he tussle over registration of madrassas can once again expose Pakistan to Financial Action Task Force restrictions. The government is under pressure currently from the Jamiat Ulema-i-Islam-Fazl to register the seminaries as charities. Otherwise, it could face dreaded street protest.

The genesis of the problems dates back to October when the ruling coalition was courting opposition parties to for votes in support of the 26th Constitutional Amendment. The amendment was being opposed by the main opposition party, the Pakistan Tehreek-i-Insaf as a draconian law aimed at clipping the wings of the superior judiciary. An opposition party supporting the bill would be doing the government a huge favour. In return, they could ask for a similarly extraordinary measure. It was against this backdrop that the JUI-F negotiated with the government and made its choice.

Thousands of religious seminaries are operated by JUI-F members and supporters and madrassa students and graduates form a large part of the party’s support base. The JUI-F therefore pressed the government and was able to persuade it to table and approve the Societies Registration (Amendment) Act, in October. The law has been passed by both houses of the parliament. However, President Asif Ali Zardari has since refused his assent and the government is defending his decision.

In formal terms, President Zardari has asked the parliament to consider Pakistan’s international obligations before altering the procedures for registering religious seminaries. “Lawmakers should keep in mind the international environment. When a [madrassa] is registered as a [charitable] society, which has conflicting interests, it would invite international criticism/ sanctions,” he wrote in a letter to the prime minister. The president argued that altering the current procedure for madrassa registration could have serious repercussions, including adverse reviews by international bodies such as the Financial Action Task Force, and might imperil the European Union’s Generalised Scheme of Preferences Plus programme.

Warned by the president, the government has proposed fresh legislation concerning the madrassas. It has now adopted the position that madrassas should be registered as educational institution under the Ministry of Education and not as charities under the Ministry of Industries.

There are tens of thousands of madrassas in the country and millions of students. Pakistan started regulating these seminaries after 9/11. In 2019, the government established the Directorate General for Religious Education to register these madrassas. While some madrassas got registered under this framework, others including those linked to the JUI-F did not.

The government’s reluctance to register madrassas under the Societies Act stems from the fear that donations received by some of the madrassas could conceivably be used for financing terrorists. This can create a lot of problems for Pakistan’s status with the Financial Action Task Force. Pakistan remained on the FATF grey list from 2018 to 2022 due to problems with controlling the flow of money for illicit purposes.

Under the Societies Registration Act, madrassas will be registered as charities, like any other NGO. With this status, they will be allowed to receive donations and enjoy certain tax exemptions. There will be limited scrutiny of their finances. However, if madrassas register with the Ministry of Education, they will not be able to receive donations. Also, they will be subject to greater financial scrutiny.

The government’s reluctance to register madrassas under the Societies Act stems from the fear that donations received by some of the madrassas can conceivably be used for financing terrorists. This will create a lot of problems for Pakistan’s status with the FATF. Pakistan remained on the FATF grey list from 2018 to 2022. It is believed that this caused more than $30 billion in economic losses.

The government is worried that if Pakistan is again put on this list, possibly due to the unregulated finances of madrassas, it will be an economic nightmare. Grey listing can prevent new foreign investment in the country and require stricter regulation in all of its global financial transactions.

JUI-F leader Hafiz Hamdullah told the media: “The government’s prime objective is to hand over control of seminaries to the FATF.” Attaullah Tarar, the federal minister for information, has denied this claim on behalf of the government.

The JUI-F is clearly not amused by this U-turn. Maulana Fazl-ur Rehman has threatened to launch street protest if the government delays the matter any further or refuses to notify the Societies Registration Act. The Ittehad Tanzeemat-i-Madaris Pakistan, a coalition of the major madrassa oversight bodies, has also demanded that the government issue a gazette notification for the Societies Registration Act.

The JUI-F has huge street power. This is a serious challenge for the government as former prime minister Imran Khan’s Pakistan Tehreek-i-Insaf is also threatening to call for civil disobedience. The government is walking a tightrope and cannot apparently buy much time even on the pretext of negotiation.

There is no easy way out of the situation the government has landed itself in.

The writer is a journalist based in Islamabad. He is the lead contributing writer for Nikkei Asia in Pakistan. He can be reached at adnan.aamir@live.com. He posts on X, at @iAdnanAamir.