The EU has taken Pakistan off its list of "High Risk" nations with regard to money laundering and terror financing.
The High-Risk Third Countries list features nations that the EU believes lacks a foolproof counter-terrorism financing and anti-money laundering framework.
Brussels placed Pakistan on the list in October 2018, which has led to major obstacles in conducting financial transactions with people or businesses based in the country, Pakistan's Commerce Ministry said in a statement on Wednesday.
Islamabad added that "Obligated Entities" within EU member states would no longer need "Enhanced Customer Due Diligence" when carrying out transactions with Pakistani persons and companies.
Meanwhile, the EU's Pakistan office called the development "an important positive step" for Islamabad.
"An important positive step for Pakistan! In line with last year’s FATF decision, the EU has decided to remove Pakistan from its list of countries with high risk regarding money laundering and financing of terrorism," the EU's delegation in Pakistan tweeted.
Pakistan Foreign Minister Bilawal Bhutto Zardari also welcomed the EU's move.
"Pakistani businesses and individuals would no longer be subjected to enhanced customer due diligence by European legal and economic operators," Bilawal Zardari blogged.
Brussels’s decision to exclude Pakistan from the key list comes at a time when the country is in the midst of an economic crisis and is negotiating a financial package with the world’s major lender, the International Monetary Fund (IMF).
Previously, both FATF and the UK removed Pakistan from their respective grey lists. While Britain's move came in November, the Paris-based FATF excluded it from its list in October 2022.