In a bold diplomatic maneuver, India is gearing up to push Pakistan back onto the Financial Action Task Force (FATF) grey list — reviving a high-stakes battle over terror financing that could once again isolate Islamabad on the global stage.
New Delhi is compiling a fresh dossier packed with what officials describe as “irrefutable” evidence of Pakistan’s ongoing support for cross-border terrorism and failure to meet FATF’s compliance benchmarks. The move comes ahead of the global watchdog’s crucial June plenary session, where India plans to make a formal case for renewed scrutiny.
“Yes, we will take it up. Work is under progress to prepare for it,” a senior Indian government official confirmed, signaling a clear intent to reignite global pressure on Pakistan’s financial practices.
Trigger: The Pahalgam attack
The latest diplomatic thrust follows the April 22 terror attack in Pahalgam, Jammu & Kashmir, which killed 26 civilians. Indian authorities allege that the assault was bankrolled through cross-border channels, highlighting once again the complex web of terror funding with alleged ties to Pakistan.
The incident, Indian officials say, is just the latest example of Pakistan’s failure to dismantle financial networks that support militant groups—networks that FATF had flagged during Pakistan’s previous stint on the grey list.
A shadow returns
Pakistan was first placed on the FATF grey list in June 2018 and remained there until October 2022. During that period, it faced increased monitoring and significant economic setbacks, particularly in foreign investment and access to international capital.
According to Indian officials, Pakistan’s removal from the grey list was premature—and may have allowed a resurgence of illicit financial activity, especially in sensitive regions like Jammu & Kashmir.
“The grey list status wasn’t just symbolic. It curbed the flow of terror-linked money into India. Without it, we’re seeing those pipelines reopen,” said a top Indian security analyst.
Global pressure campaign
India’s renewed campaign doesn’t stop with FATF. Earlier this month, New Delhi lodged formal objections to the International Monetary Fund’s $7 billion aid package to Pakistan, citing concerns that the funds could be diverted to destabilizing activities. A similar challenge is expected as the World Bank reviews funding to Pakistan in June.
It’s a coordinated push designed to “tighten the noose,” as one official put it, leveraging every international forum possible to expose and isolate terror finance.
The FATF equation
To successfully place Pakistan back on the grey list, India will need support from a significant number of FATF’s 40 member countries. While Pakistan isn’t a direct member of FATF, it is part of the Asia-Pacific Group on Money Laundering (APG) — a regional body that includes both India and Pakistan.
If the dossier gains traction, it could mark a dramatic pivot in regional geopolitics — and a resurgence of global accountability in counter-terror finance efforts.
The countdown to the FATF plenary has begun. The question now: Will the world take India’s evidence seriously enough to act?
