India is actively engaging with the United States to push for Pakistan's re-inclusion on the Financial Action Task Force (FATF) grey list, a move that could significantly impact Pakistan's financial stability and international standing. This effort comes as India seeks to highlight Pakistan's alleged continued involvement in terror financing and non-compliance with anti-money laundering regulations.

Recent diplomatic efforts underscore India's commitment to this cause. Foreign Secretary Vikram Misri's visit to the U.S. from May 27-29, 2025, included discussions with high-ranking American officials, including Deputy Secretary of State Christopher Landau and Deputy Secretary of the Treasury Michael Faulkender. According to the Ministry of External Affairs, the talks with Faulkender specifically addressed "collaboration in international financial institutions and coordination in the upcoming Financial Action Task Force (FATF) processes." This coordination is crucial as India prepares to present its case against Pakistan at the next FATF plenary meeting in June.

India intends to submit a detailed dossier to the FATF, presenting evidence of Pakistan's alleged links to terror groups such as Lashkar-e-Taiba and Jaish-e-Mohammed, which have been implicated in cross-border attacks against Indian citizens. India argues that Pakistan has not fully enacted an anti-terror law that was a condition for its removal from the grey list in 2022. The dossier will likely highlight these concerns and demand strict scrutiny and action by the FATF under international protocols.

Furthermore, India plans to oppose any further World Bank funding to Pakistan, raising concerns about the potential misuse of funds for military procurement and terror financing. India believes that any financial assistance to Pakistan should be subject to increased scrutiny to prevent it from being diverted to support terrorist activities.

Pakistan was previously on the FATF grey list from 2018 to 2022. During this period, the country was subject to increased monitoring due to deficiencies in its anti-money laundering and counter-terrorist financing framework. While Pakistan was removed from the list in October 2022, the FATF urged it to continue working with the Asia Pacific Group on Money Laundering (APG) to improve its systems.

Inclusion on the FATF grey list can have significant economic consequences for a country. It makes it difficult to attract foreign investment and secure international financial aid. Private investors also tend to shy away from economies on the grey list, leading to reduced economic activity.

India's renewed efforts to have Pakistan re-listed reflect its ongoing concerns about cross-border terrorism and the need for sustained international pressure on Pakistan to address these issues. By aligning its position with the U.S., India hopes to strengthen its case and ensure that the FATF takes decisive action. The message India aims to send to the FATF is clear: economic aid must not fuel extremism.