In Pakistan, Hafiz Saeed is periodically put under house arrest, most recently a year ago

Islamabad: When officials here learned last month that Pakistan was in danger of being sanctioned by a global task force on terror financing, they sprang into action.

After quickly amending national anti-terror laws, the government ordered a financial crackdown on several controversial Islamist groups. Most notably, officials moved to seize the assets of a charity controlled by Hafiz Saeed, a fiery anti-India cleric who is accused of masterminding a 2008 terror siege in Mumbai that killed 164 people.

It didn't work.

Hussain and other experts said Pakistan's economy, now growing at 5 per cent a year, should weather the current storm. But Kugelman said it has vulnerable signs, such as heavy debts to China and declining foreign reserves. He also noted that being on the watch list may make banks and investors think twice, and that temporary gestures like detaining Saeed will no longer be enough to avoid a reckoning that is long overdue.