FATF status

Laos is 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 is a pervasive issue in Laos, significantly impacting the economy and deterring foreign investment. Despite the government's efforts to combat corruption through laws and the establishment of the Lao State Inspection and Anti-Corruption Authority, enforcement remains weak, and bribery is commonly accepted as part of business operations. The judiciary's inefficiency further complicates the enforcement of anti-corruption measures, leading to a culture where corrupt practices are often overlooked.

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, positioning it among the fastest-growing economies globally. However, challenges such as high public debt, currency depreciation, and inflation have emerged, with the World Bank forecasting a GDP growth of 3.7 percent in 2023. The government is focusing on diversifying the economy, enhancing the investment climate, and leveraging its geographical position to boost exports and integrate more closely with neighboring economies.

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 these efforts, foreign investors face challenges such as bureaucratic complexity, corruption, and a lack of skilled labor, which can deter investment. However, recent increases in foreign direct investment, particularly in mining and infrastructure, indicate a growing interest in the Lao market.