EU and Pakistan Foster Closer Ties as Pakistan is Taken off High-Risk Country List

The European Union has recently removed Pakistan from its list of “High-Risk Third Countries” that do not have a robust anti-money laundering and countering terrorist financing regime. This development has been welcomed by Pakistan’s Prime Minister Shehbaz Sharif, who sees it as a major step towards facilitating the country’s businesses. This move comes as Pakistan faces an economic crisis and will provide much-needed relief to the cash-strapped country.

An Important Positive Step 

The EU’s delegation in Pakistan has called the decision to remove Pakistan from its list of high-risk countries an “important positive step” for the country. This move is in line with the decision by the Financial Action Task Force (FATF) last year to remove Pakistan from its list of countries under “increased monitoring.” The decision by the EU is a testament to Pakistan’s efforts to address its anti-money laundering and counter-terrorism financing frameworks.

Comfort Level for European Economic Operators 

Pakistan’s exclusion from the EU’s list of high-risk countries will likely ease the cost and time of legal and financial transactions by Pakistani entities and individuals in the EU. This will add to the comfort level of European economic operators, who will no longer be required to apply “Enhanced Customer Due Diligence” while conducting transactions with individuals and legal entities established in Pakistan. This will boost Pakistan’s economy by facilitating increased trade and investment between Pakistan and the EU.

What This Means for Pakistan?

While the EU’s decision to remove Pakistan from its list of high-risk countries is undoubtedly a positive development, it does not mean Pakistan is completely out of the woods. Pakistan must still address anti-money laundering and counter-terrorism financing frameworks to remain off the EU’s high-risk list. Furthermore, the economic benefits of this decision may take time to materialize as Pakistan’s economy faces numerous challenges. The country is still dealing with a high debt burden, a fiscal deficit, and a balance of payments crisis. While the EU’s decision provides some relief, Pakistan must continue implementing structural reforms to address its economic challenges.

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