India will push the Financial Action Task Force (FATF), the global financial crimes watchdog, to relist Pakistan on its “grey list,” a senior Indian government official said on Friday, as tensions between the two neighbours escalate once again. The development signals a renewed diplomatic offensive by New Delhi, which also plans to oppose fresh World Bank funding to Islamabad.
Pakistan was previously placed on the FATF grey list in June 2018 due to strategic deficiencies in countering money laundering and terrorist financing. The designation subjected the country to increased monitoring and reputational risk, complicating its ability to access global finance and secure multilateral lending.
After four years of reforms and intense diplomatic efforts, Pakistan was finally removed from the grey list in October 2022. The FATF acknowledged significant progress by Islamabad on its 34-point action plan, including improvements in legal frameworks, law enforcement coordination, and the prosecution of proscribed entities.
The exit from the list was seen as a critical step in stabilizing Pakistan’s external financing outlook. It restored confidence among international lenders and development partners, helping the country shore up support amid ongoing economic challenges.
While FATF is technically a non-political, consensus-driven body, diplomatic lobbying among its 39 member jurisdictions often influences the pace and nature of such decisions. Any formal re-inclusion of Pakistan on the grey list would require support from a substantial number of FATF members. However, even a campaign by a major regional power like India could pose reputational risks and complicate Islamabad’s engagement with international financial institutions.
The Indian official also confirmed that New Delhi would oppose upcoming World Bank funding initiatives earmarked for Pakistan, though further details were not immediately available.
