'Pahalgam could not occur without...': FATF condemns terror attack, flags fund movement between terror supporters

The Financial Action Task Force (FATF) on Monday strongly condemned the April 22 terrorist attack in Pahalgam and linked it to failures in preventing the flow of funds to terrorist networks. In a statement released ahead of its next phase of analysis on terror financing, the global watchdog underscored the role of money in enabling such acts of violence.

"The FATF notes with grave concern and condemns the brutal terrorist attack in Pahalgam on 22 April 2025. This, and other recent attacks, could not occur without money and the means to move funds between terrorist supporters," the statement said. It, however, did not name Pakistan. 

FATF, which supports over 200 jurisdictions in its Global Network, said terrorism continues to pose a threat to societies worldwide and emphasised the strategic use of financial intelligence as "one of the most powerful instruments for dismantling terrorist financing networks."

"In addition to setting out the framework for combating terrorist financing, the FATF has enhanced its focus on the effectiveness of measures countries have put in place. That is how, through our mutual evaluations, we have identified gaps that need to be addressed,” it said.

FATF said it is developing additional guidance on terrorist financing risk to assist experts who contribute to evaluations of jurisdictions worldwide.

In May this year, weeks after the Pahalgam attack, India Today reported that New Delhi had launched a coordinated diplomatic campaign to highlight Pakistan's role in terror financing. As part of the effort, India was also preparing to submit a dossier to the FATF containing financial records, intelligence inputs, and international evidence linking Pakistan's state-backed entities to proscribed terrorist groups. 

Officials said that the data showed systematic support — not isolated incidents — including direct funding and logistical assistance for cross-border terrorism.

The dossier was expected to urge the FATF to reconsider Pakistan's removal from the grey list in 2022, citing failures to curb terror financing. India is also reportedly lobbying financial institutions like the IMF and World Bank to reassess their aid to Pakistan, pointing to evidence that external funding may be diverted to military and terror-linked activities.

Citing Pakistan's allocation of nearly 18% of its national budget to defence — above the typical 10–14% range in conflict zones — Indian officials argue that military spending continues to grow disproportionately, even amid economic crisis. Arms imports reportedly rose by 20% during years when IMF funds were active, further fuelling concerns over misuse of aid.