What is FATF? What is its grey list? Pakistan may be included in grey list again as...

Will Pakistan be added to the grey list of the Financial Action Task Force soon? What is FATF and why is it important in the fight against terrorism? These questions surfaced after the FATF condemned the Pahalgam terrorist attack Monday and said that it could not take place without terror funding. Without taking the name of Pakistan, the terror funding watchdog said in a statement, "Terrorist attacks kill, maim and inspire fear around the world. The FATF notes with grave concern and condemns the brutal terrorist attack in Pahalgam on April 22, 2025. This, and other recent attacks, could not occur without money and the means to move funds between terrorist supporters." 

What is FATF?

It was the G-7 that took the initiative to establish an inter-governmental agency to frame policies and implement them to combat money laundering in 1989. Combating terror funding was added to the FATF in 2001. So, the FATF can be called a "policy-making body" that works to generate the necessary political will to bring about national legislative and regulatory reforms in the areas of money laundering and terror funding. With this, it is clear that the FATF sets standards and promotes effective implementation of legal, regulatory and operational measures to stop money laundering, terror financing and other related threats to the integrity of the international financial system. It was set up with 16 members, there are 40 members now. 

FATF: Grey List, Black List

FATF's Grey List contains those countries that need to take certain steps to combat money laundering and terrorist financing. They are suggested steps and are expected to take those steps in a certain period. If a member state fails to take steps to combat terror funding and money laundering despite repeated warnings, it is placed on black list. If a country is placed on black list, it is barred from taking loans and advances from multilateral agencies like the World Bank or the International Monetary Fund. Besides, their credit ratings get severely hit and they don't get investment. Consequently, their economic condition worsens. 

Iran, Myanmar and North Korea are on the blacklist. Countries in the grey list are: Algeria, Angola, Bulgaria, Burkina Faso, Cameroon, Côte d'Ivoire, Croatia, Democratic Republic of the Congo, Haiti, Kenya, Laos, Lebanon, Mali, Monaco, Mozambique, Namibia, Nepal, Nigeria, South Africa, South Sudan, Syria, Tanzania, Venezuela, Vietnam, and Yemen.

Pakistan in FATF grey list

Pakistan was added to the grey list three times for supporting terror funding. It was included in the FATF grey list on February 28, 2008, and remained there for 848 days; it was included in the list for the second on February 16, 2012, and remained there for 1,106 days. It remained there for the third time from June 2018 to 2022, for 1,576 days. Islamabad was accused of supporting terror funding to terrorist organisations like Lashkar-e-Taiba (LeT), Jaish-e-Mohammed (JeM),  Hizbul Mujahideen (HM), al-Qaeda, Tehreek-e-Taliban Pakistan (TTP) and Islamic State. 

After The Resistance Front (TRF), a front of LeT attacked and killed 26 innocent and unarmed civilians in Pahalgam on April 22, 2025, and came forward to take credit for that, Pakistan is under question once again. The possibility of being pushed to the FATF grey list looms large in Pakistan once again.