KARACHI: The Pakistan commerce ministry said on Wednesday the European Union had removed the South Asian nation from a list of ‘high risk’ countries that had deficient anti-money laundering and terror financing (AML/CFT) regimes.
The EU’s action follows Pakistan being removed in October last year from the Financial Action Task Force (FATF) grey list that warrants increased surveillance for terrorism financing. Pakistan was listed by FATF in 2018 because of “strategic counter-terrorist financing-related deficiencies.” Subsequently, Pakistan was also included in the EU’s ‘List of High Risk Countries’ in October 2018.
“Following the measures implemented to address the action plans agreed with the FATF, 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,” the commerce ministry quoted the EU as saying.
“Taking into account their relevance under the revised methodology, the Commission considers that these jurisdictions no longer have strategic deficiencies in their respective AML/CFT frameworks and do not pose a significant threat to the financial system of the European Union.”
With the removal of Pakistan from the list of high risk countries, EU member states are no longer required to apply “Enhanced Customer Due Diligence” while dealing with individuals and legal entities established in Pakistan.
“The placement of Pakistan in the list 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 statement said.
“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.”
With its removal from the list, Pakistan would essentially receive a reputational boost and get a clean bill of health from the international community on terrorist financing. It would also improve sentiment, important from a foreign direct investment perspective.
Recent widespread floods in Pakistan have further weakened the country’s economy, already in turmoil with critically low foreign exchange reserves, inflation at a multi-decade high and a sharp depreciation of the rupee currency.
