FATF, Terror Financing & State Responsibility in International Law
- Sujal Shreshyash
- 5 minutes ago
- 6 min read
IMF’s $2.4 billion to Pakistan amid Indo-Pak crisis: An economic lift or just another military gift? On May 9th, 2025, International Monetary Fund’s (IMF) Executive Board went on a grotesque approval spree by giving green flag to Pakistan’s so called green needs by handing them big green dollar bills while our heavenly Kashmir valley was painted red with innocent blood by terrorists. While Pakistan shielded terrorists under the alias of The Resistance Front (TRF) shot innocent tourists in Pahlgam of Kashmir on the 22nd of April, 2025, only two weeks after such event, the IMF not only disbursed another $1 billion loan under Extended Fund Facility (EFF) but also approved Pakistan authorities’ request for another loan of $1.4 billion under Resilience and Sustainability Facility (RSF). Usually, majority of the populace doesn’t care much for such activity of institutions like the IMF, but this time it has caught the public’s eye, either due to deliberate or very bad coincidental timing of this funding, leading Indians to question the whole structure of institutionalism and liberalism as a approach towards international relations.
India as a nation has been witnessing terrorism in its various manifestations since its independence and somewhat commonly in the 21st century. There is much irrationality when we look at the reasons behind terrorism in India but a nation like Pakistan gives it legitimacy in the name of territorial conflict, hiding the very well-known jealousy. With the rise of cosmopolitanism, terrorism rose not only as a key criticism but also an important challenge in today’s globalized world. While the world started shifting away from hardcore realism towards liberal institutionalism post-WW2 and then dominatingly post-cold war era, multiple IOs and laws were formulated to tackle terrorism. One can refer to the Marxist analogy that economic structure gives rise to the superstructure which here in the case of terrorism also applies. A faulty economic infrastructure, like conductivity of money laundering, leaves countries vulnerable towards dangerous manifestations in the superstructure, such as radical extremism and terrorism. This was very well understood by the international community in the late-20th century which led to the formation of inter-governmental organizations such as the FATF.
FATF, Terror Funding and a state’s responsibility towards itFinancial Action Task Force (FATF), established in 1989 during the G7 summit in Paris, is one of such rare international organization which the global community not only care about but both fear and rely on. It is the global money laundering and terrorist financing watchdog. It started out with the abstract aim to prevent money laundering but with the beginning of the 21st century, FATF focus shifted towards the specifies such as terror funding. In October, 2001, it published 8 special recommendations and added the Ninth recommendation in three years later. With a 40-member inter-governmental body and 40 recommendations till now, FATF sets international standards that aim to prevent illegal activities such as organized crime, drug trafficking, cyber fraud and terrorism etc. which cause any harm to the society. As a policy-making body, the FATF works to generate the necessary political will to bring about national legislative and regulatory reforms in these areas. In total, more than 200 countries and jurisdictions have committed to implement the FATF’s Standards. Non-compliance to FATF’s standards is not just a diplomatic choice which can be made by a nation as the body has strict policies for enforcing its recommendations on almost every country possible. It does so by having two lists i.e. “grey and black lists”; a country which fails to implement FATF standards can be named a Jurisdiction under ‘increased monitoring’ or a ‘high-risk jurisdiction’ respectively.
Pahlgam terror attack and the failure of FATFThe event which brought this whole terror funding debate back to the burner was not on 22nd April, 2025 when 26 civilians were shot cold bloodedly; but on the 9th of May, 2025 when IMF again released funds for Pakistan. TRF, the group which claimed responsibility of the attack, is believed to be proxy of the Lashkar-e-Taiba (LeT). LeT is a very old and well-networked terrorist organization, birthed and nurtured by the Pakistan ISI. This organization has claimed all the major terror attacks in India till now such as 2001 parliament attack and the 26/11 attack of 2008. Manifesto of these organizations our filled with reasons such as religious fundamentalism, radical extremism and much more which define why these men commit such heinous acts. But the question arises as to how these organizations survive when we have various intelligence agencies working 24/7 and IOs like the FATF especially focused towards terrorist funding. Pakistan has never been moved to the “black list” of the FATF even after repetitive obvious violations of not only FATF’s standards but humanity in general. Even when Pakistan was kept under the “grey list”, any kind of international funding such as recently given would not have been possible. The criticism here not only lies with Pakistan for its state sponsored terrorism against India but a broader question of why western IOs such as FATF and IMF keep giving the benefit of doubt to an enemy like ours, who doesn’t believe in fighting but frightening through unholy measures.
