FATF Condemns Pahalgam Attack: Terror Financing & Grey List Impact

FATF: The Global Financial Watchdog
Formed in 1989 as a G7 initiative, FATF is the premier intergovernmental body combating money laundering and terror financing. With 40 member countries (including India since 2010), it sets global standards through its 40 Recommendations across 7 key areas:
Anti-money laundering (AML) policies
Terrorist financing prevention
International cooperation
Transparency in financial systems

Pahalgam Attack: FATF’s Stern Warning
After the April 22, 2025 attack in Jammu & Kashmir (26 killed), FATF stated:
“Such attacks cannot occur without money and the means to move funds between terrorist supporters.”
This directly references cross-border terror financing networks, with India implicating Pakistan.

FATF’s Enforcement Tools: Grey List & Beyond
Grey List: Countries with strategic deficiencies in combating financial crimes (e.g., Pakistan was listed 2018-2023).
Black List: Nations failing to cooperate (e.g., North Korea, Iran).
India is pushing for Pakistan’s return to the grey list post-Pahalgam.

Operation Sindoor: India’s Military-Diplomatic Response
India’s May 7 retaliatory strikes in PoK triggered a 3-day military standoff. FATF’s condemnation strengthens India’s case by:
Validating terror-financing links to attacks.
Pressuring Pakistan to dismantle terror infrastructure.
Boosting India’s global counter-terror diplomacy.

Why FATF Matters for India
Security: 90% of terror attacks in India trace funding to cross-border networks.
Diplomacy: FATF platforms help isolate nations sponsoring terror.
Economy: Compliance prevents financial sanctions and attracts foreign investment.

Key Exam Takeaways
FATF’s mutual evaluations assess countries’ anti-terror financing systems (India’s latest: 2023).
“No Money for Terror” conferences (e.g., Munich 2025) drive global cooperation.
FATF’s mandate expansion (2001) to include terror financing post-9/11.
 

Sample Q&A (Current Affairs Focus):
Q: What is FATF’s primary mandate?
A: To combat global money laundering and terror financing through policy standards and country evaluations.
Q: How does the FATF grey list impact countries?
A: It signals high financial risk, triggering economic sanctions, reduced FDI, and restricted international loans.
Q: Why did FATF condemn the Pahalgam attack?
A: It emphasized that terror attacks require illicit funding networks, indirectly supporting India’s stance against cross-border terror finance.
Q: When did India become a FATF member?
A: 2010 – and it exited the “regular follow-up” category in 2013 after reforms.
Q: What are FATF’s 40 Recommendations?
A: A framework covering 7 areas, including AML policies, terror financing prevention, and international cooperation.