Pakistan may be put back on the Financial Action Task Force’s (FATF) grey list in the next few weeks, a Moneycontrol report quoting sources privy to the development said. This follows concerns over Islamabad’s continued failure to address financing for terror activities.
A review report, due in late June or early July, will most likely highlight grave shortcomings in Pakistan’s performance on fighting terrorist financing. Last week’s FATF plenary in Strasbourg is said to have had India raising alarm on Pakistan’s terror networks and suspected state backing, impacting current deliberations regarding the compliance status of the country.
Although FATF’s ultimate call is still in the air, officials indicate there’s a high likelihood Pakistan will be re-listed under “enhanced monitoring.” This would be Pakistan’s fourth inclusion on the grey list, previously being included from 2008–2009, 2012–2015, and 2018–2022.
The increased attention comes after the April 22 Pahalgam terror attack in Jammu and Kashmir, in which 26 individuals died. Two of the attackers were said to be Pakistani nationals. On June 16, FATF made an extraordinary statement criticizing the attack, saying that the violence “could not happen without money and the ability to transfer funds between terrorist supporters.”
The FATF grey list contains countries that have strategic weaknesses in fighting money laundering, terror financing, and the abuse of virtual assets. While listing does not impose sanctions, it may deter foreign investment and raise the cost of doing business owing to tighter financial oversight.
India, following the launch of Operation Sindoor, has dispatched several diplomatic missions to bring to the limelight Pakistan’s unabated patronage of terrorism. FATF is also in the process of publishing a report on the abuse of crowdfunding, crypto-assets, and social media for terror funding drawing upon case studies from its international network.
Pakistan’s reclassification, if it happens, will be driven by FATF consensus within the next few weeks.
