FATF status

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

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 in 2023. According to that Evaluation, Laos was deemed Compliant for 0 and Largely Compliant for 8 of the FATF 40 Recommendations. It was deemed Highly Effective for 0 and Substantially Effective for 0 with regard to the 11 areas of Effectiveness of its AML/CFT Regime.

Corruption remains a significant issue in Laos, impacting the economy and deterring foreign investment despite the government's efforts to combat it through various anti-corruption laws and initiatives. Although there have been improvements in reporting and addressing corruption, enforcement is weak, and bribery is commonly accepted as part of doing business. The Lao State Inspection and Anti-Corruption Authority oversees corruption analysis, but the judiciary's inefficiency and a culture of political patronage continue to undermine effective governance.

Laos, officially the Lao People’s Democratic Republic, is a developing economy in Southeast Asia that has experienced significant growth, averaging nearly eight percent annually over the past decade prior to the COVID-19 pandemic. The economy is primarily driven by mining, hydropower, and agriculture, with recent efforts to diversify into higher-value agriculture, light manufacturing, and tourism. However, challenges such as high inflation, a depreciating currency, and a complex business environment continue to hinder economic stability and foreign investment.

The investment climate in the Lao People's Democratic Republic has seen significant reforms aimed at improving the business environment, particularly following its accession to the WTO in 2013 and the establishment of the ASEAN Economic Community in 2015. Despite these efforts, foreign investors still face challenges such as bureaucratic complexity, corruption, and a lack of transparency in regulatory processes. However, foreign direct investment (FDI) has been on the rise, particularly in sectors like mining and hydropower, with the government actively promoting investment through special economic zones and infrastructure development.