Issue Brief on “Easing of Financial Curbs on Pakistan by European Union – an Analysis”


In a noteworthy development on March 29, 2023, the European Union (EU) decided to ease financial curbs on Pakistan and remove it from the list of High-Risk Third Countries.[1] This decision represents a significant shift in the EU’s perception of Pakistan’s financial system and opens avenues for enhanced economic cooperation. This highlights Pakistan’s efforts to improve its anti-money laundering and counter-terrorism financing framework, diplomatic engagements with the EU, and the potential benefits for both parties.

In 2018, the EU included Pakistan in its list of high-risk third countries due to concerns over money laundering and terrorism financing. This listing subjected Pakistan to enhanced scrutiny and stricter regulations in financial transactions with EU member states. This designation made it difficult for Pakistani businesses and financial institutions to access European markets, hindering trade and investment opportunities.[2] However, in 2023, the EU decided to remove Pakistan from this list, signalling a change in its perception of the country’s financial system and its regulatory framework.

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