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New Delhi: The Paris-based Financial Action Task Force (FATF) on Friday retained Pakistan on its “grey list", saying Islamabad had made only “limited progress" in curbing terror financing and failed to grasp the risks posed by groups such as the Lashkar-e-Taiba, and Jaish-e-Mohammed (JeM), which has claimed responsibility of the Pulwama terror attack.

The action by the global terror financing watchdog, which is a relief to India, came a day after the UN Security Council, in a statement, condemned the 14 February suicide attack in Pulwama that killed about 40 Central Reserve Police Force (CRPF) personnel.

The UNSC also named the Pakistan-based JeM in the statement.

Tensions between India and Pakistan have been running high since the Pulwama terror attack, with the Pakistani army on Friday warning it will respond to any Indian reprisal with “full force", according to Reuters news agency.

The UNSC condemnation came despite attempts by China to stall its statement for the reference to JeM, two people familiar with the development said. China’s attempt is a sign that despite efforts by India and China to stabilize ties and establish a working relationship following a 73-day Doklam standoff in 2017, Beijing’s position on the UN proscribing anti-India terrorists remains tilted in favour of Pakistan.

The FATF, which condemned the Pulwama attack, said it would continue to work with Pakistan, which had been hoping to get off the “grey list" of countries that have inadequate control over ensuring that money doesn’t reach terrorist groups.

The FATF urged Pakistan to address its deficiencies adequately, including the “demonstration of the effective implementation of targeted financial sanctions" against UN-designated terrorists. “Given the limited progress on action plan items, the FATF urges Pakistan to swiftly complete its action plan," it said.

Pakistan’s continued inclusion on the “grey list" makes it harder for Islamabad to access international markets for investments and loans at a time when its economy is in dire straits. India has been looking for a strong push from the FATF to choke the flow of funds to terrorist groups in Pakistan.

The UN Security Council, a 15-member body with the US, UK, Russia, France and China as its permanent veto wielding members, “condemned in the strongest terms the heinous and cowardly suicide bombing in Jammu and Kashmir, which resulted in over 40 Indian paramilitary forces dead and dozens wounded on February 14, 2019, for which Jaish-e-Mohammed has claimed responsibility".

It also “underlined the need to hold perpetrators, organizers, financiers and sponsors of these reprehensible acts of terrorism accountable and bring them to justice".

Significantly, the UNSC said that “all states must, in accordance with their obligations under international law and relevant Security Council resolutions, cooperate actively with the Government of India and all other relevant authorities in this regard". It also reiterated “that any acts of terrorism are criminal and unjustifiable, regardless of their motivation, wherever, whenever and by whomsoever committed".

The person familiar with the development cited above said China did not want a reference to JeM in the statement and had also objected to the reference to Jammu and Kashmir, wanting it to be changed to Indian-administered Kashmir—a term used to imply dispute between India and Pakistan over Kashmir. However, China finally went with the statement, which was then adopted unanimously, the person said.

The UNSC reference to the JeM did not “represent a judgement on the (Pulwama) attack" and was only a general reference, China’s foreign ministry spokesperson Geng Shuang said in Beijing on Friday.

China is seen as an “all weather" ally of Pakistan and has been repeatedly using its veto power to scuttle moves by India at the UN to put JeM’s founder Masood Azhar on a global terror list. It has previously shot down a proposal by the US, the UK and France to ban him.

China had expressed “deep sympathies" to the families of the 40 CRPF men killed in the Pulwama attack. In his condolence message to external affairs minister Sushma Swaraj, Chinese foreign minister Wang Yi had said that his country “resolutely opposes and strongly condemns all forms of terrorism", but the statement did not make any reference to Pakistan or the JeM.

Indian foreign secretary Vijay Gokhale met the Chinese ambassador to India, Luo Zhaohui, after the Pulwama attack to seek support on a UN ban on Masood Azhar.

Swaraj is also likely to take up the matter with Wang when she travels next week to Wuzhen in northern China, where she is to meet him on the sidelines of the 16th Russia-India-China foreign ministerial meeting being held on 27 February.

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