This meeting, chaired by FATF President Elisa de Anda Madrazo and MONEYVAL Chair Nicola Mucciolo, will gather more than 200 jurisdictions and organizations within the FATF Global Network.
India is anticipated to utilize this opportunity to raise concerns
regarding Pakistan’s increasing defense budget and its alleged shortcomings in fulfilling FATF obligations. As reported by Moneycontrol on May 23, the Indian government is assembling a comprehensive dossier to showcase Pakistan’s delays in implementing anti-terror legislation, its ongoing support for designated terrorists, and the potential misallocation of multilateral development aid towards military purposes.
During a recent trip to Washington, Foreign Secretary Vikram Misri engaged in discussions about the FATF process with US Deputy Secretary of the Treasury Michael Faulkender. Their conversation centered on improving collaboration among international financial institutions and India’s efforts to have Pakistan re-listed on FATF’s grey list in light of its suspected involvement in cross-border terror financing.
On June 10, P
akistan introduced its FY26 budget, increasing defense spending by 20% to $9 billion, while reducing overall federal expenditures by 7%. This decision has garnered criticism, especially in the context of ongoing international support for Pakistan.
Earlier this month, the Asian Development Bank (ADB) approved an $800 million financing package for Pakistan. India has voiced strong opposition to both, citing concerns over inadequate reforms, declining tax-to-GDP ratios, and the risk of financial aid contributing to militarization.
In May, the International Monetary Fund (IMF) sanctioned a $1 billion loan and is assessing an additional $1.3 billion through its Resilience and Sustainability Facility (RSF).
Indian officials contend that ongoing bailouts without proper accountability could facilitate state-sponsored terrorism and undermine global financial integrity.
Pakistan has been placed on FATF’s grey list three times in the past: from 2008–2010, 2012–2015, and most recently from 2018 to 2022. The latest listing was prompted by the United States and backed by the UK, France, and Germany due to significant deficiencies in counter-terrorist financing efforts.
Re-listing can hinder foreign investments, elevate borrowing costs, and subject the country to increased scrutiny from global lenders. Following the two-day plenary, FATF-style regional organizations will meet on June 14 for a high-level discussion aimed at enhancing global cooperation and oversight mechanisms.
