On Wednesday, the EU removed Pakistan from the “High-Risk Third Countries” list comprising those states that the bloc believes to be taking insufficient measures to counter money laundering and terror financing.
Overview
The EU’s delegation in Pakistan called the decision an “important positive step” for Islamabad.
Meanwhile, Pakistani PM Shehbaz Sharif said the decision would help promote trade and business. He further declared that the decision resulted from the current government’s resolve to counter terrorism.
Pakistani Commerce Minister Syed Naveed Qamar celebrated the developments in a statement, adding that Pakistani entities will “no longer be subjected to ‘Enhanced Customer Due Diligence’ by European legal and economic operators.”
Lawmaker Sherry Rehman confirmed the development, lauding Foreign Minister Bilawal Bhutto Zardari for this achievement.
An important positive step for 🇵🇰!👏
— EUPakistan (@EUPakistan) March 29, 2023
In line with last year's FATF decision,the 🇪🇺 EU has decided to remove 🇵🇰 from its list of countries with high risk regarding money laundering & financing of terrorism.@RKionka @HinaRKhar @BBhuttoZardari https://t.co/RIXpTtRfam
Speaking to Al Jazeera, Khaqan Najeeb, the former adviser to the Ministry of Finance, said that the decision shows that the EU has “accepted that weaknesses in the country’s legal and regulatory systems have been upgraded and Pakistan can now prevent financial crimes and terrorist financing.”
The EU made the decision to comply with the Financial Action Task Force’s (FATF) decision last October to remove Pakistan from its “grey list,” which requires countries to take measures to prevent money laundering and terror financing.
In November 2022, the UK also removed Pakistan from its Anti-Money Laundering/Countering the Financing of Terrorism list.
Significance of List
The EU’s High-Risk Third Countries list includes countries with “strategic deficiencies” in anti-money laundering and countering the financing of terrorism. The list looks into the countries identified by the FATF as being “under increased monitoring” to counter money laundering and terror financing. It includes Afghanistan, Iran, the Philippines, and the UAE.
De-listing of Pakistan from EU's updated list of high-risk third-countries is a major development which will facilitate our businesses, individuals & entities. It is a reflection of our unwavering resolve to further strengthen anti-money laundering & anti-terror financing regime.
— Shehbaz Sharif (@CMShehbaz) March 29, 2023
The Pakistani Ministry of Commerce recalled that Islamabad was added to the list in October 2018, imposing trade regulatory burdens on “Obligated Entities” in the EU and obstructing trade and legal transactions with Pakistani businesses and individuals. The entities included financial institutions, legal professionals, and individuals and companies trading in goods.
The decision will provide relief to Pakistani individuals and businesses amid one of its worst economic crises.
In a quest for further economic relief, Islamabad is looking to secure a loan package from the IMF. The ninth review of talks, which were set to conclude on 9 February, is still pending.