FAFT AML Deficient


Higher Risk Areas


US Dept of State Money Laundering assessment

Non - Compliance with FATF 40 + 9 Recommendations

Weakness in Government Legislation to combat Money Laundering

Not on EU White list equivalent jurisdictions

Corruption Index (Transparency International & W.G.I.)

World Governance Indicators (Average Score)

Failed States Index (Political Issues)(Average Score)

International Narcotics Control Majors List





FATF Status

Laos is no longer on the FATF List of Countries that have been identified as having strategic AML deficiencies


FATF Statement re AML Strategic Deficiencies:  23 June 2017

The FATF welcomes Lao PDR’s significant progress in improving its AML/CFT regime and notes that Lao PDR has established the legal and regulatory framework to meet its commitments in its action plan regarding the strategic deficiencies that the FATF had identified in January 2015. Lao PDR is therefore no longer subject to the FATF’s monitoring process under its on-going global AML/CFT compliance process. Lao PDR will work with APG as it continues to address the full range of AML/CFT issues identified in its mutual evaluation report.


Compliance with FATF Recommendations

The last Mutual Evaluation Report relating to the implementation of anti-money laundering and counter-terrorist financing standards in Laos was undertaken by the Financial Action Task Force (FATF) in 2011. According to that Evaluation, Laos was deemed Compliant for 1 and Largely Compliant for 2 of the FATF 40 + 9 Recommendations. It was Partially Compliant or Non-Compliant for all 6 of the Core Recommendations.


US Department of State Money Laundering assessment (INCSR)

Laos is categorised by the US State Department as a Country/Jurisdiction of Primary Concern in respect of Money Laundering and Financial Crimes



The fast-growing economy, weak governance, and Laos’ geographic position at the heart of mainland Southeast Asia combine to make it vulnerable to money laundering. Cash-based transactions, even for large purchases such as vehicles and real estate, remain commonplace, and government efforts to move toward electronic records and transactions continue to proceed slowly. The financial sector in Laos has expanded rapidly over the last decade, and while the government has enacted several new regulations aimed at preventing money laundering, officials’ knowledge remains relatively limited and implementation is untested, leaving Laos an attractive target for money launderers.


Corruption is widespread, though the government of Prime Minister Thongloun has focused greater government attention on the issue. Drug trafficking, wildlife trafficking, and human trafficking are major concerns. Traffickers are likely taking advantage of poor recordkeeping, weak enforcement of new regulations, and prevalence of cash transactions to launder the proceeds of their crimes. Smuggling is made easier by porous borders. Bulk cash smuggling to and from Thailand, China, and Vietnam is likely occurring. Laos has a large informal economy and uses informal value transfer systems.


Laos still needs to show improvement in several areas, including demonstrating fit and proper controls of banks and amending the penal code to include legal persons.



Major sources of illicit funds in the jurisdiction are thought to include narcotics trafficking, wildlife trafficking, and proceeds of corruption. Money can easily be laundered in Laos’ cash- based economy, remote casinos remain a vulnerability, and large real estate developments are thought to be another vehicle for large-scale laundering. Authorities are poorly equipped to investigate. Central government control and ability to investigate outside of the capital can be inconsistent.




Law No. 49/NA on Anti-Money Laundering and Combatting the Financing of Terrorism (AML Law), took effect on February 24, 2015. Under the law, covered entities are required to verify the identity of customers as well as the intention and objectives behind the transactions.


Laos has comprehensive KYC and STR regulations. Reporting units must report large transactions that exceed certain monetary thresholds and those under suspicion of being connected to money laundering.


The new “Regulation on the Establishment of Commercial Banks and Commercial Banks’ Branches” was issued in January 2016. This regulation includes controls over bank license holders and checks on sources of capital.


Laos is a member of the APG, a FATF-style regional body.


There is no current records exchange mechanism in place with the United States; Laos’ AML systems are nascent, though the government is exploring international cooperation mechanisms.




Laos’ major deficiencies include legal persons not being covered under existing legislation, though this should change with the new penal code, expected in mid-2017; lack of oversight for MVTS providers; and weak implementation capacity. Additionally, there is no protection against liability for individuals reporting suspicious activity, although safe harbor regulations have been discussed over the last year.


Laos’ system to identify, freeze, and seize assets is new and untested. Laos is not an Egmont member but is exploring membership.


Laos continued its AML reform efforts during 2016.




Enforcement capacity is weak, and political will can be inconsistent. However, Laos has increasingly engaged the international community on AML issues and has requested assistance where it is needed. Laos is working to implement the entirety of its action plan.


There were no AML-related prosecutions reported during the period.


The Bank of Lao People’s Democratic Republic and its Anti-Money Laundering Investigations Office are actively seeking assistance from donors and have worked closely with international experts during 2016 to build capacity and address deficiencies.


Laos is not subject to any U.S. or international sanctions or penalties.





There are no international sanctions currently in force against this country.







Rating (100-Good / 0-Bad)

Transparency International Corruption Index


World Governance Indicator – Control of Corruption





INVESTMENT CLIMATE - Executive Summary (US State Department)

After a decade-long experiment with a pure Marxist economy following the founding of the Lao People’s Democratic Republic, the Lao PDR launched the “New Economic Mechanism” in 1986. Since that time, the country has gradually implemented the reforms and built the institutions necessary to a market economy. Over the last thirty years, the trend has been slow but steady progress, culminating in accession to the World Trade Organization in February, 2013. Since 2009, annual GPD growth has averaged approximately eight percent.

In order to meet the requirements for entry to the WTO, Laos engaged in major reforms of its economic and trade laws and regulations. The Lao government is now working to implement the commitments embodied in those laws, and to meet the 2015 goal for creation of the ASEAN Economic Community (AEC), which will further liberalize the trading environment and economy. Additionally, WTO and AEC requirements reinforce fuller implementation of the conditions of the 2005 U.S.-Laos Bilateral Trade Agreement.

Economic progress and trade expansion in Laos remain hampered by a low level of human resource development, weak education and health care systems, and a poor, although improving, transportation infrastructure. Institutions, especially in the justice sector, are a work in progress, and regulatory capacity is low. Additionally, increasing corruption has recently become a major concern, and the country has suffered through fiscal and monetary crises in the past year. The Lao economy is highly dependent on exploitation of natural resources, particularly in copper mining and hydropower. Although the services and industrial sectors have grown in recent years, the economy is in need of further diversification, and the majority of the Lao population is still employed in agriculture.

According to the 7th National Socio-Economic Development Plan (NSEDP) 2011-2015, Laos seeks to continue an annual economic growth rate in the neighbourhood of 8%. To accomplish this, the government of Laos estimates that it needs approximately US$15 billion of total investment in the next five years, US$7 to US$8 billion of which it plans to source from foreign and domestic private investment. The plan directs the government to formulate “policies that would attract investments in addition to attracting Overseas Development Assistance; begin to implement public investment and investment promotion laws; and increase cooperation with friendly countries and international organizations.”





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