ISLAMABAD: The European Union (EU) has removed Pakistan from its ‘list of high-risk third-countries’ that have strategic deficiencies in the Anti Money Laundering and Countering the Financing of Terrorism (AML/CFT) regime.

Foreign Minister Bilawal Bhutto-Zardari revealed this on Wednesday echoing a similar decision taken by the Financial Action Task Force (FATF) months ago when it removed the country from its grey list after almost four years.

“Pakistani businesses and individuals would no longer be subjected to Enhanced Customer Due Diligence by European legal and economic operators,” he tweeted.

Nicaragua, Pakistan and Zimbabwe have remedied the strategic deficiencies in their respective AML/CFT regimes and no longer pose a significant AML/CFT threat to the international financial system. As a result, these three countries have been delisted from high-risk third country jurisdiction.

Bilawal underlines benefits the decision brings for Pakistani businesses, individuals

The placement of Pakistan on the EU list on Oct 22, 2018 had created undue regulatory burden on “Obligated Entities” in EU and there were instances whereby some of them had refused to entertain legal and financial transactions with individuals and entities based in Pakistan.

The new development 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 EU.

As a consequence of the measure, the Obligated Entities in the EU member states would no longer be required to apply ‘enhanced customer due diligence’ while dealing with individuals and legal entities established in Pakistan.

The Obligated Entities include credit institutions, financial institutions, and auditors, external accountants and tax advisors, notaries and other independent legal professionals acting in exercise of their professional activities.

Prime Minister Shehbaz Sharif hailed the development, saying it would facilitate the country’s businesses, individuals and entities.

“De-listing of Pakistan from EU’s updated list of high-risk third-countries is a major development which would facilitate our businesses, individuals and entities,” he said in a tweet.

The prime minister said it was a reflection of the government’s unwavering resolve to further strengthen its anti-money laundering and anti-terror financing regime.

Welcoming the good news, Minister for Climate Change Senator Sherry Rehman said the credit for the diplomatic achievement goes to FM Bhutto-Zardari.

According to the European Commission, this list takes into account the information from the FATF and the changes that took place over 2022 in the FATF list of “jurisdictions under increased monitoring”. The commission is closely involved in the monitoring of the progress of the listed jurisdictions and working closely with them to address shortcomings in AML/CFT and to help them to fully implement their respective action plans as agreed with the FATF.

Commissioner for financial services, financial stability and Capital Markets Union Mairead McGuinness, said: “It is necessary to continue to identify and list high-risk third-country jurisdictions presenting strategic deficiencies in their national anti-money laundering/countering the financing of terrorism (AML/CFT) frameworks with the view to working closely with them to prevent money laundering and terrorist financing risks.

Published in Dawn, March 30th, 2023