EU removes Pakistan from High-Risk Third Countries List over AML and Countering Terrorist Financing Efforts

The European Union (EU) has removed Pakistan from its list of “High-Risk Third Countries” that do not have robust anti-money laundering and countering terrorist financing regimes, following improvements made by Pakistan in these areas. The decision was welcomed by Pakistan’s Prime Minister, Shehbaz Sharif, who described it as a major development that would facilitate the country’s businesses. The EU’s delegation in Pakistan also hailed it as an “important positive step” for the country.

The move comes as a much-needed relief for Pakistan, which has been facing an economic crisis. The EU’s decision follows the global money laundering and financing watchdog, the Financial Action Task Force (FATF), removing Pakistan from its list of countries under “increased monitoring” in 2020.

The listing of Pakistan in 2018 resulted in creating a regulatory burden affecting Pakistani companies doing business with the 27-member bloc. The list includes countries that the EU considers to have strategic deficiencies in their anti-money laundering and counter-terrorism financing frameworks.

The decision by the EU means that EU member states’ “Obligated Entities” will no longer be required to apply “Enhanced Customer Due Diligence” while conducting transactions with individuals and legal entities established in Pakistan. The entities include credit institutions, financial institutions, auditors, external accountants, tax advisors, notaries, independent legal professionals (acting on behalf of and for their client in any financial or real estate transaction), estate agents, and individuals trading in goods.

The exclusion of Pakistan from the list would add to the comfort level of the European economic operators and is likely to ease the cost and time of legal and financial transactions by Pakistani entities and individuals in the EU. According to the Ministry of Commerce statement, this would also help Pakistan’s economy.

In a statement, Pakistan’s Ministry of Commerce said that the delisting of Pakistan would facilitate the country’s businesses, individuals, and entities. It added that Pakistan’s exclusion from the list would add to the comfort level of the European economic operators and is likely to ease the cost and time of legal and financial transactions by Pakistani entities and individuals in the EU.

The statement also highlighted that following the measures implemented to address the action plans agreed with the FATF, Pakistan remedied the strategic deficiencies in its Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) regimes and no longer posed a significant AML/CFT threat to the international financial system.

Foreign Minister Bilawal Bhutto Zardari, in a statement, said that the decision would help Pakistan’s economy and that Pakistani businesses and individuals would no longer be subjected to enhanced customer due diligence by European legal and economic operators.

The decision by the EU to remove Pakistan from its list of High-Risk Third Countries indicates that the country has made significant progress in strengthening its anti-money laundering and counter-terrorism financing frameworks. This is a positive development for Pakistan’s economy and businesses and will provide a boost to its international trade and investment relations.