Pakistan back on global terrorist financing watchlist: Reports

In a blow to Pakistan's strained relations with the United States,the Financial Action Task Force (FATF), a global money-laundering watchdog, has placed Pakistan back on its terrorist financing watchlist, Indian media and a diplomatic source said on Friday.

The move, which could hamper Pakistan's banking and hurt foreign investment, is part of a broader US strategy to put pressure on Pakistan to cut alleged links to Islamist militants operating in neighbouring Afghanistan.

A non-Indian diplomatic source from one of the FATF countries told Reuters that the group had decided Pakistan would be put back on the watchlist.

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Earlier in the week China, Turkey, and the Gulf Cooperation Council (GCC) were opposing the US-led move against Pakistan but by Thursday night both China and the GCC dropped their opposition, the diplomatic source said.

"The decision was taken yesterday," the diplomat said.

He added that the financial consequences would not kick in until June, which, in theory, could allow Pakistan the wriggle room to fix the terrorist financing issues. "But the odds of that, particularly in an election year, seem slim," he added.

An official statement is expected later on Friday.

Washington has spent the past week lobbying member countries of the FATF to place Pakistan on the so-called "grey list" of nations that are not doing enough to combat terrorism financing.

The news comes days after reports that Pakistan had been given a three-month reprieve before being placed on the list.

On Tuesday, Foreign Minister Khawaja Asif tweeted that Pakistan had received a 3-month reprieve, adding that it was
"grateful to friends who helped".

Pakistan's last-minute efforts to avoid being placed on the list, which included taking over bodies linked to terrorist Hafiz Saeed, proved insufficient, media reports said.

Islamabad tried to prevent the action against it by amending its anti-terrorism laws and by taking over organizations controlled by the Lashkar-e-Taiba chief and mastermind of the 2008 Mumbai attacks that killed 166 people.

Under FATF rules one country's opposition is not enough to prevent a motion from being successful. Britain, France and Germany backed the US move.

Pakistan was previously on the list for three years until 2015.

Pakistani officials and analysts fear being on the FATF watchlist could endanger its handful of remaining banking links to the outside world, impacting its economy ahead of a general election in the summer.

(With inputs from Reuters)