Global Anti-Terror Financing Body FATF Condemns Pahalgam Terror Attack

The global anti-money laundering and anti -terrorist financing body, the Financial Action Task Force (FATF), has condemned the Pahalgam terror attack in Kashmir on 22 April 2025, in which 26 tourists were killed. The terror attack was claimed by the Resistance Front (TRF), which is a front organisation of the banned Pakistani terrorist group Lashkar-e-Taiba.

On the night of 6 and 7th May 2025, India launched Operation Sindoor to destroy the terrorist infrastructure in Pakistan and Pakistan-Occupied Jammu and Kashmir.

The FATF rarely issues condemnations of terrorist acts, and it is only the third time in the last decade that they have condemned a terrorist attack.

Though FATF has not named any country in its statement, India has clearly stated its intent to take up terror funding charges against Pakistan to make a case for putting it back in the FATF ‘grey list’.

Pakistan was taken off the FATF Grey list in October 2022.

About Financial Action Task Force (FATF)

It was established by the Group of Seven (G7) in 1989 after the 1989 G7 summit meeting in Paris, France.

Members - 40 countries. India became a member in 2010.

Headquarters - Paris, France.

Function of FATF

It is an intergovernmental body;

• which sets the global standards on anti-money laundering(AML), combating financing of terrorism(CFT) and on proliferation financing (providing funds or financial services for the development of weapons of mass destruction, i.e chemical, biological or nuclear weapons),
•  issue recommendations to countries covering their criminal justice system, the financial sector, certain non-financial businesses and professions, transparency, and mechanisms of international cooperation.
• Assess whether countries are taking effective action against money laundering and anti-terrorist financing. 

What are the Black List and Grey List of the FATF

The FATF divides countries that do not follow its guidelines or have weak enforcement mechanisms into two categories: the Black List and the Grey List.

Black List or High-Risk Jurisdictions subject to a Call for Action

The following countries are put on the black list by the  FATF:

• If the country is not cooperating with the FATF in improving its anti-money laundering,anti-terrorist financing, and anti-proliferation standards, or 
• There are serious strategic deficiencies in countering money laundering, terrorist financing, and proliferation financing.

Countries in the Black List 

• Three -  Myanmar, Iran and North Korea.

Implications

• These countries are considered a threat to the International financial system, and FATF advises other countries to avoid dealing with them.
• It usually leads to a number of sanctions on these countries by other FATF-compliant countries.
• International financial institutions avoid giving them loans.

Grey List (Jurisdictions under Increased Monitoring)

• Those countries are included that are working with FATF to resolve the shortcomings in their existing standard to counter money laundering, terrorist financing and proliferation financing.
•  If a country complies with the FATF recommendation, it can be removed from this list, and if it consistently fails to implement FATF recommendations, it can be put on the blacklist.
• Presently, 24 countries /territories are in the list.