India Targets Pakistan’s Funding via FATF and IMF Pressure
Amid rising tensions, India weighs pushing Pakistan back onto the FATF grey list and blocking IMF funds to curb terror financing.
India Moves to Block Terror Funding: Eyes FATF Grey List and IMF Pressure
In the wake of the deadly terror attack in Pahalgam, India appears poised to mount a financial offensive against Pakistan. According to diplomatic sources and government insiders, New Delhi is actively considering two major moves: pushing for Pakistan’s re-entry into the Financial Action Task Force (FATF) grey list and lobbying the International Monetary Fund (IMF) to freeze pending loans to Islamabad.
These proposed measures reflect a strategic pivot—one that leans more on financial containment than direct retaliation.
The Aftermath of the Pahalgam Attack: A Call for Accountability
The brutal Pahalgam attack in Jammu and Kashmir has reignited longstanding concerns in India over cross-border terrorism allegedly supported by actors within Pakistan. As public outrage swelled, so did calls for decisive action. Indian officials, according to reports from The Indian Express, are exploring non-military avenues that could economically isolate Pakistan and curb its alleged support for terror outfits.
“This isn’t about retaliation—it’s about disruption,” noted a senior Indian security analyst. “India wants to disrupt the networks that funnel money into violent extremist activities. Financial isolation can be just as powerful as boots on the ground.”
Why the FATF Grey List Matters
The Financial Action Task Force (FATF) is an intergovernmental body that sets standards for combating money laundering and terrorist financing. When a country is placed on the FATF grey list, it faces increased monitoring and potential reputational damage that can restrict access to international finance.
Pakistan had previously been on the FATF grey list from 2018 to 2022 and was removed only after promising reforms. Now, India is seeking to reverse that decision by spotlighting renewed risks of terror financing.
The FATF has 40 full member countries, including major players like the US, UK, Germany, and France—all of whom have expressed solidarity with India following the Pahalgam incident. While India alone cannot re-list Pakistan, the process begins with a formal nomination during one of FATF’s three annual plenary meetings, the next of which is scheduled for June.
To push the matter forward, India needs to present documented evidence of terrorist financing risks and garner support from other FATF members. Early diplomatic conversations suggest that India is already laying the groundwork, especially with nations that condemned the Pahalgam attack.
IMF Loan Under Scrutiny
In addition to FATF maneuvering, India is also weighing action at the International Monetary Fund. Pakistan, which remains heavily reliant on IMF assistance, is due for a key board-level review in May. Indian officials are reportedly preparing to raise objections based on the argument that IMF funds might be misused to indirectly support destabilizing activities.
While India is not a major shareholder in the IMF, its voice—especially when backed by allies like the US or EU—can influence deliberations. New Delhi is expected to highlight risks associated with lax financial oversight in Pakistan, drawing attention to issues that could impact global financial stability.
“Any objection raised in this context isn’t just symbolic,” said an international finance expert based in Washington, D.C. “It complicates Pakistan’s path to securing funding and adds pressure for compliance with global standards.”
Diplomatic Support Builds Momentum
As India builds its case, diplomatic overtures are already yielding results. Condolence messages and statements of support have poured in from over 23 FATF member states, including Saudi Arabia, the UAE, and the European Commission. This growing coalition could help strengthen India’s case for both FATF and IMF actions.
Pakistan, for its part, is likely to push back strongly. While not a FATF member, it is part of the Asia-Pacific Group on Money Laundering (APG), a regional affiliate. Islamabad has long denied any link to cross-border terrorism and claims it has implemented reforms in line with FATF demands. The Pakistani government has not officially responded to India’s latest considerations.
A Strategic Shift in India’s Foreign Policy
India’s potential move to strike financially rather than militarily signals a broader shift in its foreign policy approach. It shows a preference for leveraging international institutions and multilateral pressure over direct confrontation—a strategy likely aimed at avoiding escalation while still seeking meaningful consequences.
This playbook not only positions India as a responsible global actor but also places Pakistan under greater scrutiny at a time when its economy is already under significant stress.
Conclusion: Financial Leverage as a Tool for Counterterrorism
As the dust settles from the Pahalgam attack, India’s focus on financial instruments like the FATF and IMF reveals a calculated, long-game strategy. Instead of immediate military reprisals, New Delhi is building a case on the world stage—one that aims to cut off the financial lifelines that sustain terrorism.
Whether these measures will yield concrete results remains to be seen. But they mark a clear shift in tone, indicating that the future of conflict may be fought less on battlefields and more in boardrooms and diplomatic chambers.
Disclaimer:
This article is based on currently available information from government sources and credible news outlets. It aims to provide a balanced view of India’s evolving foreign policy strategies and does not endorse any specific political or military stance.
source : Business Today