Global terror financing watchdog FATF decided to keep Pakistan under its 'Grey List' on Wednesday.
The reason cited for this was Pakistan's apparent inability to check terror funding to groups like Lashkar-e-Taiba (LeT) and Jaish-e-Mohammed (JeM).
The decision was taken at the body's third plenary session, which was held virtually due to the coronavirus pandemic.
"The FATF plenary decided continuation of Pakistan in 'Grey List' till its next meeting to be held in October," an official privy to the development told PTI.
The announcement also comes hours after a US report stated that Pakistan was a 'safe haven' for terrorists.
As per the report, Pakistan took "modest steps" in 2019 to counter terror financing and restrain India-focused militant groups from conducting large-scale attacks following the Pulwama attack in February, but it remained a "safe harbor" for regionally focused terrorist group.
In its Congressional-mandated annual report 2019 Country Reports on Terrorism, the State Department said Pakistan took action against some externally focused groups, including indicting Lashkar e-Taiba (LeT) founder Hafiz Saeed and associates in three separate terrorism financing cases.
It allowed groups targeting Afghanistan, including the Afghan Taliban and affiliated Haqqani Network (HQN), as well as groups targeting India, including the LeT and its affiliated front organisations, and Jaish-e-Mohammed (JeM), to operate from its territory, the report said.
"It did not take action against other known terrorists such as JeM founder and UN-designated terrorist Masood Azhar and 2008 Mumbai attack 'project manager' Sajid Mir, both of whom are believed to remain free in Pakistan," alleged the State Department.
Although al-Qaeda in Afghanistan and Pakistan has been seriously degraded, key figures among the outfit's global leadership, as well as its regional affiliate al-Qaeda in the Indian Subcontinent (AQIS), continued to operate from remote locations in the region that historically served as safe havens, it said.
Pakistan is one of the countries that figures in the terrorist safe havens list.
A strong Indian delegation with experts on money laundering and terror financing participated in the half-day FATF plenary.
With Pakistan's continuation in the 'Grey List', it will be difficult for the country to get financial aid from the IMF, World Bank, ADB and the European Union, thus further enhancing problems for the nation which is in a precarious financial situation.
If Pakistan fails to comply with the FATF directive by October, there is every possibility that the global body may put the country in the 'Black List' along with North Korea and Iran.
India has been maintaining that Pakistan extends regular support to terror groups like LeT, JeM and Hizbul Mujahideen, whose prime target is India, and has urged FATF to take action against Islamabad.
Pakistan was placed on the 'Grey List' by the FATF in June 2018 and continues to be in the list since then as it has failed to comply with the tasks given by the FATF to stop terror financing.
The FATF is an inter-governmental body established in 1989 to combat money laundering, terrorist financing and other related threats to the integrity of the international financial system.
The FATF currently has 39 members including two regional organisations -- the European Commission and Gulf Cooperation Council.
India is a member of the FATF consultations and its Asia Pacific Group.
(With PTI inputs)