A global money-laundering watchdog has placed Pakistan back on its terrorist financing watchlist, Indian media and a diplomatic source said on Friday, in a likely blow to both Pakistan’s economy and its strained relations with the United States.

The move is part of a broader US strategy to pressure Pakistan to cut alleged links to Islamist militants waging chaos in neighbouring Afghanistan.

It comes days after reports that Pakistan had been given a three-month reprieve before being placed on the list, which could hamper banking and hurt foreign investment.

Washington has spent the past week lobbying member countries of the Financial Action Task Force (FATF) to place Pakistan on the so-called “grey list” of nations that are not doing enough to combat terrorism financing.

Pakistani officials and analysts fear being on the FATF watchlist could endanger its handful of remaining banking links to the outside world, causing real financial pain to the economy just as a general election looms in the summer.

Under FATF rules one country’s opposition is not enough to prevent a motion from being successful. Britain, France and Germany backed the US move.

Islamabad has sought to head off the move by amending its anti-terrorism laws and by taking over organizations controlled by Hafiz Saeed, a Pakistan-based Islamist whom Washington blames for the 2008 Mumbai attacks that killed 166 people.