Pahalgam terror attack: Will Pakistan walk the FATF tightrope again?
As India reels from the emotional impact of the Pahalgam terror attack that claimed the lives of almost 27 civilians, the incident has sparked a renewed diplomatic standoff with Pakistan. With the country's suspected link with TRF, the threat of Pakistan again making a reservation in the Financial Action Task Force (FATF) grey list looms large.
As India reels from the emotional impact of the Pahalgam terror attack that claimed the lives of almost 27 civilians, the incident has sparked a renewed diplomatic standoff with Pakistan. With the country's suspected link with the resistance front claiming responsibility of the massacre, the threat of Pakistan again making a reservation in the Financial Action Task Force (FATF) grey list looms large.
TRF claims responsibility
The Resistance Front (TRF) is a banned terror outfit and widely regarded as a proxy of the Pakistan-based Lashkar-e-Taiba. Formed in the aftermath of the abrogation of Article 370 in Jammu and Kashmir, TRF is believed to be composed of operatives from both Lashkar-e-Taiba and Hizbul Mujahideen.
Though this group was banned by the Ministry of Home Affairs in 2023, its operational footprint continues to pose a severe threat to regional stability of Jammu and Kashmir.
With Pakistan under suspicion for it’s long-standing support of proxy terror outfits, India is signaling that business-as-usual is no longer an option. However, Islamabad has denied any connection with the attack responding with a series of retaliatory moves of its own.
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Pakistan and FATF
Despite being removed from the Financial Action Task Force (FATF) grey list in October 2022 — a move acknowledging improvements in its anti-money laundering and counter-terrorist financing frameworks — Pakistan's record remains under scrutiny.
The FATF, an intergovernmental watchdog that deals with combating money laundering and terror financing, had placed Pakistan under increased monitoring from 2018 to 2022 due to its failure to act against known terror financiers and operatives.
India had responded cautiously at the time of Pakistan’s exit from the grey list. Ministry of External Affairs had remarked that “Pakistan must continue to take credible, verifiable, irreversible, and sustainable action against terrorism and terrorist financing emanating from territories under its control.”
As of February 2025, 25 countries are included in the FATF grey list including Algeria, Bulgaria, Croatia, Kenya, Nepal, Syria as well as Yemen.
What can happen next?
With the next FATF plenary scheduled for June, the Pahalgam attack could significantly influence the global assessment of Pakistan’s counter-terror efforts. If evidence links the perpetrators directly to Pakistani soil or support systems, it could trigger renewed calls for Islamabad’s reclassification into the grey list — a move that could further isolate the country financially and diplomatically.
