Friday, October 27, 2023

EU drops Pakistan from high-risk country list


Pakistan has been removed from the European Union’s list of high-risk third countries, a move that is expected to improve business conditions for Pakistani entities and individuals. The listing of Pakistan in 2018 had created a regulatory burden affecting Pakistani companies doing business with the 27-member bloc. The Ministry of Commerce said that 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 the EU. Foreign Minister Bilawal Bhutto-Zardari said in a Twitter post that Pakistani businesses and individuals would no longer be subjected to Enhanced Customer Due Diligence by European legal and economic operators.

The high-risk third countries list includes nations that do not have a robust enough regulatory and legal system to prevent financial crimes and terrorism financing that could pose significant threats to the financial system of the bloc. When a country is added to the list, it is subjected to particularly enhanced scrutiny and additional measures that increase the cost of doing business. The Pakistani entities that will no longer be subjected to enhanced EU scrutiny include credit and financial institutions, auditors, external accountants, tax advisers, notaries, and independent legal professionals, among others.

Pakistan’s delegation in the EU called the removal from the list a positive step. In line with last year’s FATF decision, the EU has decided to remove Pakistan from its list of countries with high risk regarding money laundering and financing of terrorism. This refers to the decision by the global money laundering and financing watchdog, the Financial Action Task Force (FATF), to remove Pakistan from its list of countries under increased monitoring after four years.

Khaqan Najeeb, a former adviser to the Ministry of Finance, hailed the EU decision as evidence of Pakistan’s success in removing strategic deficiencies that were highlighted under the FATF listing, which can severely restrict a country’s international borrowing capabilities. This announcement 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 move is expected to boost business activity between Pakistan and the EU, as it will ease the cost and time of legal and financial transactions by Pakistani entities and individuals in the EU. It will also improve the comfort level of European economic operators, making it easier for them to do business with Pakistani companies.

Pakistan has been taking steps to improve its regulatory and legal systems to prevent financial crimes and terrorism financing. The country has made significant progress in this regard, which has been recognized by the FATF and the EU. The removal from the high-risk third countries list is a significant achievement for Pakistan, as it will help the country attract more foreign investment and boost its economic growth.

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