International watchdog FATF condemns Pahalgam attack, vows tighter scrutiny

India has reportedly intensified its diplomatic push to highlight the resurgence of cross-border terrorism and the funding channels that support it on the global stage

In a first, the Financial Action Task Force (FATF) on Monday publicly condemned the terrorist attack in Pahalgam, Jammu and Kashmir, on 22 April 2025, and announced plans to increase its monitoring of how well countries are tackling the financing of terrorism.

 

This development is being viewed by strategic and geopolitical analysts as a potential opening for India to push for Pakistan’s re-entry into the FATF grey list.

 

“Terrorist attacks kill, maim and inspire fear around the world. The FATF notes with grave concern and condemns the brutal terrorist attack in Pahalgam on 22 April 2025,” the international watchdog said in a public release titled Strengthening Efforts to Combat Terrorist Financing. 

 

“This, and other recent attacks, could not occur without money and the means to move funds between terrorist supporters,” it added.

FATF shifts focus to implementation

The FATF's statement also hints at a shift in its evaluation approach. “In addition to setting out the framework for combating terrorist financing, the FATF has enhanced its focus on the effectiveness of measures countries have put in place,” it stated.

 

“That is how, through our mutual evaluations, we have identified gaps that need to be addressed,” added the statement. 

 

India sees this evolving focus — from laws on paper to actual implementation — as an opportunity to highlight persistent gaps. According to top officials, India has compiled new evidence tracing the flow of funds, the misuse of technology, and the role of virtual currencies in financing terrorism. This dossier was presented during the recently concluded FATF meetings and is expected to be submitted at other international forums as well.

India pushes to expose terror financing

India has reportedly stepped up its diplomatic efforts to draw global attention to renewed cross-border terrorism and the financial networks supporting it. Senior Indian officials have shared intelligence with key members of the FATF’s Global Network — covering more than 200 jurisdictions — to build a case for grey-listing Pakistan once again.

 

Although Pakistan was removed from the FATF grey list in 2022 after making several compliance efforts, Indian authorities maintain that the core infrastructure supporting terrorism still exists and is being shielded by superficial legal changes.

 

The Pahalgam attack and several other recent incidents in Jammu and Kashmir are being cited by India as evidence that these funding channels remain active.

FATF's grey list

The FATF is the global watchdog for money laundering and terrorist financing, setting international standards to help prevent such unlawful activities.

 

At present, 24 countries are on the Financial Action Task Force’s (FATF) “grey list,” which identifies nations placed under increased monitoring due to weaknesses in their systems for preventing money laundering, terror financing, and the funding of weapons of mass destruction.

 

Countries on the grey list must promptly fix these weaknesses while being closely monitored by the FATF.

 

Pakistan has had a recurring presence on the FATF grey list over the years. It was first placed on the list in February 2008, but removed in June 2010. However, it returned to the list in February 2012 and was removed again in February 2015. Pakistan was then re-added in June 2018 and remained under scrutiny until October 2022.

 

Although Pakistan was taken off the list in October 2022, the FATF advised it to “continue cooperation with the Asia Pacific Group to strengthen its anti-money laundering and counter-terror financing systems.”