Grey list exit not bulletproof: FATF on concerns of terror financing in Pakistan

The Financial Action Task Force (FATF) has sounded a cautionary note on Pakistan’s 2022 exit from its grey list, warning that delisting is not a foolproof shield against terror financing or money laundering. In response to the WION question at the conclusion of October plenary , FATF President Elisa de Anda Madrazo stressed that countries like Pakistan, which have graduated from the watchdog’s scrutiny, remain under a “follow-up” process to ensure compliance with global anti-terror financing standards. The remarks come amid alarming reports of Pakistan-based terrorist group Jaish-e-Mohammed (JeM) exploiting digital wallets to raise massive funds for new training camps.

Pakistan’s removal from the FATF grey list in October 2022 marked the end of a four-year stint under heightened scrutiny, its third since 2008. The restive South Asian nation completed a rigorous 34-point action plan, enacting legislative reforms, bolstering financial oversight, and prosecuting terror financiers to secure its exit. The move was a lifeline for Pakistan’s beleaguered economy, easing access to international markets and IMF bailouts amid a deepening financial crisis.

However, fresh Indian intelligence assessments have raised red flags, alleging that JeM has leveraged Pakistani digital payment platforms like EasyPaisa and SadaPay to amass PKR 3.91 billion (roughly $14 million) for constructing 313 new terror training facilities across the country. The development follows India’s “Operation Sindoor” on May 7, a precision strike that demolished JeM’s Markaz Subhanallah and four other camps, eliminating many operatives. In response, the group launched a brazen fundraising campaign on social media, with intercepted posts urging supporters to donate for rebuilding training centers.

Asked about concerns over digital fundraising, Madrazo told WION, “any country that is removed from the list, we continue our process of follow up.” Pakistan, a member of the Asia/Pacific Group on Money Laundering (APG) rather than FATF itself, is monitored by the regional body, which enforces the watchdog’s standards across the Asia-Pacific. Established in 1997, the APG ensures member states combat money laundering, terrorist financing, and proliferation financing.

Madrazo underscored that no nation is immune post-delisting, stating, “any country that is in the grey list but that also exits the grey list is not bulletproof for the actions of criminals, either money launderers or terrorists. So we do invite all jurisdictions, including those that have been delisted, to continue their good work to prevent and deter crimes."

Responding to questions about the Pahalgam attack, Madrazo reaffirmed FATF’s resolve that, "as it relates to terrorist attacks in any jurisdiction, FATF remains committed to strengthening our standards and their implementation to ensure less terrorist financing globally.” FATF in June had condemned the Pahalgam terror attack. The Resistance Front (TRF), a proxy of the Pakistan-based Lashkar-e-Taiba (LeT), claimed responsibility for the terror attack in Northern India's tourist site of Pahalgam.