India is preparing to formally approach the Financial Action Task Force (FATF) to place Pakistan back on its “grey list” for failing to curb terror financing and money laundering, a senior government source confirmed.

“We will be taking it up with the FATF,” the source said, indicating India’s growing frustration over Pakistan’s inaction on cross-border terrorism and alleged diversion of international financial aid for military purposes.

This development comes in the wake of the April 22 terror attack in Pahalgam, Jammu and Kashmir, which killed 26 civilians. India believes the attack had cross-border links and that Pakistan continues to shelter terror groups operating against Indian interests.

FATF places countries on its grey list when they fail to address serious strategic deficiencies in their systems to prevent money laundering, terrorist financing, and financing of weapons proliferation. Grey-listed countries are subject to enhanced monitoring and are required to commit to time-bound action plans.

Pakistan was grey-listed in 2018 and remained under scrutiny until 2022, when FATF removed it after Islamabad claimed significant progress on its action plan. However, India contends that Pakistan’s compliance has not been genuine or sustained.

New Delhi is also concerned that funds disbursed by multilateral institutions like the IMF are being misused. Earlier this month, India opposed the release of a tranche of IMF's $7 billion Extended Fund Facility to Pakistan, arguing the aid could indirectly fuel terror operations by enabling increased arms procurement.

The FATF plenary, which meets in February, June, and October, is expected to be India’s next diplomatic front. India is likely to present data and intelligence to push for renewed scrutiny of Pakistan’s financial practices and its alleged continued links to terror groups.

India is preparing to formally approach the Financial Action Task Force (FATF) to place Pakistan back on its “grey list” for failing to curb terror financing and money laundering, a senior government source confirmed.

“We will be taking it up with the FATF,” the source said, indicating India’s growing frustration over Pakistan’s inaction on cross-border terrorism and alleged diversion of international financial aid for military purposes.

This development comes in the wake of the April 22 terror attack in Pahalgam, Jammu and Kashmir, which killed 26 civilians. India believes the attack had cross-border links and that Pakistan continues to shelter terror groups operating against Indian interests.

FATF places countries on its grey list when they fail to address serious strategic deficiencies in their systems to prevent money laundering, terrorist financing, and financing of weapons proliferation. Grey-listed countries are subject to enhanced monitoring and are required to commit to time-bound action plans.

Pakistan was grey-listed in 2018 and remained under scrutiny until 2022, when FATF removed it after Islamabad claimed significant progress on its action plan. However, India contends that Pakistan’s compliance has not been genuine or sustained.

New Delhi is also concerned that funds disbursed by multilateral institutions like the IMF are being misused. Earlier this month, India opposed the release of a tranche of IMF's $7 billion Extended Fund Facility to Pakistan, arguing the aid could indirectly fuel terror operations by enabling increased arms procurement.

The FATF plenary, which meets in February, June, and October, is expected to be India’s next diplomatic front. India is likely to present data and intelligence to push for renewed scrutiny of Pakistan’s financial practices and its alleged continued links to terror groups.