Pakistan exits EU's ‘List of High-Risk Third Countries'

FOOLS_NIGHTMARE · Mar 30, 2023

Removal will free country's businesses and individuals from “Enhanced Customer Due Diligence”

Pakistan has made major progress as the European Union (EU) removed the country from the “List of High-Risk Third Countries”, freeing the Pakistani businesses and individuals from“Enhanced Customer Due Diligence” by the regional body's legal and economic operators.

In a statement issued on Wednesday, the Ministry of Commerce said that Pakistan exited the list of nations having strategic deficiencies in the Anti Money Laundering/Countering the Financing of Terrorism (AML/CFT) regime, which pose a significant threat to their financial system.

According to the delegated regulation, “Following the measures implemented to address the action plans agreed with the Financial Action Task Force (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. 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.”

As a consequence of the said measure, the “Obligated Entities” in EU member states would no longer be required to apply “Enhanced Customer Due Diligence” while dealing with individuals and legal entities established in Pakistan.

The “Obligated Entities” include (a) credit institutions, (b) financial institutions and (c) the natural or legal persons acting in the exercise of their professional activities. The list of persons includes auditors, external accountants and tax advisors.

Notaries and other independent legal professionals, where they participate, whether by acting on behalf of and for their client in any financial or real estate transaction, or by assisting in the planning or carrying out of transactions for their client concerning the:

i. buying and selling of real property or business entities;

ii. managing of client money, securities or other assets

iii. opening or management of bank, savings or securities accounts

iv. organisation of contributions necessary for the creation, operation or management of companies;

v. creation, operation or management of trusts, companies, foundations, or similar structures;

The Obligated Entities’ list also includes trust or company service providers not already covered under point (a) or (b), estate agents and other persons trading in goods to the extent that payments are made or received in cash in an amount of EUR 10,000 or more, whether the transaction is carried out in a single operation or in several operations which appear to be linked.

Pakistan was added to the “List of High-Risk Countries” on October 22, 2018 by the European Union.

The placement of Pakistan in the list had created an undue regulatory burden on “Obligated Entities” in the 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 ministry 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 region.

UK had removed Pakistan from the high-risk list in November 2022.