “remedial actions and sanctions” against them, the statement added.
It went on to demand that the Pakistani authorities identify cash couriers and prevent them from moving illicit money out of the country; that effective action is taken against groups that are prosecuted for financing terrorists; and that suspect groups are denied resources to launder or raise money for terrorist activities.
Pakistan was put on the watchdog’s gray list last year for failing to act against Lashkar-e-Taiba and its suspected political front, Jamaat-ud-Dawa. This week, fearing its status on the gray list would be renewed, Pakistan renewed its bans on Jamaat-ud-Dawa and another affiliate, which had lapsed earlier. But the task force went ahead with its rebuke hours later, signaling that the move was too little, too late.
Although last year Pakistan initially seized some assets of the groups believed to be fronts for Lashkar-e-Taiba, officials’ efforts waned, and the groups remain active.
Pakistan’s finance minister responded Friday on Twitter to the unusually harsh statement by the Financial Action Task Force, saying that the group’s board had kept Pakistan on the gray list “despite hectic efforts and lobbying to get us black listed.”
But the post by the finance minister, Asad Umar, may make matters worse by failing to express any commitment to the watchdog’s targets.
The United Nations and the United States Treasury Department consider Jaish-e-Muhammad a terrorist organization. Several moves by the United Nations Security Council to impose sanctions on the group’s leader, Masood Azhar, have failed because of vetoes by China, an ally of Pakistan.
But on Thursday night the Security Council, including China, condemned the Jaish-e-Muhammad attack on Indian soldiers in a forceful statement.
Sensing growing pressure over Jaish-e-Muhammad’s activities in Pakistan, the Interior Ministry said on Friday evening that the government had taken control of the group’s headquarters in Punjab Province.
But if past actions are any guide, new steps like this one are likely to be temporary and cosmetic. Pakistan’s military denies accusations by the United States that it protects certain terrorist groups, using them as tools to achieve foreign and domestic policy objectives.
The United Nations is expected in coming weeks to advance a resolution to blacklist Mr. Azhar, the Jaish-e-Muhammad leader, though last week China shrugged off Indian demands to renew efforts to penalize him. Targeting Mr. Azhar specifically would make it harder for the group to raise funds in Pakistan.
The financial task force will make a final decision later this year on whether to remove Pakistan from its gray list, place it on its black list or remove it altogether.