CONTEXT

• On April 22, 2025, a terror attack in Pahalgam, Kashmir, killed 26 people.
• Attack was carried out by Pakistan-trained terrorists, as per Indian authorities.
• This incident has drawn rare international condemnation from the Financial Action Task Force (FATF).

CONCEPT – FATF AND ITS ROLE

• FATF (Financial Action Task Force) is a global watchdog for money laundering and terror financing.
• Established in 1989, it has 200 member jurisdictions forming a global network.
• FATF maintains “grey” and “black” lists to name and shame non-compliant countries.
• A country on the grey list faces enhanced scrutiny and limited access to global finance.
• Pakistan was earlier on the grey list (2018–2022) due to non-compliance on terror finance.
• India’s National Risk Assessment (NRA) identifies state-sponsored terrorism from Pakistan as a major terror financing (TF) threat.
• FATF’s inclusion of “state-sponsored terrorism” in its upcoming report is a first-of-its-kind international acknowledgment.

 CURRENT  

• FATF condemned the Pahalgam attack, marking only the third condemnation in a decade (previous in 2015 & 2019).
• Stated the attack was not possible without financial support—highlighting role of terror financing.
• FATF to release a comprehensive analysis report on terror financing, including state-sponsored cases.
• The report will include data from 200 jurisdictions and be released in a month.
• FATF will conduct a webinar to help stakeholders understand emerging threats in terror finance.
• India preparing a dossier for submission ahead of Asia Pacific Group (APG) meet (Aug 25) and FATF Plenary (Oct 20).
• Aim: Re-list Pakistan in the FATF grey list for consistent violations.
• Evidence includes Pakistan’s military presence at funerals of designated terrorists and funding through multilateral channels.
• Currently, 24 countries are under the FATF grey list.
• FATF President Elisa de Anda Madrazo emphasized global unity against terror finance at the ‘No Money for Terror’ Conference in Munich.