ISLAMABAD (REUTERS) - The US State Department has named a self-proclaimed Pakistani charity as a "foreign terrorist organisation", a status that freezes any assets it has under US jurisdiction.
Jamaat-ud-Dawa calls itself a humanitarian charity but is widely seen as a front organisation for the Lashkar-e-Taiba (LET), a Pakistan-based group accused of orchestrating attacks in India, including the 2008 Mumbai attack that killed 166 people.
The designation comes as Nato troops in Afghanistan are drawing down, and regional rivals Pakistan and India compete with each other for influence with Kabul.
Some fear the competition may spill into open conflict between the two nuclear-armed nations, who have fought three wars since independence.
Historically, Pakistan has used militant groups like LET to mount covert attacks on Indian soil, something the current government has vowed will not happen again.
Jamaat-ud-Dawa's listing will prohibit US entities or citizens from dealing with the organisation, but will probably have little practical effect on its operations or fund-raising.
The United Nations said in 2008 that Jamaat-ud-Dawa was a front for LET and Pakistani authorities vowed to crack down.
But Jamaat-ud-Dawa continues to operate openly in Pakistan. Its leader holds public rallies and gives interviews.
The group says it is currently carrying out charitable work in the remote border region of North Waziristan to help residents displaced by military operations.
"In December 2001, the Department of State designated LET as a Foreign Terrorist Organisation. Since the original designation occurred, LET has repeatedly changed its name in an effort to avoid sanctions," the State Department said in a statement on Wednesday.
"More specifically, LET created Jamaat-ud-Dawa as a front organisation, claiming that the group was an 'organisation for the preaching of Islam, politics, and social work'."
The US Treasury Department separately announced that it was designating two LET leaders, Nazir Ahmad Chaudhry and Muhammad Hussein Gill, as "specially designated global terrorists", imposing economic sanctions on them.
Officials from Jamaat-ud-Dawa did not return calls seeking comment, but the organisation responded on its Twitter feed.
"We reject the misleading and malicious assertions by the US state and treasury departments as a fact-less exercise and propaganda against us," the tweets read. "US allegations and (their) timing are precisely due to 'strategic partnership' with India in Afghanistan; against Pakistan."
In 2012, the United States offered a US$10 million reward for information leading to the arrest of Hafiz Saeed, who founded LET. He claims he has long abandoned its leadership and now heads Jamaat-ud-Dawa.
Chaudhry, considered a close aide of Hafiz Saeed, has served as LET's vice-president, a member of its central leadership council and director of its public relations department.
Gill is one of the founders of the Lashkar-e-Taiba and has served as its chief financial officer for years.
As a result of Wednesday's action, any assets belonging to Gill and Chaudhry and their group that come under US jurisdiction are frozen.
In addition, US citizens and firms are barred from any dealings with those designated.
