Context:
The Financial Action Task Force (FATF) meetings underway in Paris are expected to focus on state sponsorship of terrorism, with Pakistan’s continued support to banned terror outfits coming under scrutiny once again. FATF is examining financial networks used by groups like Lashkar-e-Taiba (LeT) and Jaish-e-Mohammed (JeM) operating from Pakistan.
Key Highlights / Details
FATF Deliberations
• FATF Plenary session: Wednesday to Friday; attended by 200+ jurisdictions.
• Main agenda includes identifying terror financing risks and state-sponsored networks.
• FATF for the first time formally recognized “state sponsorship of terrorism” as a major global threat (July 2025 report).
Pakistan Under Spotlight
• Over 130 Pakistan-linked individuals/entities are on the UN Sanctions List.
• Pakistan-based terror proxies:
- Lashkar-e-Taiba (LeT) – operating via Jamaat-ud-Dawa (JuD)
- Jaish-e-Mohammed (JeM)
- Resistance Force (TRF) – proxy behind Pahalgam terror attack (April 22), now a U.S.-designated terror group
• In June 2025, FATF condemned the Pahalgam attack stating “terror attacks cannot occur without financial support.”
State Sponsorship Evidence
• Pakistan government sanctioned funds for rebuilding LeT and JeM facilities.
• Allocated PKR 4 crore to LeT HQ (Markaz Taiba in Muridke) destroyed by IAF strike on May 7.
• Estimated reconstruction cost over PKR 15 crore – terror outfit raised funds under guise of “flood relief”.
• Highlights misuse of charity fronts and NGO funding routes for terror financing.
Relevant Prelims Points
• FATF: Inter-governmental body founded in 1989; HQ in Paris.
• Maintains Grey List (Enhanced Monitoring) and Black List (High-Risk Jurisdictions).
• India is a member of FATF; Pakistan removed from Grey List in 2022 but remains under watch.
• UN Terror Lists: 1267 Committee designates individuals/entities linked to Al-Qaeda/ISIS.
Relevant Mains Points
Significance for India
• Pakistan’s continued support to terror groups threatens J&K security.
• FATF can pressure Pakistan to shut down funding channels of LeT/JeM/ISI-backed proxies.
• Helps India in global counterterror diplomacy.
Challenges
• Pakistan uses humanitarian fronts and state budget allocations to bypass FATF scrutiny.
• China and Turkey often shield Pakistan in multilateral forums.
• Difficulty tracking cryptocurrency and hawala-based terror finance.
Way Forward
• Strengthen international terror financing networks mapping.
• Push FATF to adopt state accountability clause.
• Better coordination with EU, U.S. & Gulf states for financial sanctions.
• Tight control over NGOs linked to extremism.