Why EU Removed Pakistan From High Risk Third Countries List

The European Commission has removed Pakistan from its list of "High Risk Third Countries," which presents serious risks to the financial system of the European Union, the Ministry of Commerce stated on Wednesday.

The ministry claimed in a statement that Pakistan's inclusion on the EU's list in October 2018 put an excessive regulatory load on "Obligated Entities" within the Union and hampered legal and financial transactions with people and organizations with a base there.

The document went on to say that "Obligated Entities" of EU member states would no longer be required to perform "Enhanced Customer Due Diligence" when dealing with people and businesses founded in Pakistan.

Credit institutions, financial institutions, auditors, outside accountants, tax advisors, notaries, independent lawyers (acting on behalf of and for their client in any financial or real estate transaction), estate agents, and people engaged in commerce are among the entities.

A list of nations that the EU believes have strategic flaws in their frameworks for fighting money laundering and countering terrorism funding is known as the EU High Risk Third Countries list.

According to the ministry, Pakistan's removal from the list would increase the level of confidence among European businesspeople and probably reduce the expense and length of time associated with legal and financial operations by Pakistani entities and individuals in the EU.

It was described as a "important positive step" for Pakistan by the EU delegation in Pakistan.

The EU announced on Twitter that Pakistan had been removed from its list of nations with a high risk of money laundering and terrorist funding "in line with last year's FATF decision."

According to a tweet from foreign minister Bilawal Bhutto Zardari, Pakistan has been taken off the list of high-risk third countries with strategic weaknesses in their AML/CFT regime by EU officials.

Yesterday, Syed Naveed Qamar, the minister of commerce, also made an announcement on Twitter that European legal and business actors would no longer conduct "Enhanced Customer Due Diligence" on Pakistani companies and people.

In her reaction to the news, Sherry Rehman, the federal minister for climate change, praised Foreign Minister Bilawal Bhutto Zardari for the "achievement" of Pakistan's removal from the EU's list.

Exporters and dealers won't encounter obstacles after this significant development. Foreign Minister Bilawal Bhutto Zardari deserves all the glory for this diplomatic victory, she said.

Rehman claimed that Pakistan's economy, exporters, and merchants suffered as a result of the country being listed as a high-risk nation by the EU in 2018.

What does being on the roster mean?

The listing of nations on the list, according to the EU website, is intended to identify jurisdictions with strategic shortcomings in their national AML/CFT regimes that pose serious threats to the Union's financial system and, as a result, the efficient operation of the internal market.

When a nation is added to the list, it indicates that the EU considers that nation's legal and regulatory framework for combating money laundering and terrorism financing has serious flaws.

When a nation is included on the EU's list of high-risk third countries, extra controls are put in place for any financial transactions involving that nation. These steps are intended to lessen the risks brought on by the country's anti-money laundering and counterterrorism funding framework's shortcomings.

Increased customer due diligence requirements, improved transaction monitoring, and limitations or bans on particular financial transaction types are just a few of the specific measures that may be implemented.

By removing Pakistan from its list of "high-risk third countries" in November of last year, the United Kingdom essentially acknowledged Pakistan's efforts to strengthen its controls over money laundering and terrorism financing.