Financial Action Task Force (FATF), the global watchdog for terror funding may remove Pakistan from the punitive "grey list" in its upcoming review meeting.

Sources told IANS that the FATF is "satisfied" with Pakistan's efforts to crack down on terror funding and money laundering, even though Pakistani terrorists have been continually infiltrating into India through the Line of Control (LoC) in Jammu and Kashmir.

China, the US, the UK, Australia, Japan and a few other countries, at the FATF's three-day review meeting in Beijing, refrained from passing any adverse remarks against Pakistan, sources said.

Pakistan was placed in the 'grey list' in 2018 and was supposed to complete its compliance by October 2019. The grey list financially penalized Pakistan at a time when it was already facing economic crisis.

Sources said China is particularly advocating for its exit from the 'grey list'. The Imran Khan government has also been lobbying hard, using multiple channels and platforms in the US, UK and Europe, for a reprieve.

However, one of the main reasons for this change in the stance among the key players in FATF, sources said is the recent West Asia crisis following the US offensive against Iran, killing its Revolutionary Guard Corps commander and spy chief Qassem Soleimani.

After Tehran retaliated by striking at two US military bases in Iraq and shooting down a Ukrainian plane killing over 170 civilians, including 70 Canadians, the US realized that it "needs an ally who will do their bidding for the right price in the region".

Pakistan's military has offered to play a bigger role in the Middle East at the behest of the Donald Trump administration. "Islamabad is willing to work against the US adversaries for a price but India will never meddle in the Middle East. So Islamabad has its own advantages," sources said.

Besides, America needs Pakistan in its negotiations with the Taliban for a peace deal in Afghanistan, another source said. 

If the FATF exonerates Pakistan, it will encourage te ISI-sponsored banned outfits to continue its cross-border terrorism in Jammu and Kashmir, Indian officials fear.

Last year, the FATF had warned Pakistan and threatened to put it in the black list for non-compliance of its conditions. But now, there is no chance of blacklisting Pakistan, sources said.