By Zaffar Abbas BBC correspondent in Islamabad

The hawala transfer system leaves no paper trail

Pakistani officials say they have already taken several steps to put an end to cash transfers via the hawala banking system.

Mr Snow said he was pleased with the measures Islamabad had taken to combat terrorism.

But Finance Minister Shaukat Aziz admitted a lack of co-ordinated efforts between countries was still causing problems on cash transfers.

Aid pledge

Funding global terrorism through alternate or illegal banking channels has remained one of the biggest worries of the United States.

On demands from Washington, Islamabad has imposed some restrictions on hawala banking practices and has banned a number of Islamic charities the US believes were involved in funding extremist groups.

Hawala is a centuries-old system that relies on trust relationships and does not leave a paper trail for transfers.

Much of the present hawala network grew out of gold smuggling operations in South Asia in the 1960s and 1970s.

In his meeting with several Pakistani ministers and central bank officials, Mr Snow asked for a new and strict law to check money laundering.

Pakistani officials say he was advised to be patient as such a law would soon be introduced, given the approval of parliament.

Mr Snow said Pakistan would get the promised $3 billion in assistance to fight terrorism, improve the country's education system and tackle poverty.

Mr Aziz said cash transfers were often made through a third country.