India’s Strategic Push: Pakistan Faces FATF Grey List Return with Robust Plan

India has intensified its diplomatic campaign to push Pakistan back onto the Financial Action Task Force (FATF) grey list following the April 2025 Pahalgam terror attack, which killed 26 people. The attack, attributed to Pakistan-based Lashkar-e-Taiba’s proxy, The Resistance Front, has prompted New Delhi to expose Pakistan’s alleged terror financing. Some News Agencies reports India’s plan to present a detailed dossier at the FATF’s June 2025 plenary, urging global scrutiny of Pakistan’s financial systems to curb illicit funding.

Evidence of Terror Links
India’s case hinges on evidence linking Pakistan to ongoing terror activities, including the Pahalgam massacre. A senior official told News Agencies that actionable intelligence traces terror financing to Pakistani sources, with figures like LeT commander Hafiz Abdul Rauf exposed in public events. India’s dossier, to be submitted via the Asia Pacific Group, highlights Pakistan’s failure to fully comply with anti-money laundering and counter-terrorism financing standards, despite its 2022 grey list exit. New Delhi argues that new terror fronts like TRF bypass global scrutiny.

Challenging IMF Aid
Beyond FATF, India is targeting Pakistan’s $7 billion IMF bailout, finalized in July 2024. At the IMF’s May 2025 board meeting, India’s executive director plans to raise concerns about funds being diverted to terror activities, per Business Today. India has also urged the Asian Development Bank to delay a $1 billion loan, citing Pakistan’s history of financial mismanagement. 

Global Support and Impact
India’s efforts have gained traction, with 23 FATF members, including the US, UK, and Saudi Arabia, expressing solidarity post-Pahalgam. Re-listing Pakistan could restrict foreign investments and increase financial oversight, crippling its fragile economy. As tensions escalate, India’s multi-pronged strategy, including suspending the Indus Waters Treaty, signals a firm stance against cross-border terrorism, with the FATF plenary as a critical battleground.