India to Urge FATF to Greylist Pakistan Over Terror Concerns Amid Escalating Tensions
India’s move to push for Pakistan’s re-listing under FATF’s “increased monitoring” category—commonly known as the grey list—comes amid heightened tensions following a series of cross-border hostilities and strong rhetoric from senior Indian leaders, including Prime Minister Narendra Modi.
The FATF grey list includes countries that are considered a risk to the international financial system due to strategic deficiencies in countering money laundering and terror financing. Pakistan was removed from the list in 2022 after taking action on several FATF-mandated reforms, bolstering its economic credibility.
However, India is now preparing to highlight Pakistan’s alleged diversion of international aid, including recent IMF bailouts, toward military build-ups and support for terror groups operating across the border. According to the government source quoted by Reuters, India also plans to oppose new World Bank funding proposals for Islamabad.
The diplomatic offensive comes days after the International Monetary Fund (IMF) defended its $1 billion disbursement to Pakistan under the Extended Fund Facility (EFF), stating that Islamabad had met all the required reform benchmarks. This installment is part of a broader $7 billion programme, from which Pakistan has so far received $2.1 billion.
Notably, Indian authorities argue that IMF loans have historically coincided with surges in arms procurement by Pakistan, raising concerns over potential misuse of aid. Defence Minister Rajnath Singh earlier stated that IMF loans to Pakistan amount to “indirect funding of terrorism,” a claim echoed by India in communications with international financial bodies.
Prime Minister Modi, while addressing a rally in Bikaner, Rajasthan on Thursday, issued a stern warning: “If Pakistan continues to export terrorists, it will have to beg for every penny. Its economy and military will pay the price for every terrorist attack.”
The FATF is expected to hold its next plenary session in late June, where member countries, including India, can present evidence and raise objections related to terror financing and money laundering activities.
