Pakistan’s socio-religious context is favorable for both Faith-Based Organizations’ and Madaris to grow and play a key role in the religious economy of country. One negative aspect of this socioreligious context is the attachment of few FBOs and Madaris with terror financing. FATF in this regard has proposed recommendations to block and break terror financing channels via making legislation against money laundering and terror financing. The Parliament in Pakistan has recently passed legislation containing money laundering and terror financing. This study assumes that FATF legislation will impact the growth of the religious economy by creating constraints for both FBOs and Madaris in receiving financial assistance in the name of charity. And for that reason, this study attempts to achieve two basic objectives. First, this study identifies different publicconvincing tactics used by FBOs and Madaris to maintain a smooth flow of financial assistance in the name of charity. This objective has been achieved via interviewing different stakeholders such as representatives from FBOs, Madaris, Law enforcement agencies, and local community members. Second, this study provides a comprehensive analysis of constitutional development made by the Pakistani government under the recommendations of FATF to minimize the role of religious economies in terror financing. However, the second objective has been achieved by interviewing Law Enforcement Agencies and analyzing available secondary sources. Study findings show that Madaris act as the sole supplier of the workforce to perform religious activities as well as absorb and educate a huge number of marginalized and poor students and make Madaris deserving of charity and other contributions. Similarly, FBOs provide welfare programs to uphold the most marginalized section of the society which is visible and known to local community members. It shows that FBOs are in an exchange relationship with local community members. In this exchange relationship, in the first place, FBOs provide welfare services and in return collects charity donations from local community members to finance all the operational costs associated with the said welfare programs. In addition, looking into the constitutional development, it has been found that considerable legal reforms have been taken place in Pakistan since February 2020, including the passage of several legislation and rules, have aided Pakistan’s progress on the Action Plan. As part of the FATF’s wider 40 Recommendations, these advancements are expected to help improve outcomes under effective compliance and technical compliance metrics. Supervisor:- Ms Fizzah Khalid Butt