Wednesday, the Ministry of Commerce announced that the European Commission has removed Pakistan from its “High-Risk Third Countries” list, which posed serious challenges to the financial system of the European Union.
The ministry stated in a statement that Pakistan was added to the EU’s list in October 2018, which imposed excessive regulatory burdens on “Obligated Entities” within the Union and hindered legal and financial transactions with Pakistan-based individuals and entities.
In addition, “Obligated Entities” of EU member states will no longer be required to implement “Enhanced Customer Due Diligence” when conducting transactions with Pakistan-based individuals and legal entities.
The entities include credit institutions, financial institutions, auditors, external accountants, tax advisors, notaries, independent legal professionals (acting on behalf of and on behalf of their client in any financial or real estate transaction), real estate agents, and individuals engaged in the trading of products.
The EU High-Risk Third Countries List includes countries with strategic anti-money laundering and counter-terrorism funding weaknesses.
According to the ministry, the exclusion of Pakistan from the list would increase the confidence of European economic operators and reduce the cost and duration of legal and financial transactions by Pakistani entities and individuals in the EU.
It was deemed an “important positive step” for Pakistan by the EU delegation in Pakistan.
“By last year’s FATF decision, the EU has decided to remove Pakistan from its list of high-risk nations for money laundering and terrorism financing,” it tweeted.
Foreign Minister Bilawal Bhutto Zardari tweeted that Pakistan has been removed from the EU’s list of high-risk third countries with strategic deficiencies in their AML/CFT regime.
“European legal and economic operators would no longer subject Pakistani businesses and individuals to enhanced customer due diligence,” he added.
In the meantime, Prime Minister Shehbaz Sharif hailed it as a “major development” that would benefit enterprises, individuals, and entities.
“It demonstrates our unwavering commitment to further strengthen the anti-money laundering and anti-terror financing regime,” he stated.
Commerce Minister Syed Naveed Qamar also announced on Twitter yesterday that European legal and economic operators will no longer conduct “Enhanced Customer Due Diligence” on Pakistani businesses and individuals.
Federal Minister for Climate Change Sherry Rehman thanked Foreign Minister Bilawal Bhutto Zardari for Pakistan’s EU delisting.
“The EU deleted Pakistan from its high-risk list, which is good news. After this significant development, exporters, and merchants will encounter no obstacles. “This diplomatic success is due to Foreign Minister Bilawal Bhutto Zardari,” she stated.
Pakistan’s economy, exporters, and retailers were hurt by the EU’s 2018 high-risk list, Rehman said.
Foreign Office officials also applauded the decision.
“The elimination from the list will facilitate financial transactions between Pakistani and European Union entities. “Pakistan looks forward to leveraging this development for mutually beneficial economic cooperation with the European Union and to sharing its experience in the upgrade of AML/CFT regimes with partner nations,” the FO said.
What does being on the list entail?
According to the EU website, the placement of countries on the list is intended to identify nations with strategic deficiencies in their national AML/CFT regimes that pose significant threats to the Union’s financial system and, by extension, the effective functioning of the internal market.
When a country is added to the list, it indicates that the EU believes that its legal and regulatory systems for preventing financial crime and terrorist financing are significantly deficient.
The EU restricts financial transactions with high-risk third nations. These measures are intended to mitigate the dangers posed by the country’s inadequate anti-money laundering and counter-terrorism financing frameworks.
Specific measures that may be implemented include increased requirements for customer due diligence, enhanced monitoring of transactions, and restrictions or bans on certain categories of financial transactions.
In November of last year, the United Kingdom removed Pakistan from its list of “high-risk third countries” through a statutory instrument, effectively recognizing Pakistan’s efforts to strengthen money laundering and terrorism financing controls.
