U.S. Pushes to Put Pakistan on Terrorism Financing Watchlist

(Bloomberg) -- The U.S. is pushing to get Pakistan placed on an international terror-financing watchlist a month after President Donald Trump suspended about $2 billion in military aid to the nuclear-armed nation.

The U.S., along with the U.K., have reported to the Financial Action Task Force that Pakistan hasn’t complied with terrorism regulations, Rana Muhammad Afzal Khan, a junior Pakistani minister for finance and economic affairs, said by phone on Wednesday. Khan said the body’s review is scheduled for early next week and that the charges were a “conspiracy.” Pakistan gave a comprehensive reply to the allegations on Feb. 5, “but now they are adding some more items.”

The move is the latest attempt from Washington to get Islamabad take more action against terror groups that allegedly have support and sanctuary within Pakistan. Relations between the two nations have deteriorated drastically in the past year and in his first tweet of 2018, Trump said Pakistan gave “lies and deceit” in return for U.S. funding. Being placed on the list may impede Pakistan’s access to global markets at a time when its foreign reserves are dwindling and external deficits widening ahead of national elections in July.

“Pakistan needs external sector help and tensions with the U.S. do not help,” said Mushtaq Khan, a former chief economist at Karachi-based Bank Alfalah Ltd. who now runs an independent consultancy and is no relation to the junior minister. “This will muddy the outlook.”

‘We’re Serious’

Minister Khan said the U.S. had pointed out the free movement of Hafiz Saeed -- the alleged mastermind of the 2008 Mumbai attacks -- and continual operation of his Jamaat-ud-Dawa and Falah-e-Insaniat Foundation charities, which are on a United Nation’s sanction list and have been accused of being fronts for militant groups. Pakistan’s foreign secretary will visit New York within the next two to three days to discuss the issue.

“We’ll dis-operate them,” Rana Khan said, referring to Saeed’s charities. “We’re serious and want to stop them -- we brought in new legislation, started increased scrutiny and working actively on seminary reforms.”

Pakistan announced on Monday that it changed a law and now allowed its security forces to take action against groups on the UN Security Council list. Prime Minister Shahid Khaqan Abbasi also said in an interview this month that in the last two-to-three months Pakistan has “more or less complied” with sanctions against Saeed’s organizations. However, Abbasi said more action against Saeed himself was unlikely as “we have no charges against him.”

Saeed, who has repeatedly denied his involvement in militant groups or the assault in India’s financial capital, was released from house arrest in Lahore in November -- provoking condemnation from the White House.

Residual Elements

Pakistan has repeatedly denied providing safe haven for terrorists and has pointed to the thousands of military and civilian casualties it has sustained fighting insurgent groups on its soil. FATF, the anti-laundering body, had previously added Pakistan to its monitoring list in 2012, before removing it three years later.

While security has improved following multiple army operations in the past decade, critics say Pakistan’s powerful military, which dominates foreign policy, continues to support groups that further its objectives in Afghanistan and against arch-rival India.

Attending a regional military conference in Kabul, Afghanistan’s capital, on Tuesday, Pakistan’s army chief General Qamar Javed Bajwa reiterated that all terrorist sanctuaries had been destroyed, but some “residual” elements were still being targeted.

--With assistance from Ismail Dilawar

To contact the reporter on this story: Kamran Haider in Islamabad at khaider2@bloomberg.net.

To contact the editors responsible for this story: Chris Kay at ckay5@bloomberg.net, Khalid Qayum

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