FATF condemns Pahalgam attack, to release report on ‘state-sponsored terror’ for first time

17 Jun 2025 GS 2 International Relations
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  1. FATF's Rare Condemnation:

  • FATF condemned April 2025 Pahalgam terror attack

  • Only 3rd such condemnation in a decade

  • Stated attack required terror financing networks

  1. Historic Development:

  • Upcoming FATF report (July 2025) will for first time:

    • Recognize 'state-sponsored terrorism' as terror funding source

    • Currently only India's National Risk Assessment acknowledges Pakistan's role

  1. India's Diplomatic Push:

  • Submitted dossier to re-grey list Pakistan

  • FATF developed new toolkit  Terror Financing Risk & Context to prevent countries from hiding terror financing risks

  1. Strategic Implications:

  • Validates India's position on cross-border terrorism

  • Potential for stronger global action against state sponsors

  • May lead to increased scrutiny of Pakistan's role

  1. Future Actions:

  • FATF to conduct webinar on terror financing risks

  • Report expected to shape global counter-terror policies

UPSC Relevance:

Prelims:

  • FATF's role as global terror financing watchdog

Mains:

  • GS2 (IR): India's use of multilateral platforms to counter terrorism

  • GS3 (Security): Evolving nature of terror financing


The development marks a significant shift in global counter-terrorism approach by formally acknowledging state complicity. India's sustained diplomatic efforts at FATF have borne fruit, potentially leading to stronger mechanisms against Pakistan-supported terrorism.

FATF: The Apex Anti-Terror Financing Watchdog

What is FATF?

    • Full Name: Financial Action Task Force (FATF)/Groupe d'action financière (GAFI)

    • Nature: Inter-governmental policy-making body

    • Established: 1989 (G7 initiative)

    • Headquarters: Paris (independent but hosted at OECD)

    • Members: 40 countries (including India) + regional bodies like EU

What Does FATF Do?

  1. Sets Rules: Makes global standards to stop illegal money flows and terror funding.

  2. Checks Countries: Reviews nations to see if they follow these rules (called "mutual evaluations").

  3. Lists Non-Compliant Countries:

    • Blacklist: High-risk countries (e.g., Iran, North Korea).

    • Greylist: Countries under watch (e.g., Pakistan was listed earlier).

Why is FATF Important?

  • Helps track terror funding and dirty money.

  • Pressures countries to improve laws by naming and shaming them.

  • India uses FATF to expose Pakistan’s role in funding terrorism.

Key Facts

  • Started with 16 members, now has 40.

  • After 9/11 (2001), it also started fighting terror financing.



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