For more than three decades, Pakistan has remained at the centre of global concerns over terrorism financing and money laundering. Despite repeated assurances to the international community, Islamabad’s record reveals a troubling pattern: cosmetic compliance, selective prosecutions, and a persistent failure to dismantle the financial ecosystems that sustain jihadist violence. As scrutiny has increased, terrorist organisations operating from Pakistani soil have not disappeared. Instead, they have adapted quietly, creatively, and dangerously.
Groups such as Lashkar-e-Taiba (LeT) and Jaish-e-Muhammad (JeM), both internationally designated terrorist organisations, are no longer dependent on traditional banking channels. Under pressure from the Financial Action Task Force (FATF) and other multilateral bodies, these outfits have shifted to alternative fundraising models, exploiting digital payment systems, humanitarian crises, religious institutions and social media platforms. The result is a more decentralised, opaque, and resilient terror-financing architecture that is harder to detect and even harder to dismantle.
Pakistan’s entanglement with terror financing is neither accidental nor recent. The country has been placed on the FATF “grey list” three separate times between 2008 and 2022, reflecting systemic deficiencies in its anti-money laundering and counter-terrorist financing regimes. These listings were not arbitrary. They followed years of documented evidence showing Pakistan’s failure to curb financing networks linked to groups targeting India, Afghanistan, Western interests, and even Pakistan itself.
A particularly damning assessment came after the Asia-Pacific Group conducted an on-site evaluation in October 2018. Its 2019 Mutual Evaluation Report identified serious gaps in Pakistan’s understanding of terror financing risks and criticised its lack of effective implementation of FATF-mandated reforms. Terrorist entities such as Al Qaeda, ISIS, LeT, JeM, Jamaat-ud-Dawa (JuD), Falah-i-Insaniat Foundation (FIF), the Haqqani Network and Taliban-linked individuals were explicitly cited as ongoing threats.
Yet, despite these findings and despite overwhelming open-source intelligence and judicial records, FATF announced in October 2022 that Pakistan had fulfilled all 34 action items, leading to its removal from the grey list. This decision was welcomed by Islamabad but viewed with scepticism by counterterrorism experts worldwide.
The FATF delisting did not translate into a meaningful disruption of terrorist operations. Instead, jihadist groups recalibrated their funding strategies. Traditional bank accounts, once the backbone of terror financing, were increasingly viewed as liabilities. In their place emerged digital wallets, mobile payment services, cryptocurrency channels, proxy charities, and crowd-funded religious projects.
This shift reflects not ideological moderation, but operational pragmatism. The objective remains unchanged: sustaining armed jihad, expanding ideological reach and ultimately reshaping South Asia and beyond under a rigid interpretation of Islamic rule.
Jaish-e-Muhammad offers perhaps the clearest example of this transformation. Founded in 2000 by Maulana Masood Azhar after his release from an Indian prison during the 1999 IC-814 hijacking, JeM quickly emerged as one of the most violent jihadist organisations in South Asia. Its attacks include the 2001 Indian Parliament assault, the murder of journalist Daniel Pearl, and multiple assassination attempts against former Pakistani President Pervez Musharraf.
JeM’s ideological goals extend far beyond Kashmir. The group openly endorses the creation of an Islamic caliphate across South Asia and espouses virulent hostility toward non-Muslims and even other Muslim sects, particularly Shias.
With banking scrutiny tightening, JeM has shifted to digital payment platforms such as EasyPaisa and SadaPay, reportedly controlled by family members of Masood Azhar. These wallets allow the group to collect funds anonymously, rapidly, and at scale, while evading conventional financial monitoring systems.
One of JeM’s most cynical fundraising innovations has been the exploitation of humanitarian crises. Under the pretext of Gaza relief, JeM operatives solicit donations from Pakistan and Gulf countries. Masood Azhar’s son, Hammad Azhar, reportedly orchestrates these campaigns using aliases, curated propaganda videos, and emotionally charged appeals.
