The Financial Action Task Force (FATF) has decided to keep Pakistan on its ‘grey list’ and asked it to take steps to curb terror financing and money laundering after India’s relentless campaign against its intransigent neighbour in the wake of the Pulwama attack.

The decision was taken by the global terror financing watchdog at its five-day meeting in Paris.

“Given the limited progress on action plan items… the FATF urges Pakistan to swiftly complete its action plan, particularly those with timelines of May 2019,” the FATF said in a statement.

FATF president Marshall Billingslea said the global body expected Pakistan to meet its commitments. The FATF also noted with grave concern and condemned the Pulwama attack, saying such attacks could not occur without money and the means to move funds between terrorist supporters.

Sources in New Delhi said Pakistan’s commitments to crack down on terror financing would be reviewed by the FATF in June and October this year. If it failed to take legal action and meet the targets set by the FATF, Pakistan could be blacklisted.

Pakistan was placed on the ‘grey list’ in June last year and was lobbying hard to be removed from the list at this meeting.

India is believed to have handed over to the FATF a dossier, nailing the culpability of Pakistan in the terror attack in Pulwama.

The FATF noted that since June 2018 when Pakistan made a high-level commitment to work with the global body and address its strategic counter terrorist and financing-related deficiencies, Islamabad has taken some steps in this direction. However, Pakistan has not demonstrated a proper understanding of the terror financing risks posed by organisations, including the JuD, LeT and JeM and persons affiliated with the Taliban.

The FATF said Pakistan should continue to work on its action plan to address its strategic deficiencies and gave a 10-point action plan to Islamabad for implementation.

The FATF blacklist means the country concerned is “non-cooperative” in the global fight against money laundering and terrorist financing. If the FATF blacklists Pakistan, it may lead to downgrading of the country by lenders like International Monetary Fund, World Bank, Asian Development Bank, and European Union.

Pakistan getting blacklisted by the FATF will likely hurt its finances and may derail its planned investments and incoming aid, plunging the country into a serious balance of payments crisis from which recovery would be hard, analysts say.