Washington, Jan 30 Pakistan’s legal framework may align on paper with the 40 recommendations of global money laundering and terrorist financing watchdog Financial Action Task Force (FATF) but enforcement on the ground remains glaringly inconsistent.
The FATF’s 2025 Comprehensive Update on Terrorist Financing Risks raises alarm, highlighting a significant increase in hybrid digital methods, with Pakistan-linked terror entities moving from banks to fintech platforms to bypass scrutiny, a report said on Friday.
“In the shadow of Mexico City's historic Palacio de Bellas Artes, global financial watchdogs will convene in February 2026 for the Financial Action Task Force (FATF) Plenary and Working Group Meetings. In conference rooms far removed from South Asia’s violence, Pakistan will once again present itself as a responsible counterterrorism partner, armed with compliance reports, legislative amendments, and assurances of reform,” Siddhant Kishore, a Washington-based national security and foreign policy analyst, wrote in ‘The Cipher Brief’.
“On paper, Pakistan’s financial regulations increasingly resemble those of many developing democracies. On the ground, however, the networks that finance and enable terrorism continue to adapt and operate with troubling resilience. The widening gap between form and function is precisely what Western policymakers must confront as FATF prepares its next round of assessments,” he added.
Citing open-source reporting and documented financial intelligence patterns, the security analyst said that that Pakistan based terrorist organisations such as Jaish-e-Mohammad (JeM) and Lashkar-e-Taiba (LeT) have undergone modernization rather than dismantlement.
“Recent documents reveal how these UN-designated outfits exploit humanitarian crises, such as the Gaza conflict, to funnel funds into terror activities. Under the guise of aid appeals and mosque reconstructions, figures like Hammad Azhar, son of JeM leader Masood Azhar, and Azhar’s brother Talha al-Saif orchestrate campaigns using digital wallets like EasyPaisa, SadaPay, and JazzCash, aggregating micro-donations and cryptocurrencies to evade detection,” Kishore stated
“These efforts aggregate micro-donations and cryptocurrency transfers, often employing fragmented wallet structures and chain-hopping across platforms to avoid detection. Funds have reportedly supported militant infrastructure, including the establishment of more than 300 Mosques and the reconstruction of locations historically linked to LeT training facilities damaged during India’s 2025 Operation Sindoor,” he mentioned.
The report stressed that at the upcoming FATF meeting in Mexico, the US and EU delegations should press Pakistan to adopt outcome-based evaluations centred on “sustained investigations, verifiable asset seizures, and the dismantling of facilitation networks”.
“Particular scrutiny must be directed toward digital payment systems, informal charities, and micro-donation models that exploit regulatory blind spots. Western governments should also coordinate more closely to monitor cross-border flows linked to high-risk jurisdictions, ensuring that Pakistan’s reforms translate into measurable disruption rather than rhetorical reassurance,” it noted
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