European Union (EU) authorities have removed Pakistan from the List of High-Risk Third Countries which have strategic deficiencies in the Anti Money Laundering / Countering the Financing of Terrorism (AML/CFT) regime that 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 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:
- credit institutions;
- financial institutions;
- the following natural or legal persons acting in the exercise of their professional activities:
a. auditors, external accountants, and tax advisors;
b. 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 client money, securities, or other assets
iii. opening or management of bank, savings, or securities accounts
iv. organization of contributions necessary for the creation, operation, or management of companies;
v. creation, operation or management of trusts, companies, foundations, or similar structures;
c. trust or company service providers not already covered under point (a) or (b);
d. estate agents;
e. 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.
It might be recalled that Pakistan was included in the List of High-Risk Countries on 22nd October 2018 by the EU. 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 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.