Amid rising diplomatic and military tensions, India is preparing to urge the Financial Action Task Force (FATF) to re-list Pakistan in its ‘grey list’ for insufficient compliance on countering terrorism financing and money laundering, Reuters reported, quoting a top Indian government official.
The FATF grey list—officially known as “jurisdictions under increased monitoring”—includes countries with strategic deficiencies in countering money laundering, terrorist financing, and proliferation financing. Countries on this list face enhanced scrutiny and reputational damage, making it more difficult to attract foreign investment and financial support.
“India is likely to make a formal appeal to FATF during its next plenary session to re-examine Pakistan’s current status, based on fresh evidence and recent developments,” the senior official was quoted as saying by Reuters.
Pakistan was removed from the FATF grey list in 2022, a move that boosted its international financial credibility and opened doors to easier access to global lenders. However, recent geopolitical strains and evidence of continued terror activity linked to Pakistani soil—highlighted during India’s Operation Sindoor—have rekindled concerns about Islamabad's compliance with FATF norms.
In a related development, the official also revealed that India is planning to oppose future World Bank funding to Pakistan, citing concerns over misuse of international financial aid amid growing evidence of state-sponsored terrorism.
This diplomatic escalation comes even as the International Monetary Fund (IMF) recently approved a $1 billion loan tranche for Pakistan under its Extended Fund Facility (EFF). The loan, part of a $2.1 billion package approved in September 2024, was sanctioned after Pakistan met a series of tough economic reforms.
IMF Communications Director Julie Kozack defended the decision, saying: “Our Board found that Pakistan had indeed met all of the targets. It had made progress on some of the reforms... and for that reason, the Board went ahead and approved the program.”
Notably, Pakistan had to comply with 11 new conditions imposed by the IMF, including parliamentary approval of economic measures, lifting import restrictions, and increasing surcharges on electricity.
