Pakistan is off of the EU’s list of High-Risk Third Countries

Authorities in the European Union (EU) have taken Pakistan off the List of High-Risk Third Countries after the government fixed flaws in their strategic weaknesses in their AML/CFT frameworks and don’t pose a big threat to the EU’s financial system

Previously, Pakistan along with some other countries had flaws in the Anti-Money Laundering/Countering the Financing of Terrorism (AML/CFT) regime that posed a serious threat to their financial system.

Earlier, Pakistan was added to a list of 21 countries that had weaknesses in their money laundering and terrorist control monitoring systems.

According to the Delegated Regulation, “Nicaragua, Pakistan, and Zimbabwe have fixed the strategic weaknesses in their respective AML/CFT regimes and no longer pose a significant AML/CFT threat to the international financial system.”

Taking into account how important they are under the new method, the Commission thinks that these jurisdictions no longer have strategic weaknesses in their AML/CFT frameworks and don’t pose a big threat to the EU’s financial system.

As a result of this measure, “Obligated Entities” in EU member states would no longer have to do “Enhanced Customer Due Diligence” when dealing with people and businesses in Pakistan.

Among the “Obliged Entities” are:

(a) places that give loans;

(b) institutions of finance;

(c) the following natural or legal persons doing professional work:

a. external accountants, auditors, and tax advisors;

b. notaries and other independent legal professionals, when they take part in transactions involving:

i. the buying and selling of land or businesses;

ii. Managing client money, securities, or other assets

iii. opening or taking care of bank, savings, or securities accounts

iv. the organization of contributions needed to start, run, or manage a business;

v. making, running, or taking care of trusts, companies, foundations, or other similar structures;

c. trust or company service providers who are not already covered in (a) or (b);

d. estate agents;

e. other people who sell or buy goods and pay or get paid in cash for a total of EUR 10,000 or more, regardless of whether the transaction is done all at once or in several steps that seem to be linked.

You might remember that on October 22, 2018, the EU put Pakistan on its list of “High-Risk Countries.” Putting Pakistan on the list put too much regulatory pressure on “Obligated Entities” in the EU, and in some cases, they refused to work with people and businesses in Pakistan on legal and financial matters.

The new development would make European businesspeople feel better and is likely to make it cheaper and faster for Pakistani businesses and people to do legal and financial business in the EU.