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 all levels of the economy and deterring foreign investment. Despite the Lao government's implementation of anti-corruption laws and the establishment of the Lao State Inspection and Anti-Corruption Authority, enforcement is weak, and bribery is commonly accepted as a means to expedite services. The country's ranking on Transparency International’s Corruption Perceptions Index has improved slightly, but the culture of corruption, particularly involving political patronage and petty bribery, continues to hinder effective governance and business operations.

Laos, officially the Lao People’s Democratic Republic, is a developing economy in Southeast Asia that has experienced average growth of nearly eight percent over the past decade, making it one of the fastest-growing economies globally. However, challenges such as high public debt, currency depreciation, and inflation have emerged, with the World Bank forecasting GDP growth of 3.7 percent in 2023. The government is focusing on diversifying the economy and improving the investment climate, particularly in sectors like agriculture, light manufacturing, and tourism, while continuing to develop its natural resources.

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 and the establishment of the ASEAN Economic Community. Despite a record high in foreign direct investment inflows, primarily in mining and hydropower, challenges such as bureaucratic complexity, corruption, and a lack of skilled labor continue to deter potential investors. The government is actively working to enhance the investment landscape by streamlining processes and promoting sectors like agriculture and tourism, while also addressing issues related to transparency and regulatory consistency.