India gears up to re-push Pakistan into FATF grey list over terror financing

In a renewed diplomatic offensive, India is preparing to submit a detailed dossier to the Financial Action Task Force (FATF), urging the global watchdog to reinstate Pakistan on its “grey list” over persistent concerns of terror financing and money laundering.

Top government sources confirmed that New Delhi is compiling evidence to present at the FATF’s upcoming plenary session in June. The dossier will outline Pakistan’s alleged failure to uphold the legal and financial commitments it made when it was removed from the grey list in October 2022.

"Yes, we will take it up. Work is under progress to prepare for it," said a senior government official, underscoring India’s strategic intent to revive global scrutiny on Pakistan’s financial practices.

This move follows the April 22 terror attack in Pahalgam, Jammu & Kashmir, which claimed the lives of 26 civilians. Indian authorities allege that the attack was facilitated through cross-border terror funding, reigniting calls to clamp down on financial pipelines supporting militant activities.

Pakistan had remained on the FATF grey list from June 2018 to October 2022—a designation that subjected it to “increased monitoring” and severely hindered its foreign direct investment prospects and international capital flows. According to Indian officials, the grey list status had significantly restricted illicit financial transfers from Pakistan into sensitive regions like Jammu & Kashmir.

India's efforts to push Pakistan back on the FATF radar are part of a broader strategy. Earlier this month, India formally objected to the International Monetary Fund’s (IMF) ongoing $7-billion aid package to Pakistan, alleging misuse of funds to support destabilizing activities.

In addition to the FATF dossier, India is also expected to challenge a pending review of World Bank funding to Pakistan, also scheduled for June, further tightening the diplomatic noose.

To succeed in its FATF nomination, India will need support from other FATF member countries. The 40-member intergovernmental body, along with over 200 jurisdictions aligned through FATF-Style Regional Bodies, holds triannual plenaries to assess global compliance on financial crime prevention. While Pakistan is not a direct member of FATF, it belongs to the Asia-Pacific Group on Money Laundering (APG), which includes both India and Pakistan as members.

India’s forthcoming submission could potentially reignite international pressure on Pakistan and reshape regional dynamics in the battle against terror financing. The world will be watching as the FATF gathers in June.