Pakistan’s banks have been ordered to restrict international remittances to relatives of suspected militants as Islamabad launched a crackdown after a terrorist attack in India brought the two countries to the brink of war.
In the past two days Pakistan security forces have detained at least 60 members of militant groups, following international calls for Islamabad to disband radical Islamist groups.
Among those arrested were close relatives of Masood Azhar, founder of the Jaish-e-Mohammad (Army of Mohammad), which was blamed for the attack that killed 40 Indian paramilitary personnel last month.
The government has also banned two Islamic charities linked to Hafiz Saeed, founder of the Lashkar-e-Taiba, which was responsible for terror outrages in Mumbai in 2008.
The moves marked the most serious actions against suspected militants since Imran Khan, Pakistan’s former cricket captain, was installed as prime minister in August.
Officials said the crackdown had the support of Pakistan’s powerful military, which has long been suspected of using terror groups as proxies to attack India, and cause havoc in neighbouring Afghanistan.
“All stakeholders, the civilians and the armed forces are on the same page. They are all supporting this effort,” a senior Pakistani official said.
Pakistan, which desperately needs a $12bn IMF bailout to bolster its fragile economy, was placed last year on the Paris-based Financial Action Task Force’s watchlist, or “grey list”, of countries that have failed to take adequate steps to prevent financing to terror groups.
With an October deadline for Pakistan to comply with the FATF conditions, New Delhi has lobbied for Pakistan to be blacklisted.
“A blacklist scenario will seriously hit confidence,” a Pakistan finance ministry official told the Financial Times. “It will raise borrowing costs for any Pakistan-related project and will dent confidence. Any businessman looking at Pakistan will think many times over.”
On Wednesday, senior Pakistani bankers said that a “cornerstone” of the new effort to curb funding to terror groups was a new requirement for banks to vet remittances of less than $10,000 to beneficiaries related to militant groups.
Previously, Pakistani banks typically paid these smaller sums without any effort to assess the nature or purpose of the transaction.
“If the money trail shows the funds are coming from the Middle East in particular and the receiving party appears on our list [of suspects related to a member of a militant group], we are going to thoroughly screen that transaction, hold it indefinitely if essential or simply send it back,” said a Karachi-based president of a private Pakistani bank.
Islamabad said it was also identifying preachers who attracted public support for militant causes, and would remove them from their positions at mosques.
“The prayer leaders with a dubious history will be replaced. We don’t want to see our mosques remain a platform for spreading violence,” a senior government official said.
But New Delhi remained highly sceptical of Islamabad’s efforts. Indian officials said Pakistan was known for rounding up militants when the pressure was on, only to quietly free them once the international spotlight had moved elsewhere.
“Given their track record, unless we see things on the ground, it’s difficult to take things at face value,” a senior Indian official said. “There has been a pretence of taking action to deflect the international community. But unless they take concrete, verifiable action on the ground it is difficult to believe what is coming out from Pakistan.”
A senior western diplomat agreed that Pakistan needed “permanent mechanisms to put militants out of business. There have been promises of crackdowns in the past but the restrictions eased with time.”
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