Indian Banks Tighten Checks on Suspected Pakistan-Linked Funds

India—(Special Correspondent/Web Desk)—The Reserve Bank of India has instructed all banks to closely monitor money coming indirectly from Pakistan. This step was taken because of concerns that such funds might be used to buy arms. Direct money transfers from Pakistan to India are already restricted, and each transaction needs RBI approval.

The new directive, issued on August 6, came after investigations following recent tensions between the two countries. India accused Pakistan, without clear proof, of being linked to an April attack in Pahalgam. According to the RBI, Pakistan is now marked as a high-risk country for arms financing. The letter also mentioned that some funds were sent through other countries before reaching India.

Officials believe there is a serious risk that banking channels in India could be misused for illegal arms deals. While general rules exist to prevent money laundering and terrorism financing, this specific warning on Pakistan is uncommon.

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The letter also cited Pakistan’s alleged violations of global rules and sanctions, including a case where a state-owned entity reportedly tried to avoid restrictions related to missile development. A recent FATF report mentioned these concerns. Along with Pakistan, North Korea was also listed as a high-risk country because of past UN sanctions.

Pakistani officials denied these claims, saying their laws against money laundering and terror financing are very strict. Neither the Reserve Bank of India nor Pakistan’s Foreign Ministry commented further on the issue.