India strikes to re-list Pakistan on FATF gray checklist and seeks IMF assist evaluate over terror funding considerations after the Pahalgam assault.
In response to the lethal terrorist assault in Pahalgam, Jammu and Kashmir, on April 22, 2025, which claimed the lives of 26 Hindu vacationers, India is contemplating two important measures geared toward curbing monetary help for terrorism emanating from Pakistan.
Push to Re-Listing Pakistan on FATF’s Gray Listing
India is considering initiating a course of to have Pakistan reinstated on the Monetary Motion Activity Drive’s (FATF) “gray checklist,” a designation that topics nations to elevated monitoring on account of deficiencies in combating cash laundering and terrorist financing. Pakistan was beforehand positioned on the gray checklist in June 2018 and remained there till October 2022. Throughout this era, Pakistan was required to implement a 34-point motion plan to deal with these deficiencies.
Re-listing Pakistan may have important financial repercussions, together with lowered international direct funding and elevated due diligence necessities for worldwide monetary transactions. This transfer would additionally sign to the worldwide neighborhood that Pakistan has not made ample progress in curbing monetary help for terrorism.
Request to evaluate IMF assist to Pakistan
Concurrently, India has requested the Worldwide Financial Fund (IMF) to evaluate its ongoing monetary help to Pakistan. Pakistan is at the moment benefiting from a $7 billion bailout bundle initiated in July 2024. India’s objection centres on considerations that these funds could also be diverted to help terrorist actions, significantly following the current assault in Pahalgam.
The IMF is scheduled to conduct a efficiency evaluate of Pakistan’s financial program in Might 2025. India’s intervention may affect the IMF’s evaluation and probably have an effect on the disbursement of future monetary help to Pakistan.
Pakistan’s historical past with FATF
Pakistan has a historical past of being positioned on and faraway from the FATF’s gray checklist. Earlier than its removing in October 2022, Pakistan had been on the checklist since June 2018. Throughout this era, Pakistan was required to implement a 34-point motion plan to deal with deficiencies in its anti-money laundering and counter-terrorist financing regimes .
The FATF’s choice to take away Pakistan from the gray checklist in 2022 was primarily based on the nation’s reported progress in bettering its compliance with worldwide requirements. Nevertheless, India has expressed considerations that Pakistan has not sustained these efforts, significantly in addressing the monetary help for terrorist teams working inside its borders.
Implications for regional safety
The proposed measures mirror India’s broader technique to fight cross-border terrorism by focusing on its monetary underpinnings. By pressuring worldwide monetary establishments and regulatory our bodies, India goals to disrupt the financial networks that help terrorist actions originating from Pakistan.
These developments come at a time of heightened tensions between India and Pakistan following the Pahalgam assault. Each nations have taken steps to droop key bilateral agreements, together with a significant river-sharing treaty and airspace entry, additional straining diplomatic relations.
India’s consideration to re-list Pakistan on the FATF’s gray checklist and its request to the IMF to evaluate monetary help to Pakistan underscore the nation’s dedication to combating terrorism financing. These actions purpose to exert worldwide stress on Pakistan to take extra decisive and sustained actions in opposition to terrorist teams working inside its territory. The outcomes of those initiatives will likely be intently monitored by the worldwide neighborhood, as they’ve important implications for regional stability and worldwide monetary cooperation.