Ministry of Commerce says move will ease cost and time of legal and financial transactions by Pakistani entities and individuals.
Islamabad, Pakistan – The European Union has removed Pakistan from its “list of high-risk third countries”, a move that is expected to improve conditions for business activity.
In a statement announcing the news on Wednesday, Pakistan’s Ministry of Commerce said the listing of Pakistan in 2018 had resulted in creating a regulatory burden affecting Pakistani companies doing business with the 27-member bloc.
“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,” the statement said.
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.
EU authorities have removed Pakistan from the List of High Risk Third Countries which have strategic deficiencies in their AML/CFT regime. Pakistani businesses & individuals would no longer be subjected to Enhanced Customer Due Diligence by European legal & economic operators.
— BilawalBhuttoZardari (@BBhuttoZardari) March 29, 2023
The high-risk third countries list includes nations that, according to the EU, 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 & financing of terrorism,” it tweeted, referring 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 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,” he told Al Jazeera.