The April 22, 2025, terror attack in Pahalgam, Jammu & Kashmir, which claimed the lives of 26 tourists, has been strongly condemned in a rare statement by the Financial Action Task Force (FATF), the international watchdog for anti-money laundering and counter-terrorist financing.
The FATF statement emphasized the crucial role that terror financing plays in facilitating such acts by highlighting the fact that such attacks are impossible without financial resources and the capacity to transfer money among terrorist supporters.
Given the gravity of the incident and the concern of the international community, this statement represents just the third time in the last ten years that FATF has directly denounced a terrorist attack. FATF’s emphasis has progressively moved to assessing the efficacy of nations’ Counter-Terrorist Financing (CFT) policies and locating weaknesses that permit such
In their continued attempts to draw attention to Pakistan’s alleged support for terrorism and advocate for its reinstatement on the FATF grey list, Indian officials have hailed the FATF’s announcement as a major step. Officially known as “Jurisdictions Under Increased Monitoring,” the grey list consists of nations that have strategic shortcomings in their CFT and anti-money laundering laws but are collaborating with FATF to address them through action plans. The progress of the nations on this list is tracked every four months, and they are scrutinized more closely. Being placed on the blacklist for noncompliance has serious financial and reputational repercussions.
Although Pakistan was taken off the grey list in October 2022, it is still being closely watched internationally because of ongoing claims that it gives safe havens to terrorists who have been designated by the UN.
FATF declared that it will shortly publish a thorough analysis of terrorist financing, which will include the first recognition of “state-sponsored terrorism” as a source of funding—a notion that was previously only acknowledged in India’s National Risk Assessment. This action shows that the dangers of state-sponsored terrorism funding are becoming more widely acknowledged, especially in light of Pakistan.
Elisa de Anda Madrazo, president of the Financial Action Task Force, emphasized the necessity of coordinated international action, saying that no one organization can address the problem of terrorist financing on its own. In order to assist more than 200 jurisdictions in strengthening their CFT frameworks, FATF is also expanding its guidance and support. This includes addressing emerging risks from virtual assets, crowdfunding, and social media.
Following the Pahalgam attack, India initiated Operation Sindoor, which targeted terror camps in Pakistan and Pakistan-occupied Kashmir. This led to a brief increase in military hostilities and a large number of militant casualties. The attack is being actively investigated by the National Investigation Agency (NIA), which is questioning local residents and looking for leads on the attackers.
The significance of strong CFT measures is highlighted by FATF’s denunciation and its emphasis on the financial trail behind terrorism. Countries on the grey list are forced to enact reforms or risk further isolation due to increased monitoring, harm to their reputation, decreased foreign investment, and higher borrowing costs.
Global efforts to combat the financing of terrorism have significantly increased as a result of FATF’s direct condemnation of the Pahalgam attack and its focus on the financial trail.
