After the recent terror attack in Pahalgam, India is planning two strong financial moves against Pakistan to stop its support for cross-border terrorism. First, India may try to get Pakistan back on the Financial Action Task Force (FATF) grey list, a list of countries that don’t do enough to stop terror financing.

Second, India is likely to raise concerns over the $7 billion aid that Pakistan received from the International Monetary Fund (IMF), saying the money might be misused to support terror activities. This aid deal was finalized in July 2024.

Pakistan was placed on the FATF ‘grey list’ in June 2018 for not doing enough to stop terror funding but was removed in October 2022 after taking some strict actions like jailing and fining people linked to terror groups. Now, India wants Pakistan back on the list, which would bring more attention to Pakistan’s financial activities and could hurt its chances of getting foreign investments.

India is expected to talk to key FATF member countries in the coming weeks to gather support before the next FATF meeting. The FATF has 40 member countries and holds major meetings three times a year, in February, June, and October.

India’s actions against Pakistan

After the Pahalgamterror attack that killed 25 tourists and a local, India has taken several tough actions against Pakistan. The attack was carried out by terrorists linked to the Pakistan-based group Lashkar-e-Taiba. In response, India downgraded diplomatic ties, suspended the Indus Waters Treaty, closed the Attari-Wagah border checkpost, cancelled visa services for Pakistani citizens, and shut its airspace to Pakistani flights. Also, the government banned 16 Pakistani YouTube channels and blocked the Instagram accounts of Pakistani celebrities such as Hania Aamir, Mahira Khan, and Ali Zafar. In retaliation, Pakistan suspended trade with India and warned it may put the Simla Agreement on hold.