Pakistan has long been accused of nurturing and supporting Islamist militant groups for use as proxies to project power in the South Asian region particularly towards its arch-rival India and in Afghanistan
Pakistan won an extra four months to meet international anti-terrorism financing norms on Friday when a global dirt money watchdog decided to keep the country off its blacklist for now.
After Pakistan missed multiple previous deadlines, the Financial Action Task Force said it was concerned that Islamabad had again failed to complete an internationally agreed action plan.
"The FATF strongly urges Pakistan to swiftly complete its full action plan by June 2020," the FATF said in a statement issued after a meeting in Paris. "Otherwise, should significant and sustainable progress especially in prosecuting and penalizing TF [terrorism financing] not be made by the next Plenary, the FATF will take action."
It said such action could include calling on its member states to order their financial institutions to give particularly rigorous attention to business relations and transactions with Pakistani clients.
Pakistan has long been accused of nurturing and supporting Islamist militant groups for use as proxies to project power in the South Asian region particularly towards its arch-rival India and in Afghanistan. Islamabad denies such accusations.
But with a minimum of three votes by FATF members needed to avoid the organisation's blacklist, Pakistan has been able to avoid punishment so far thanks to support from major ally China and other friendly countries including Malaysia and Turkey.
"China and other brotherly countries have supported Pakistan throughout the process in terms of guiding the country to improve its frameworks," Pakistani Finance Ministry adviser Abdul Hafeez Shaikh said in a statement in Islamabad before the FATF decision was made public.
Finance Ministry and counter-terrorism officials say Pakistan has done much under pressure to comply with FATF's 27-point agenda, which included an unprecedented conviction for terrorism financing of Hafiz Saeed, chief of the Pakistani Lashkar-e-Taiba (LeT) militant group.
In 2018 the FATF placed Pakistan on its "grey list" of countries with inadequate controls over terrorism financing, which made foreign firms more cautious about investing in Pakistan.