FATF has cautioned Pakistan that exiting the grey list in October 2022 does not shield it from scrutiny over terror financing and money laundering.
The warning comes amid reports that Jaish-e-Mohammad (JeM) is reportedly raising funds for training camps using digital wallets, including initiatives led by female operatives, sometimes disguised as religious or community webinars.
FATF President Elisa de Anda Madrazo stressed that delisted countries remain under follow-up scrutiny. “Any country that exits the grey list is not bulletproof against money launderers or terrorists,” she said, adding that jurisdictions must continue efforts to prevent and deter crimes.
The warning follows intelligence reports of Pakistan-based terror networks using e-wallets, crypto platforms, and mobile banking apps to transfer funds domestically and abroad, including Afghanistan and the Gulf. Small charity wallets on apps like JazzCash, Easypaisa, and Sadapay are allegedly used to collect micro-donations later pooled for terror activities. Digital forensics traced some transactions through Dubai-based wallets and crypto exchanges before entering Pakistan’s fintech ecosystem.
FATF flagged Pakistan for weak KYC compliance and its domestic fintech firms’ role in enabling anonymous transfers to madrassa-linked accounts. JeM and Lashkar-e-Taiba reportedly use crypto-mixing tools to hide transaction origins. Observers warn that any new discovery of digital wallet-based terror financing could see Pakistan returned to the grey list and complicate IMF negotiations.
Indian intelligence agencies are monitoring Pakistan’s online donation drives, including cross-border crypto flows to Kashmir-linked networks, amid warnings that urban radical networks may mimic Pakistan’s wallet models.
Pakistan, first grey-listed in 2008 for terror financing, remained on the list from June 2018 to October 2022. Its exit came after implementing an action plan under global pressure, but FATF’s follow-up indicates continued vigilance is necessary to curb technology-enabled terror funding.
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