WASHINGTON: Pakistan has made substantial progress in countering terrorist financing and addressing regional extremist networks, a US State Department report states while also highlighting significant security challenges including a sharp rise in terrorist attacks in 2023.

The report released this week commends Pakistan for completing its updated National Risk Assessment (NRA) on money laundering and terrorist financing in 2023. This assessment evaluated 87 terrorist organisations, conducted sectoral vulnerability analyses, and identified donations and extortion as key funding sources for terrorism.

According to the assessment, 41 groups remain active in Pakistan, leveraging cash couriers and illegal money transfer services. Porous borders with Afghanistan are flagged as critical vulnerabilities facilitating illicit financial fiows.

The report notes that consistent with its commitment to relevant UN resolutions, Pakistan prosecutes its returning citizens who participated in foreign wars. `There were about 100 Pakistani nationals in northeast Syria` in 2023, it mentions.

`To date, Pakistan has declined to repatriate any of its nationals,` it adds.

The State Department underscores Pakistan`s efforts to disseminate the findings to law enforcement and other stakeholders, directing them to implement targeted policy and operational priorities. Notably, Pakistan extradited a dual US-Pakistani citizen to the US in December to face prosecution for terrorismrelated crimes.

The US report notes that Pakistan collects biometric information at land crossings through its International Border Management Security System.

The Customs Service attempted to enforce antimoney laundering laws and foreign exchange regulations at all major airports, in coordination with other agencies.

In 2023, Pakistani customs managed the entry of dual-use chemicals for legitimate purposes through end-use verification, while also attempting to prevent their diversion for use in IEDs.

FATF, rising threat Pakistan`s removal from the Financial Action Tasl< Force (FATF) Grey List in October 2022 is highlighted in Washington as a `pivotal achievement`. This followed sustained efforts to address strategic deficiencies identified in 2018.

The FATF acl(nowledged Pakistan`s improved compliance with international anti-money laundering (AML) and counter-terrorist financing (CFT) standards, culminating in a strengthened regulatory framework.

Despite advancements in combating terrorist financing, the report paints a grim picture of the security landscape in 2023. Terrorist attacks increased by over 50pc compared to 2022, with civilians and securityforces beingfrequentrargets.

Provinces like Khyber Pakhtunkhwa and Balochistan experienced concentrated violence, with groups like the TTP, Balochistan Liberation Army, and local ISIS affiliates employing explosives and small arms in their attacks.

Madressahs` compliance The report notes Pakistan`s continued efforts in countering violent extremism, including operating `deradicalization` camps in KP that provide corrective religious education, vocational training, and counseling.

The National Counterterrorism Authority (Nacta) also expanded its Preventing and Countering Violent Extremism (P/CVE) office in 2023, signing an MoU with the Higher Education Commission (HEC) to implement CVE initiatives across universities.

However, concerns remain regarding madressahs failing to comply with registration and funding documentation laws, some of which continue to promote ideologies that could lead to violent extremism.

Pakistan`s active participation in multilateral counter-terrorism forums, such as the Global Counterterrorism Forum and South Asian Association for Regional Cooperation, as well as the inclusion of cities like Karachi and Peshawar in the Strong Cities Network, underscores its commitment to regionalstability.

Political, strategic dimensions Security analysts note that while Pakistan has made progress in countering terrorist financing, its domestic security remains precarious.

`The rise in terrorist activity alongside progress in countering terrorist financing highlights the complex reality Pakistan must navigate,` says Agha Murtaza Haider, a security analyst, while highlighting the dualchallenges the countryfaces.

He also addressed domestic political concerns such as the Pakistan Tehreelei-Insaf`s call for US sanctions over alleged democratic backsliding. But he believed Washington`s strategic interests in counterterrorism and regional stability are likely to take precedence over such demands.

`Washington`s approach has consistently favoured stability over punitive measures,` he observed, adding that Pakistan`s cooperation in addressing terrorist financing remained a key US priority.

While Pakistan`s efforts have earned international recognition, the steep rise in terrorist activityin 2023 underscores the dauntingchallenges ahead in ensuring both domestic stability and global trust.