Will FATF Reassess Pakistan's Status? India Pushes for Grey Listing Amid Rising Tensions

India's Push for FATF Action Against Pakistan

In a significant move, India is preparing to advocate for Pakistan's return to the Financial Action Task Force (FATF) 'grey list' due to its non-compliance with regulations concerning anti-money laundering and terrorism financing, according to a government insider.

The source confirmed, "We will be addressing this issue with the FATF," when questioned about India's intentions regarding Pakistan's status.

The backdrop of this development is the recent escalation of tensions between the two nations, particularly following a terror attack in Pahalgam on April 22 that resulted in the deaths of 26 civilians.

India asserts that Pakistan has not taken adequate measures against terrorism originating from its soil and has allegedly misappropriated funds from international agencies for military purposes.

Countries that do not adequately tackle their strategic shortcomings in combating money laundering and terrorist financing are subjected to increased scrutiny and may be placed on the FATF's grey list.

Being placed under increased monitoring by the FATF indicates that a country has committed to addressing identified deficiencies within a specified timeframe.

The FATF plenary, which is responsible for decision-making, convenes three times annually—in February, June, and October.

Pakistan was initially added to the FATF's grey list in 2018, at which point it was given a plan of action to mitigate money laundering and terrorism financing. However, it was removed from the list in 2022.

Earlier this month, India also opposed the release of a portion of the International Monetary Fund's bailout package intended for Pakistan.