On March 15th, 2023, the European Union announced that Pakistan had been removed from its List of High Risk Third Countries.
This move followed concerted efforts by Pakistan’s Foreign Minister Bilawal Bhutto Zardari and Commerce Minister Syed Naveed Qamar.
The announcement has significant implications for businesses and individuals in Pakistan, as well as for EU member states.
Background
Pakistan was initially placed on the List of High Risk Third Countries in October 2018 due to perceived strategic deficiencies in its anti-money laundering/counter-terrorism financing (AML/CFT) regime.
This designation created undue regulatory burdens on obligated entities in the EU and led to instances where some businesses refused to engage in legal and financial transactions with entities based in Pakistan.
EU’s Decision
According to the EU’s Delegated Regulation, Pakistan, along with Nicaragua 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.
The EU’s decision means that obligated entities in member states will no longer be required to apply Enhanced Customer Due Diligence when dealing with individuals and legal entities established in Pakistan.
Implications for Pakistan
The EU’s decision is likely to ease the cost and time of legal and financial transactions by Pakistani entities and individuals in EU member states.
This move will boost the confidence of European economic operators and provide a much-needed boost to Pakistan’s struggling economy.
Moreover, this will remove the stigma of being listed as a high-risk country, which can damage Pakistan’s reputation as a reliable trading partner.
Implications for EU Member States
The removal of Pakistan from the List of High Risk Third Countries will ease regulatory burdens on obligated entities in the EU.
This will facilitate legal and financial transactions with Pakistani entities and individuals, leading to increased economic activity between Pakistan and EU member states.
Conclusion
The EU’s decision to remove Pakistan from its List of High Risk Third Countries is a welcome development that will facilitate legal and financial transactions between Pakistan and EU member states.
This will provide a boost to Pakistan’s struggling economy and remove the stigma of being listed as a high-risk country.
The decision will also ease regulatory burdens on obligated entities in the EU, leading to increased economic activity between Pakistan and EU member states.