Equally alarming is JeM’s massive mosque-construction drive. Under the banner of building 313 new markaz (central buildings), a number heavy with jihadist symbolism, the group launched a campaign to raise nearly 3.91 billion Pakistani rupees (approximately $14 million). Each mosque is projected to cost Rs 12.5 million, with funds collected through hundreds of digital wallets and amplified via WhatsApp, Facebook, and encrypted messaging platforms.
Indian intelligence assessments suggest this single campaign could finance JeM’s operations for a decade, including recruitment, training, logistics and weapons procurement.
Lashkar-e-Taiba, the group behind the 2008 Mumbai terror attacks, has similarly adapted. Formed in the late 1980s, LeT is one of the most sophisticated jihadist organisations in South Asia, with global recruitment networks and a long history of overseas plots—from Denmark to Australia.
Operating through its front organisations, Jamaat-ud-Dawa and the Pakistan Markazi Muslim League, LeT increasingly frames its fundraising around humanitarian causes. Flood relief, rescue boats, medical aid, and social welfare projects provide a convenient cover for money collection while reinforcing the group’s grassroots legitimacy.
A single flood-rescue boat, according to LeT-linked appeals, costs Rs 1.2 million. Multiply this by dozens of campaigns across Punjab and Pakistan-occupied Kashmir, and the scale of fundraising becomes evident.
The shift to decentralised, humanitarian-branded, and digital fundraising presents a profound challenge to global counterterrorism efforts. These methods:
- Blur the line between charity and militancy
- Exploit genuine humanitarian sentiment
- Circumvent traditional AML/CTF controls
- Enable cross-border micro-donations
- Radicalise donors by emotionally engaging them.
More importantly, they allow terrorist groups to embed themselves within civil society, making enforcement politically sensitive and operationally complex.
While tactics evolve, the ideology driving these groups remains unchanged. Their ultimate objective is not Kashmir alone, nor even India. It is the establishment of a global Islamic order governed by Sharia, achieved through violence, coercion and demographic pressure.
History offers grim reminders of what happens when such movements gain power – from Iran and Afghanistan to Syria and parts of Pakistan itself. The costs are paid not only by non-Muslims, but by Muslims who reject totalitarian interpretations of faith.
The critical question is no longer whether terrorist groups are adapting. They are. The real question is whether the international community is adapting fast enough.
India, as a primary target of these organisations, must continue to expose these networks diplomatically, financially, and technologically. The West, meanwhile, must reassess whether procedural compliance metrics are sufficient when ideology-driven actors are playing a long game.
Terrorism financing today is no longer about suitcases of cash or suspicious wire transfers. It is about apps, narratives, crises and belief systems. Ignoring this reality risks allowing jihadist groups to operate in plain sight under the banners of charity, faith and humanitarian concern.
Salah Uddin Shoaib Choudhury is an award-winning journalist, writer, and Editor of the newspaper Blitz, published from Bangladesh. He specialises in counterterrorism and regional geopolitics
GFX 1
Terror Funding: Old Playbook vs New
THEN: Cash & Couriers
- Bank accounts
- Cash runners
- Hawala chains
- Single-point collectors
NOW: Apps & Anonymity
- Mobile wallets (EasyPaisa, SadaPay)
- Crypto channels
- Proxy charities
- Mosque-building campaigns
- Social-media crowd funding
GFX 2
Mosques as Money Machines
- 313 markaz planned
- ₹12.5 million per mosque
- ₹3.91 billion (~$14m) funding target
- Hundreds of digital wallets
- 10+ years of operational funding
GFX 3
FATF: Passed on Paper, Failing on Ground
Reality Check Scorecard
ON PAPER
- 34 action points “completed”
- Grey list exit: 2022
ON GROUND
- Same jihadist groups active
- Funding channels reinvented
- Ideology untouched
- Money flows harder to trace
