Pakistan’s recent amendments aid madrassa’s in promoting extremism by virtually dismantelling anti-terror safeguards previously committed. In a recent development that threatens regional and global security, Pakistan’s recent amendments to the Societies Registration Act of 1860 mark a significant and dangerous retreat from its counter-terrorism financing commitments. The legislation, signed into law in December 2024, effectively dismantles the critical oversight mechanisms for madrasas that were established to fulfill Pakistan’s Financial Action Task Force (FATF) obligations, raising serious concerns about the country’s commitment to combating terrorism financing. The new law represents a dramatic shift from the previous regulatory framework, where madrasas were required to register under the Directorate General of Religious Education (DGRE). Under the amended act, these religious seminaries can now register under the more lenient Societies Registration Act, substantially weakening government oversight of their curriculum and financial operations. This change effectively nullifies years of progress in monitoring and regulating these institutions, which have historically been linked to extremist activities.

This legislative change is particularly troubling given the historical context of madrasas in Pakistan. These religious schools have long served as recruitment grounds for extremist organizations and channels for terror financing. The DGRE, established in December 2019, was specifically created to monitor and regulate approximately 35,000 madrasas across Pakistan which was a key condition for the country’s removal from the FATF’s grey list in October 2022. The establishment of DGRE was seen as a significant step forward in Pakistan’s counter-terrorism efforts, but this new legislation effectively undermines its authority and purpose. The consequences of this regulatory rollback are far-reaching and potentially devastating. While an ordinance was hastily passed to maintain DGRE control over the 18,000 already-registered madrasas, it leaves approximately 17,000 unregistered madrassas free to operate under the more permissive Societies Act. More worryingly, the ordinance’s limited 120-day validity period raises serious questions about the government’s long-term oversight intentions and commitment to maintaining regulatory control over these institutions.

The timing of this legislation appears carefully calculated to minimize international scrutiny. Pakistan, having emerged from the FATF grey list just two years ago, was supposed to maintain strict monitoring of its Non-Profit Organizations (NPOs) sector as part of its follow-up commitments to the FATF’s International Co-operation Review Group. The new law directly contradicts FATF Recommendation 8, which mandates protection of NPOs from terrorist financing abuse, and appears designed to circumvent these international obligations while maintaining a veneer of compliance. Perhaps most alarming is the provision that new madrasas need not register with the DGRE at all. This creates a dangerous loophole where future religious seminaries can operate with minimal government supervision, potentially becoming havens for extremist ideologies and terror financing activities. The lack of oversight on new institutions essentially creates a two-tier system where future madrasas can avoid even the basic scrutiny that existing ones face.

The amendments effectively render these institutions autonomous, making them highly susceptible to exploitation by extremist elements. The reduced oversight of curriculum and financial operations creates an environment where radical ideologies can flourish unchecked, and suspicious financial transactions may go unnoticed. This autonomy is particularly concerning given Pakistan’s history of struggling with extremist influences within its religious education system. This legislative change represents more than just administrative reorganization; it signals Pakistan’s willingness to compromise on its international counter-terrorism commitments for domestic political expediency. The move raises serious questions about Pakistan’s commitment to combating terrorism financing and extremism, particularly given the country’s history of being grey-listed by FATF three times in 2008, 2012, and 2018. Each grey-listing was a result of structural deficiencies in the country’s anti-money laundering and counter-terrorism financing frameworks.

Concerns are further amplified by Pakistan’s track record in implementing and maintaining counter-terrorism measures. The country’s approach has often been characterized by temporary compliance followed by gradual relaxation of controls, a pattern that appears to be repeating with this new legislation. The timing of the amendment, coming just two years after Pakistan’s removal from the FATF grey list, suggests a calculated move to roll back regulations while maintaining minimal compliance with international requirements. The broader implications for regional security cannot be overstated. As Pakistan continues its reporting cycles under FATF obligations, this deliberate weakening of madrasa oversight fundamentally alters the country’s terror financing risk profile. The potential for these institutions to once again become conduits for extremist funding and ideology poses a significant threat to regional stability and international security efforts.

FATF reviewers must carefully scrutinize these developments. While Pakistan maintains a facade of compliance through temporary measures like the limited-duration ordinance, its substantive actions suggest a troubling retreat from meaningful oversight of institutions historically linked to extremism and terror financing. This development demands immediate attention from international monitoring bodies to prevent the re-emergence of institutional structures that have previously enabled terrorism financing in the region. Pakistan’s new Societies Registration (Amendment) Bill 2024 represents a significant step backward in the fight against terrorism financing and extremism. The legislation’s weakening of oversight mechanisms, combined with the creation of loopholes for future institutions, poses a serious threat to regional security and international counter-terrorism efforts. Failure to address these issues could have far-reaching consequences for global security and stability.