UK removes Pakistan from its ‘High-Risk Third Countries’ list

By Ghulam Haider

Foreign Minister Bilawal Bhutto Zardari on Monday said that the United Kingdom has officially removed Pakistan from its list of “High-Risk Third Countries”.

Sharing a picture of the official document on his Twitter handle, Bilawal said that the decision comes after Pakistan’s early completion of the Financial Action Task Force’s (FATF) action plan.

“His Majesty’s Treasury issued an amendment to the UK’s ‘High-Risk Third Countries’ list on 14 November 2022, through a Statuary Instrument. The amendment removes Pakistan from the list in accordance with the decision taken by the Financial Action Task Force (FATF) on 21 October 2022,” the official document read.

It said that the Foreign, Commonwealth and Development Office (FCDO) recognises the progress Pakistan has made to improve money laundering and terrorist financing controls.

“The Foreign, Commonwealth and Development Office recognizes the progress Pakistan has made to improve money laundering and terrorist financing controls,” it further added.

The international money-laundering watchdog put the country on its so-called grey list in June 2018, after Islamabad failed to implement policies aimed at stamping out money laundering and the financing of international terror groups.

The move severely curtailed exchange flows and discouraged foreign direct investment by putting reams of red tape around even the simplest projects.

In a statement, the Paris-based organisation said it “welcomes Pakistan’s significant progress” in its anti-money laundering efforts.

“Pakistan is therefore no longer subject to the FATF’s increased monitoring process,” it added.

“The FATF welcomes Pakistan’s significant progress in improving its AML/CFT regime. Pakistan has strengthened the effectiveness of its AML/CFT regime and addressed technical deficiencies to meet the commitments of its action plans regarding strategic deficiencies that the FATF identified in June 2018 and June 2021, the latter of which was completed in advance of the deadlines, encompassing 34 action items in total. Pakistan is therefore no longer subject to the FATF’s increased monitoring process,” read the statement.

“Pakistan will continue to work with the APG to further improve its AML/CFT system,” the statement added.

In April 2021, the UK government added Pakistan to the list of undesirable 21 high-risk countries with unsatisfactory money laundering and terrorist financing controls. Pakistan ranked 15 on the UK’s list of 21 “high-risk third countries,” which included Syria, Uganda, Yemen, Zimbabwe and Iran.

In a major development last month, the FATF took Pakistan off a global money laundering watchlist, officials said in a move Islamabad hopes will ease foreign investment and boost the country’s economy.

Pakistan exits FATF’s grey list after 4 years

Last month, the FATF removed Pakistan from its list of “increased monitoring”–also known as the “grey list”–after four years.

The FATF had included Pakistan in its increased monitoring list in June 2018 for deficiencies in Pakistan’s legal, financial, regulatory, investigations, prosecution, judicial and non-government sectors to fight money laundering and terror financing.

What does Pakistan’s exit from FATF grey list imply? | By Sultan M Hali

Since then, Pakistan had made serious attempts to escape the grey list of the watchdog. As a result of Pakistan’s serious efforts, the FATF in June this year announced that Pakistan had completed all 34 items on two separate plans as demanded by the global watchdog for combating money laundering and terror financing.

After the Plenary meeting in October, the watchdog announced that Pakistan was no longer subject to the FATF’s increased monitoring process.

The watchdog noted that Pakistan had strengthened the effectiveness of its AML/CFT regime and addressed technical deficiencies to meet the commitments of its action plans regarding strategic deficiencies that the FATF had identified in June 2018 and June 2021.

The FATF is a global money laundering and terrorist financing watchdog that aims to prevent these activities, and holds countries that don’t comply accountable. Pakistan ended up on the FATF’s “grey list” in June 2018 for failing to take appropriate action against money laundering and terrorist financing. The “grey list” is a step closer to the FATF’s black list, which Pakistan was actively trying to avoid. Ending up on the FATF’s black list is bad news for a country that wants to protect its global reputation, and receive financial assistance from international organizations. Countries downgraded to the black list are considered “high risk” jurisdictions.