Why in news?
The Financial Action Task Force (FATF) held its plenary meetings in Paris from 22 to 24 October 2025. Among the topics discussed was the role of state sponsorship in financing terrorism, an issue highlighted by India in relation to Pakistan. The global watchdog warned that state support for extremist groups remains a serious threat to international security.
Background
The FATF is an intergovernmental body created in 1989 by the Group of Seven nations to combat money laundering. After the September 2001 attacks, its mandate expanded to include countering terrorist financing. The FATF develops and promotes standards that countries should implement to protect the integrity of the global financial system. It has 39 members and a network of regional bodies covering more than 180 jurisdictions.
Countries that repeatedly fail to comply with FATF standards risk being placed on its "grey list" or "black list," which triggers increased scrutiny and financial sanctions. India became a full member in 2010.
State sponsorship of terrorism
In its 2025 comprehensive update, the FATF noted that some governments continue to provide safe havens, funding, weapons or training to terrorist organisations. Such state sponsorship allows extremist networks to operate openly, build training camps and acquire sophisticated equipment. India contributed a case study detailing how Pakistan's state-owned National Development Complex allegedly diverted funds to proliferation activities and how banned groups operate under new names to evade sanctions.
The report urged countries to criminalise all forms of support for terrorist groups, including financing by state agencies, and to increase cooperation on asset recovery and extradition. Terrorists are also exploiting new technologies such as cryptocurrencies, online crowdfunding and anonymous payment platforms, making regulatory vigilance crucial.
Significance
- Global security: State support sustains armed networks that destabilise regions and prolong conflicts. By spotlighting this issue, the FATF underscores the need for political will to sanction complicit governments.
- India's stance: India has long accused Pakistan of harbouring and funding terrorist groups that target Indian citizens. Bringing these concerns to the FATF's table raises pressure on Islamabad and strengthens India's diplomatic efforts to isolate sponsors of terrorism.
- Regulatory evolution: The FATF is updating its recommendations to address emerging threats in the digital economy. Countries must enact robust laws and cooperate with technology companies to trace and block illicit transfers.
Conclusion
By calling out state-sponsored terrorism, the FATF emphasises that governments cannot turn a blind eye to extremist proxies. International pressure and coordinated action are needed to disrupt financing networks and hold sponsors accountable. The ongoing deliberations will shape future standards that countries must adopt to protect global financial systems and ensure that terror has no safe haven.
Source: News On Air . Press Information Bureau . FATF - Plenary Announcement