Terrorism financing is at the center of thriving terrorism; evidently without funding and financing, it will be practically impossible for terrorist organizations to remain operational and continue their plans. It is important to target finance mechanism of terrorists and terror organizations for decisive eradication of terrorism. This study focuses on the impact of Financial Action Task Force (FATF) on Pakistan’s counter terror financing policies. In June 2018, FATF sited Pakistan on the “grey list” by underlining strategic deficiencies in the area of Terror Financing TF. This research highlights the main sources/channels of terror financing utilized by individuals and entities to fund the terrorist groups causing violence and supporting extremist ideologies. The research also highlights appropriate and relevant efforts that are made by Pakistan’s institutions to address the complex issue of terror financing under the recommendations by Financial Action Task Force (FATF). This research is qualitative in nature and adheres to the case study design for gathering exclusive insight into Pakistan’s position and efforts in line with FATF requirements. Dependency theory has been applied as a theoretical framework to highlight Pakistan’s dependency, political and economic in specific as a developing country on developed countries as part of international groups and organizations like FATF. Results of the study revealed that Pakistan has progressed and has done a commendable work while complying with the FATF action plan, and out of 27 actionable items, Pakistan has completed 21 and complied, whereas the rest of 6 items are partially complied. Despite this accomplishment, Pakistan was retained on FATF “grey list”. Lastly, this research has recommended that institutional system exists in Pakistan however; there is a need to increase the TF investigation, prosecution and conviction rates.