India Bid to Grey List Pakistan on False Premise

India has been keen to cover up its humiliation during Operation Sindoor (2025), while blaming its false terrorist attacks on its people just to malign Pakistan internationally.  Previously, it failed to get Pakistan grey-listed on the Financial Action Task Force (FATF) due to a lack of evidence to support its case. After the failed attempt, it has now come up with an FATF report on Proliferation Financing (PF): illegal financial means that contribute towards proliferation of Weapons of Mass Destruction (WMD), and falsely links it with FATF Grey Listing.

FATF has three broader areas of monitoring illegal financing: Anti-Money Laundering (AMF), Counter-Terror Financing (CTF), and Counter-Proliferation Financing (CPF). On 20^th June 2025, it released a guidance report, non-binding, per the United Nations Security Council (UNSC) resolutions on Complex Proliferation Financing and Sanctions Evasion Schemes, to highlight major gaps in the global response to proliferation financing and sanctions evasion. It reveals significant vulnerabilities in the global financial system in countering the financing proliferation of WMD. The report identifies four major typologies of sanction evasions by illicit actors,

• Use of intermediaries to evade sanctions,
• Obscuring beneficial ownership information (BOI) to access the financial systems,
• Using virtual assets and other technologies,
• Exploiting the maritime and shipping sector.

India lobbied to get Pakistan back on the grey list once more on terror charges, but failed. India has been deliberate in its campaign to mislead the international community to malign Pakistan through any means possible, by misusing the leverage it gets in international organizations. The recent so-called case study, published by FATF on 20 June 2025 and quoted by Indian sources, as a premise against Pakistan has nothing to do with PF and the grey listing of a country. The claim by Indian authorities regarding the interception of a ship allegedly carrying missile-related components bound for Pakistan, in 2020, is baseless and politically motivated. No credible evidence had been presented at that time to establish any link between the seized commercial goods and Pakistan’s missile program. The cited case has no link to proliferation financing, and does not cause a violation of FATF Recommendations, neither a violation that qualifies grey listing of country. India misuses the platform to push a political agenda based on misleading, outdated claims. This is a deliberate distortion aimed at maligning Pakistan globally. Such unfounded allegations undermine the integrity of international export control regimes and represent an attempt to politicize technical forums like the FATF for geopolitical goals.

As per FATF guidance report, states have to take measures (Targeted Financial Sanctions) against the UN-designated countries to stop the proliferation of WMDs. This case study has nothing to do with the generation of funds for developing WMDs; rather, it is the political use of the technical forum, which also involves falsifying documents. The Indian narrative seems to be merely imaginative and baseless.

Previously, Pakistan has been placed on the increased Monitoring List, also known as the grey list, thrice in 2008, 2012, and 2018, for Anti-Money Laundering (ATF) and Counter-Terror Financing (CTF). Pakistan had been removed from the list each time it came up with significant improvement and completion of action items. Each time, Pakistan met the requirements and came up with an effective mechanism for curbing terror financing, which had emerged out of its traditional financial system. Pakistan’s former Prime Minister was the only leader who, on the floor of the UN General Assembly in 2019, had mentioned money laundering as the root of all the problems related to illegal activities and called for effective UN Intervention to address it. The proposal remains so.

FATF, as a global anti-money laundering and counter terrorism financing watchdog, prevents illegal activities that may cause harm to the international community. It’s three broader agendas: AML/CTF/CPF, monitor any illegal financial means that support any of the three evils. FATF, through 40 standard action items, guides national authorities to implement regulatory measures to curb AML/CTF. Particularly, its recommendation 8, with a focus on Non-profit Organizations (NPOs), for the potential use of NPOs as a vehicle for Money Laundering (ML) and Terror Financing (TF), including,

• By terrorist organizations posing as legitimate entities,
• By exploiting legitimate entities as conduits for terrorist financing, including for the purpose of evading asset-freezing measures, and
• By concealing or obscuring the clandestine diversion of funds intended for a legitimate purpose to terrorist organizations.

According to the report by the Campaign to Stop Funding Hate (CTSFH), India has an extensive network of illegal financial organizations, including charity organizations working in Western countries and funding extremist groups in India against its religious minorities. Similarly, the FATF 2024 report on India highlights the risk of misuse of anti-money laundering and counter-terror financing laws to favor these extremist groups, while, as per Amnesty International’s report, weaponizing these laws to harass rights groups in India to report human rights violations by the state-backed extremist groups.

FATF, under the failure to comply with the outcomes of recommendation 8, should place Indian non-profit organizations on an increasing monitoring list for their potential role in funding violent extremism and terrorism in India as well as across the globe.  It should take a non-partisan and pragmatic view of India’s growing network of extremist organizations in funding international terrorism, and discourage the use of its platform for serving political agenda of a country against another.