Latest Indo-Pak “ceasefire”, IMF funding, the Western deep state and the realist diplomacy behind itWhenever an event such as terrorism happens on any nation’s soil, it not only bleeds a few people or wets a few eyes but mobilizes the whole nation together very quickly, no matter how much broken a nation might be due to their internal politics. But in times such as these, its easy to let patriotism and hyper nationalism cloud our rationale thinking and also miss to look for things which aren’t meant to be looked at. In these times when people don’t read the news or articles but instead flashy headlines on social media, it has indeed made people who remain behind doors hiding in the shadows, easier to not be called out in their hypocritic practices. Few questions such as the timing of the release of funds from IMF to Pakistan has opened door towards a lot of scrutiny and question whether India is just being a fool partaking in institutionalism and should it exit western IOs. The question is also of that is IMF sympathy blind or has lost common humanity within its executive council?
How IMF and other western IOs play the devil’s advocateIMF on 9th May released two set of funding to Pakistan; one is just another disbursal from the $7 billion loan already approved in 2024 in which Pakistan already received a billion dollar immediately last year itself but this timing for another disbursal could have been better. This either signals towards an oblivion executive council at the IMF which didn’t consider how this release of fund in such sensitize time would resonate throughout the world or it’s a message to India from the deep state players like America and China showing their hidden loyalty to our enemy. Both USA and China together make up for a that much voting share which is equivalent to the voting share the rest eight countries in the top 10 stakeholders of IMF hold. Since the Trump administration came into power, America might have imposed the most tariff on China but is silently getting in bed with both Russian and China as evident by multiple calls between Trump and Xi Ping and Putin too. One can’t put a veil of ignorance that China, through its “chequebook and debt diplomacy” have literally bought countries like Pakistan and might be using it as a proxy to strongarm India. What really got ignored in this whole debate across India is that the focus should be on the $1.4 billion under RSP rather than the $1 billion disbursal as it’s an old deal. This $1.4 billion is given to Pakistan on the request of its so-called authorities, which is common knowledge that is heavily controlled by the military, at such insensitive time. Another thing missed by many is that this $1.4 billion is a more friendly loan than the one disbursed under EFF. It has more repayment time and flexibility, hence can be considered as a gift to the Pakistani army. Simply put; why does a country like Pakistan should get any funds for “Resilience and Sustainability”, that also such a huge amount when its clearly evident from last many years that it has become a theocratic-military state festering with terrorism and internal coups? What memorandum is Pakistan showing to the IMF which is getting approved so quickly? In the official brief by IMF published on the day of the fund disbursal, its clearly evident that the organization is diplomatically justifying how Pakistan has been doing better economically and needs more fund like this. Instead of giving a slap on the wrist, or cutting the hand of terrorism, IMF has gone onto to give a gift Pakistan as a spoiled brat. India, institutionalism and disappointment This is not the first time this question has arisen in the mind of geopolitical strategist on to whether India shall follow through its liberal approach when it comes to IOs or just start quitting them at this point and adopt hard politics and realism. Even after prior terror attacks in our nation, India’s request to blacklist Pakistan completely or get a seat as the permanent UNSC member has been declined, either by America or China. IOs like the IMF and FATF are heavily dominated and influenced by western politics, which still sees third world countries as a pack of trading cards for them to play with. India must adopt the approach of confrontation instead of co-operation in these very realist times and also acknowledge its own internal faulty policy and politics before institutions like the IMF becomes “International Military Fund” and FATF into “Financial Assistance to the Terrorist Forces”.
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