In an unpredicted move, the UK government has started imposing sanctions on Pakistan after adding Pakistan to the list of 21 countries that were part of Schedule 3ZA (High Risk Countries) under its Money Laundering and Terrorist Financing (Amendment) (High-Risk Countries) Regulations 2021.
Pakistan ranks 15th in the list of countries plagued by conflict and terrorism, while according to the new restrictions, British-Pakistani institutions and individuals will not be able to send remittances. Remittances from the UK to Pakistan amount to 1.7 billion a month, and disruption would severely affect Pakistan’s system.
Since Brexit, British officials strengthened anti-money-laundering laws to define a high-risk country as one where banks need to do due diligence before accepting foreign transactions. The United Kingdom’s decision to add Pakistan to its list of “high-risk countries” may make it harder for Islamabad to exit the Financial Action Task Force (FATF) gray list in June.
Whether or not to stay on the gray list now depends on PTI-led federal government’s performance. Legislation is made easily but the implementation situation is very complicated. It is in the interest of the government of Pakistan itself to stop money laundering and terror financing because if these two issues are resolved, Pakistan’s economy could become very stable.
The increasing inflow of remittances through legal channels is only one of the many economic benefits that Pakistan stands to reap from adopting global standards on illicit financing. The end of the endeavour to get off this list is in sight and the country must leave no stone unturned to reach its goal.