Pakistan banned a charity linked to the Mumbai attacks, arrested its leaders and ordered its assets frozen, officials said Thursday.
Information Minister Sherry Rehman said that the government had formally "proscribed" Jamat-ud-Dawa.
U.S. and Indian officials say Jamat is a front group for Lashkar-e-Taiba, a banned militant group blamed for the Mumbai attacks.
Central Bank spokesman Syed Wasimuddin said all Pakistani banks had been ordered to freeze any of the group's assets.
The U.N. Security Council panel on Wednesday declared Jamat-ud-Dawa a front for a terrorists and thus subject to sanctions including an asset freeze, travel ban and arms embargo.
Earlier Thursday, authorities in the country's largest city, Karachi, said they had closed nine premises associated with the group, apparently carrying out the order from the central government.
An Associated Press reporter outside one Jamat office in the city said it was locked up and deserted. It was unclear what was happening at the group's large headquarters close to the eastern city of Lahore.
Pakistan has arrested at least 20 people, including two extremists alleged by India to be key players in the Mumbai attacks, but India has made it clear it wants to see more action.
The attacks on Mumbai, India's financial center, killed 171 people and sharply raised tensions between the nuclear-armed neighbors, which have fought three wars over the last 60 years.
The U.N. Security Council panel on Wednesday declared Jamat-ud-Dawa a front for a terrorist group subject to U.N. sanctions including an asset freeze, travel ban and arms embargo.
U.S. officials say the group, which has offices, schools and medical clinics around the country, is a front for Lashkar-e-Taiba, a banned militant group accused by India of carrying out and planning the Mumbai assaults.
In a statement Thursday, Prime Minister Syed Yousuf Raza Gilani said Pakistan had "taken note of the designation" and "would fulfill its international obligations." He did not elaborate.
'We demand justice'
Earlier, Jamat's hard-line Islamist chief denied that the charity was involved in terrorism and denounced the U.N. He said the group would petition the U.N. as well as national and international courts to overturn the decision.
"If India or the U.S. has any proof against Jamat-ud-Dawa, we are ready to stand in any court. We do not beg, we demand justice," Hafiz Mohammed Saeed said at a news conference.
Pakistan has promised to pursue those responsible for the Mumbai attacks.
But it complains that India has not shared evidence from its investigation, underlining the mistrust hampering U.S. efforts to avert a deeper crisis between the two countries.
New FBI-style agency
India also announced a massive overhaul of its security and intelligence agencies Thursday in the wake of the Mumbai terror attacks.
Among the new measures, the government will seek to create an FBI-style national investigative agency, beef up coastal security, better train local police, strengthen anti-terror laws and increase intelligence sharing, said Home Minister Palaniappan Chidambaram, the country's top law enforcement official.
"Given the nature of the threat, we can't go back to business as usual," Chidambaram said in a speech to India's Parliament, adding he would "take certain hard decisions to prepare the country and people to face the challenge of terrorism."
The revamp represents the government's first detailed response to widespread public anger over security and intelligence failures in the attacks. Chidambaram has previously apologized for government "lapses" in the assault.