Pakistan will be put back on a terror financing watch list by June if it does not take further action against militants operating within its borders, media are reporting.
Citing Pakistani officials and unnamed diplomats, Reuters and India Today reported on February 23 that the Financial Action Task Force, which met during the week in Paris, decided to put Pakistan back on its "grey list" after China and Gulf Arab countries dropped their opposition to the move.
The terrorism task force discourages banks and global investors from lending money to a country put on its grey list. Pakistan was on the list from 2012 to 2015.
The United States, Britain, and France, and Germany put a motion before the task force to put Islamabad back on the list out of concern it is not doing enough to fight militants.
They said Islamabad's recent move to ban some charities linked to a militant believed to be behind the 2008 Mumbai attacks that killed 166 people did not go far enough.
Acting U.S. Assistant Secretary of State Alice Wells told Reuters that Pakistan's move against charities linked to Hafiz Saeed was insufficient, especially since the Islamist leader and the radical groups he leads remain free and untouched in Pakistan.
"When we saw terrorists like Hafiz Saeed be released for the sixth time from house arrest or saw charitable arms of Lashkar-e Taiba or Jaish-i-Mohammad operate freely, sometimes in front of police stations doing fund-raising exercises, it obviously raises serious concerns," Wells told Reuters. Wells said she could not confirm any decision to put Pakistan back on the watch list.
India Today said the terrorism task force made its decision to re-list Pakistan provisional, starting in June, to give Islamabad time to avoid being listed by cracking down further on militants.
If no futher action is taken by June, Pakistan would go back on the list, the media reports said.
The decision came days after Pakistan's Foreign Minister Khawaja Asif said on Twitter that his "efforts have paid [off]" and Pakistan had been granted a "three months pause" by the task force.
Participants in the Paris task force meeting said the United States, which under President Donald Trump has toughed its stance toward Pakistan, lobbied to convince other task force members that Islamabad is not doing enough to combat terrorism financing.
At the outset of the meeting, China, Turkey, and several Gulf Cooperation Council members had opposed re-listing Pakistan, but those countries dropped their opposition by the time the decision was made late on February 22, media reported.
Saudi Arabia and other Gulf Arab countries are allies of the United States, and they were "flipped" by U.S. lobbying, Reuters cited a Pakistani official as saying.
Reuters quoted a government source as saying that Pakistan expects it will be able to satisfy the task force's concerns by the group's next session in June, when Pakistan is otherwise scheduled to go back on the list.
A Pakistani Foreign Ministry spokesman in Islamabad, Mohammad Faisal, said Pakistan is working to take more measures to satisfy the task force and Washington's concerns.
Pakistani businessmen fear getting put back on the "grey list" will endanger Pakistan's banking links to the outside world and cause financial pain for the economy.
Countries already on the grey list include North Korea, Iran, Iraq, Syria, Yemen, and Ethiopia.
AP reported that Bosnia and Herzegovina was removed from the list at the Paris meeting because it was judged to be in compliance with efforts to counter money laundering and terror financing.