India building a case to 'grey list' Pakistan at FATF's meeting in June

The FATF had removed Pakistan from its grey list in October 2022. However, Indian officials have consistently maintained that Pakistan has failed to take sustained and verifiable action against UN-designated terror groups operating from its own soil.

India is preparing to raise the issue of Pakistan’s terrorism record at the upcoming Financial Action Task Force (FATF) plenary meeting scheduled in June, with a view to seek Islamabad’s re-inclusion in the watchdog’s ‘grey list’, government sources said on May 23.

“India will take it up in the FATF meeting coming up. India is making preparations accordingly,” said sources, adding that a detailed dossier on Pakistan support for terror networks is being prepared to support the case.

The FATF had removed Pakistan from its grey list in October 2022. However, Indian officials have consistently maintained that Pakistan has failed to take sustained and verifiable action against UN-designated terror groups operating from its own soil.

"In 2022 FATF removed Pakistan from the grey list as they promised to bring a law, which they have failed to do so. With more dossiers from India, Pakistan shoudl go back to the grey list," the source said.

The Financial Action Task Force (FATF) Grey list comprises countries identified as having strategic deficiencies in their anti-money laundering and counter-terrorism financing frameworks but which have committed to working with the FATF to address these issues within a set timeframe. While not subject to international sanctions, countries on the Grey List face increased scrutiny from global financial institutions, which can affect investor confidence and raise the cost of doing business.

The development comes amid renewed concerns over Pakistan’s alleged support to terror networks and India's efforts to hold Islamabad accountable through international mechanisms. The FATF grey list refers to countries under increased monitoring for strategic deficiencies in anti-money laundering and counter-terror financing frameworks.

India’s attempt to revive scrutiny on Pakistan is also linked to rising threats of cross-border terror and the lack of action on terrorist groups that continue to operate with impunity.

India is likely to present the dossier highlighting instances of Pakistan’s continued inaction, with emphasis on recent intelligence inputs and violations of FATF’s global standards. Officials believe that the material evidence could trigger a review of Pakistan’s status at the FATF.