Global terror financing watchdog FATF on Friday decided to retain Pakistan in its ''Grey List'' and warned the country of stern action if it fails to prosecute and penalise those involved in terror funding.
The decision was taken at the Financial Action Task Force (FATF) plenary which concluded in Paris on Friday after six days of deliberations.
The global body also warned Pakistan that if it does not complete a full action plan by June, it could lead to consequences on its businesses, a source said.
According to a statement issued by the FATF, all deadlines given to Pakistan to check terror funding have come to an end but the country has failed to complete its action plan by the agreed timeline.
To date, Pakistan has largely addressed 14 of 27 action items given to it in controlling funding to terror groups like the Lashkar-e-Taiba (LeT), the Jaish-e-Mohammad (JeM) and the Hizbul Mujahideen, which are responsible for a series of attacks in India.
"The FATF strongly urges Pakistan to swiftly complete its full action plan by June 2020. Otherwise, should significant and sustainable progress especially in prosecuting and penalising terror funding not be made by the next Plenary, the FATF will take action, which could include the FATF calling on its members and urging all jurisdiction to advise their financial institutions to give special attention to business relations and transactions with Pakistan," the statement said.
With Pakistan's continuation in the ''Grey List'', it will be difficult for the country to get financial aid from the IMF, the World Bank, the ADB and the European Union, thus further enhancing problems for the nation which is already dealing with a big financial situation.
If Pakistan fails to comply with the FATF directive, there is every possibility that the global body may put the country in the ''Black List'' along with North Korea and Iran, sources said.
With regard to Pakistan, the FATF said, all deadlines in the action plan have expired and again expressed concerns given Pakistan's failure to complete its action plan in line with the agreed timelines.
The FATF said Pakistan should continue to work on implementing its action plan to address its strategic deficiencies, including by: "demonstrating that remedial actions and sanctions are applied in cases of Anti-Money Laundering (AML) and combating the financing of terrorism violations, relating to Terrorist Funding (TF) risk management and Targeted Financial Sanctions (TFS) obligations."
India has been maintaining that Pakistan extends regular support to terror groups like the LeT, the JeM and the Hizbul Mujahideen, whose prime target is India, and has urged the FATF to take action against Islamabad.
Pakistan needed 12 votes out of 39 to exit the ''Grey List'' and move to the ''White List''. To avoid the "Black List", it needs the support of three countries.
The FATF meeting, from February 16 to 21, was held a week after an anti-terrorism court in Pakistan sentenced Hafiz Saeed, the mastermind of the 2008 Mumbai attack and founder of the LeT, to 11 years in two terror financing cases.
The Pakistani court's judgment came ostensibly to please the FATF and western countries so that the country can exit the ''Grey List'', sources said.