In a significant diplomatic move, India presented the statement of Khyber Pakhtunkhwa’s Chief Minister, Ali Amin Gandapur, as a major piece of evidence before the Financial Action Task Force (FATF) to put Pakistan on its grey list. India leveraged a high-profile critique within Pakistan to support India’s claim that Pakistan has failed to curb the financing of terrorism.
The evidence handed over is based on the public statement made by the KP Chief Minister, where he accused the Pakistani institutions. “We arrest the Taliban, but the institutions release them,” Gandapur quoted. Indian authorities presented this statement as direct support for their position, arguing that there is a strategic gap in the counter-terrorist financing (CTF) in Pakistan.
The FATF, a money laundering and terrorist financing combating intergovernmental organization, maintains a list of countries that the organization monitors for terrorist financing, i.e., the grey list. A country on this list may face devastating effects on the economy, leading to a downgrade of credit rating, a decrease in foreign investment, and more scrutiny by the international financial agencies such as the IMF and the World Bank. In October 2022, Pakistan was taken off the grey list following four years of intense monitoring, but India has since lobbied against Pakistan to get it back on.
An Opportunity for India
The Indian officials regard the words of CM Gandapur as an indubitable testimony of a high-ranking government representative of a province plagued by militancy. It reinforces their argument that state machinery in Pakistan remains susceptible to terrorist activities despite official assurances.
The recent turn of events is part of the diplomatic wrangle between the two nuclear-armed countries. Pakistan claims that India politicizes the FATF to achieve its strategic and political agendas. Although a formal reaction to this particular submission is still underway, Pakistan claims that it has achieved notable and quantifiable progress in its implementation of anti-money laundering and addressing terrorism, a position that has been confirmed by the FATF decision to put the country off the grey list.
The international community will now be monitoring how the FATF will react to the evidence submitted by India. In case the evidence is convincing to the member countries of the watchdog, it might provoke a reexamination of Pakistan’s situation on terrorism financing and re-listing on the grey list. This scenario will have implications for the already struggling economy of the country.
