Will FATF tighten the Grey List noose around Pakistan? Watchdog says Pahalgam terror attack 'could not occur without money'

The Financial Action Task Force (FATF) on Monday condemned the deadly Pahalgam terrorist attack that killed 26 innocent civilians on April 22. The global financial watchdog said the attack could not have occurred without the terrorists getting funded.

"The FATF notes with grave concern and condemns the brutal terrorist attack in Pahalgam on 22 April 2025. This, and other recent attacks, could not occur without money and the means to move funds between terrorist supporters," the FATF statement said.

The watchdog said it identified loopholes in the fight against terror funding, adding that it has come up with guidance on terrorist financing risk.

"As terrorism continues to threaten societies and citizens around the world, the FATF supports over 200 jurisdictions within its Global Network to build and enhance their counter-financing of terrorism (CFT) measures including through the strategic use of financial intelligence," it added.

This comes less than a month after India apprised the FATF about the evidence regarding Lashkar-e-Taiba and Jaish-e-Mohammad terror camps struck by India during Operation Sindoor.

FATF generally takes action against rogue states based on compliance with its anti-money laundering and counter-terrorism financing norms. If Pakistan is found to be involved in funding terror groups, the FATF could put the country in Grey List and implement economic sanctions on the country.

It should be noted that Pakistan first ended up in the Grey List in 2008. It was removed from the list a year later. However, it was put back in the list twice again, i.e. from 2012 to 2015 and from 2018 to 2022.

India had previously urged the IMF to stop giving funds to Pakistan but in vain. However, if Pakistan is back in Grey List, FATF can prevent it from receiving funds from the IMF and the World Bank. IMF had earlier warned Pakistan that tensions with India could affect its bailout programme's "fiscal, external and reform goals".

Protesting IMF's decision to give fresh loans to Pakistan in May, India had abstained from voting in a key meeting, citing potential misuse of the money to fund terrorist groups.

India