EU Removes Pakistan From List of 'High-Risk' Countries

0:00

/0:00

1×

Facts

• On Wednesday, the European Union (EU) removed Pakistan from its list of 'High-Risk Third Countries,' which have strategic deficiencies in their anti-money laundering and counter-terrorism financing regime that pose significant threats to the bloc's financial system.¹
• The EU's delegation in Pakistan termed it an 'important positive step' for the country, which was included on the list in 2018, placing the country under additional regulatory restrictions.²
• De-listing Pakistan from the EU's updated list would mean the EU countries' so-called 'Obligated Entities' will no longer be required to apply 'Enhanced Customer Due Diligence' while conducting legal and financial transactions with individuals and institutions based in Pakistan.³
• In October 2022, the Financial Action Task Force — a global money laundering and terrorist financing watchdog — removed Pakistan from the list of countries under 'increased monitoring' after almost four years. The UK, which added Pakistan to the list of 21 high-risk countries in 2021, followed suit a month later.⁴
• These developments come as Pakistan faces its worst economic crisis in decades, with retail inflation soaring to 47%, and prices of staple food commodities surging — such as wheat flour skyrocketing by 120.66%.⁵
• Since the Taliban reclaimed power in Afghanistan, Pakistan witnessed a 27% increase in terrorist acts in 2022 compared to 2021. In January 2023, 134 people lost their lives in at least 44 militant attacks across the South Asian nation.⁶

Sources: ¹Al Jazeera, ²Ndtv.com, ³The express tribune, ⁴Geo, ⁵Moneycontrol and ⁶The diplomat.

Narratives

• Narrative A, as provided by Geo. This decision is a much-needed breather for Pakistan, as exporters will now face fewer obstacles to trade, and Islamabad will better be able to tackle one of its worst-ever economic crises. The rupee is depreciating and inflation is rising, but now Pakistan can unlock critical funding from the International Monetary Fund. This South Asian nation now can take necessary measures to end the crisis through sustainable export-led economic growth.
• Narrative B, as provided by Firstpost. Removing Pakistan from this list is dangerous, as it could lead to a rise in money laundering and terror financing activities — especially as the country heads into its next general elections later this year. Terrorism was already on the rise, and Islamabad continues to shelter proxy terrorist leaders and allows global terror networks to remain intact.