The UK Adds Pakistan To 21 High-Risk States Listing
The UK government has included Pakistan in the list of undesirable 21 high-risk countries with unacceptable money laundering and terrorist financing controls.
This list issued by the UK Government duplicates the list of countries termed as high-risk or under increased monitoring by the Financial Action Task Force (FATF). Pakistan ranks at number 15 on the list with divisive countries such as Syria, Uganda, Yemen, and Zimbabwe.
The list of high-risk third countries under Schedule 3ZA includes Albania, Barbados, Botswana, Burkina Faso, Cambodia, Cayman Islands, Democratic People’s Republic of Korea, Ghana, Iran, Jamaica, Mauritius, Morocco, Myanmar, Nicaragua, Pakistan, Panama, Senegal, Syria, Uganda, Yemen, and Zimbabwe.
The countries under this category are considered ‘risky’ due to weak tax controls and check and balance absence on terrorism financing and money laundering.
The list has been released as included in post-Brexit developments. Until the Brexit transition period’s end, the list of high-risk countries was concluded by the European Union (EU) under the 4th Anti-Money Laundering Directive. Now the UK has its separate list which includes Pakistan.
According to the UK government, the new list of high-risk third countries has been issued with the aim of enhanced customer due to diligence requirements.
In December 2020, as per a British government report, dirty money continues to flow unrestricted from Pakistan into the UK and vice versa.
The report, compiled by the Treasury and Home Office, had termed Pakistan, China, Hong Kong, Russia and United Arab Emirates (UAE) as the ‘hotspot countries’ from where the flow of money was happening the most.
In the case of Pakistan, the report stated that the UK continues to have close economic relations with Pakistan which also includes significant remittance flows between both jurisdictions, which as per the estimates equated to approximately $1.7 billion in 2017.
According to the report, these economic and cultural ties also permit and hide illegal funds to be transferred between the UK and Pakistan, including through prohibited informal value transfers.
The report stated, “Culprits continue to buy high-value assets, like real estate, precious gems, and jewellery to launder illegal funds which are transferred from Pakistan to the UK and vice versa."
This comprises profits from corruption and drug trafficking. The threat from cash-based money laundering from the UK to Pakistan via smuggled cash and Money Service Businesses (MSBs) also continues.