Pakistan removed from EU’s list of High-Risk Countries

Pakistan has been removed from the European Union’s “list of high-risk third countries”, which is expected to boost the business environment in the country.

Pakistan’s Ministry of Commerce announced the news in a statement on March 30, 2023.

It said the country’s listing in 2018 had resulted in the creation of a regulatory burden, hurting Pakistani companies doing business with Europe.

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 the EU.”

In a tweet, foreign minister Bilawal Bhutto-Zardari declared that European legal and corporate entities “would no longer subject Pakistani businesses and individuals to enhance customer due diligence”.

The EU has compiled a list of high-risk third countries that it claims lack the legal and regulatory framework necessary to prevent financial crimes and “terrorism” financing that may present serious risks to their financial system.

When it is added to the list, a country is subjected to more intense scrutiny and additional regulations that raise the cost of doing business.

Auditors, external accountants, tax advisers, notaries, and independent legal specialists are just a few of the Pakistani institutions that won’t be subject to increased EU scrutiny any longer.

Pakistan’s removal from the list was hailed as a “positive step” by its delegation in the European Union.

In a tweet, they referred 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.

The tweet read: “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.”

Former Ministry of Finance advisor Khaqan Najeeb called the EU’s decision proof that Pakistan had successfully fixed the “strategic deficiencies” that the FATF listing had revealed and which may significantly limit a country’s ability to borrow abroad.

In a statement, Najeeb said:

“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.”