|
|
Sanctions:
None applicable
____________________________________________________
Offshore Jurisdiction Blacklists:
Information unavailable.
____________________________________________________
US State Department Money Laundering Report - 2011:
Laos is not a regional or offshore financial center. However, its
lack of a comprehensive legal and regulatory framework and
ineffective implementation of existing laws increases Laos’
vulnerability to money laundering and related financial crimes.
Illegal timber harvesting, official corruption, cross-border
smuggling of goods and currency, high value used cars, illicit
proceeds from the sale of methamphetamine and opiates,
including heroin, and domestic crime may all be sources of illicit
funds. In 2009, the Lao Government endorsed an estimate of the
value of the illicit drug economy of about ten percent of GDP or
up to $750 million. There are continued reports of illicit funds
being diverted into hotel construction, gaming operations, resort
development, mining ventures, golf courses, luxury real and
personal property, and industrial tree cropping projects.
Laos receives a large amount of development assistance from
overseas donors and there are concerns that a substantial
portion of these monies may be stolen or otherwise diverted. In
recent years a number of private sector-financed projects and/or
parastatal enterprises in the hydropower, mining, and
construction sectors have started to generate revenues to the
government, but reliable public reporting of these revenues is
often lacking and the possibility exists of theft and/or diversion.
Anecdotal evidence indicates that bulk cash generated from illicit
activities is often smuggled across borders and deposited in
accounts in Thailand, China, and Vietnam. During 2010, there
were several significant narcotics seizures by Lao law
enforcement authorities which involved bulk cash smuggling.
Invariably, part of the evidence seized by police or customs
agents in such cases includes large amounts of cash (usually in
US dollars or Thai Baht). In the largest case, nearly $175,000
equivalent in Thai Baht was part of the evidence.
The gaming industry represents a particularly large and growing
vulnerability. The Ministry of Information and Culture (MOIC) is
responsible for the regulation of casinos in Laos. However, its
regulatory regime has no known AML controls for casinos in
place. In 2010, the Lao Government approved two new special
economic zones (SEZs) in Luang Namtha, and Bokeo provinces.
Private Chinese companies fully own and manage these SEZs.
The Savan-Seno SEZ, established in 2003 in Savannakhet
Province, remains under the government’s management. The
SEZs present an additional complication for the AML regime, as it
is not clear that MOIC regulatory authority applies to casinos
located inside the SEZs. Other smaller gaming operations
apparently operate in Laos--often near immigration checkpoints
along the Mekong and across from Thailand.
DO FINANCIAL INSTITUTIONS ENGAGE IN CURRENCY
TRANSACTIONS RELATED TO INTERNATIONAL NARCOTICS
TRAFFICKING THAT INCLUDE SIGNIFICANT AMOUNTS OF US
CURRENCY; CURRENCY DERIVED FROM ILLEGAL SALES IN
THE U.S.; OR THAT OTHERWISE SIGNIFICANTLY AFFECT THE
U.S.: NO
CRIMINALIZATION OF MONEY LAUNDERING:
“All serious crimes” approach or “list” approach to predicate
crimes: All serious crimes
Legal persons covered: criminally: Not available civilly: Not
available
CRIMINALIZATION OF TERRORIST FINANCING:
Ability to freeze terrorist assets without delay: NO
UN lists of designated terrorists or terrorist entities distributed to
financial institutions: YES
(Please refer to the Department of State’s Country Reports on
Terrorism, which can be found here: http://www.state.
gov/s/ct/rls/crt/)
KNOW-YOUR-CUSTOMER RULES:
Covered entities: Banks, finance companies, loan institutions and
cash transfer companies
Enhanced due diligence procedures for PEPs: Foreign: NO
Domestic: NO
SUSPICIOUS TRANSACTION REPORTING REQUIREMENTS:
Covered entities: Banks, finance companies, loan institutions and
cash transfer companies
Number of STRs received and time frame: Not available
Number of CTRs received and time frame: Not applicable
MONEY LAUNDERING CRIMINAL
PROSECUTIONS/CONVICTIONS:
Prosecutions: None
Convictions: None
Assets forfeited: criminally: None civilly: None
RECORDS EXCHANGE MECHANISM:
With U.S.: Not available
With other governments/jurisdictions: Not available
Laos is a member of the Asia/Pacific Group on Money Laundering
(APG), a FATF-style regional body. Its first mutual evaluation was
conducted in October 2010. Once finalized, the evaluation report
will be available here: http://www.apgml.org/about/eventDetail.
aspx?EventID=65
ENFORCEMENT AND IMPLEMENTATION ISSUES AND
COMMENTS:
The Government of Laos (GOL) should place priority upon full
implementation of its existing anti-money laundering/counter-
terrorist financing (AML/CFT) decrees. The GOL should prioritize
capacity building, including training and awareness programs for
appropriate supervisory, law enforcement, FIU and prosecutorial
personnel as well as the judiciary. The GOL should also reach out
to entities subject to the reporting requirements to make them
aware of their compliance responsibilities.
The GOL should ensure all entities not supervised by the Bank of
Laos, especially the casinos, are adequately supervised and
monitored for AML/CFT compliance. Laos began to address the
vulnerabilities in the gaming industry through the issuance of a
new Prime Ministerial Decree in 2010 on the establishment of
SEZs. The legislation prohibits the establishment of casinos in
any new SEZ; however, this rule does not apply to the three SEZs
currently in operation. At least one “gambling gaming” operation
opened at a hotel in Boulikhamxai Province in 2010, apparently
financed and/or operated by Vietnamese business interests.
During 2010, there was also a public announcement that “internet
online gambling” operations would be opened during 2011 under
a joint investment agreement with a well known gaming
corporation based in Manila.
Reporting entities designated in the anti-money laundering (AML)
decree, other than financial institutions, are not believed to be
supervised at all for AML purposes. The Bank of Laos issued a
guideline for suspicious transaction reporting, but to date the Anti-
Money Laundering Intelligence Unit (AMLIU) has received only a
small number of reports and none are known to have resulted in
referrals to law enforcement. AMLIU does not currently have the
data, analytic capacity, or technical and procedural means to
detect and refer such cases.
The GOL requires enhanced due diligence for “high risk
persons.” However, the AMLIU defines a “high risk person” as any
individual who is or has been listed in the “black lists” of the
United Nations, and does not clearly state that other individuals
who meet a set of high-risk criteria can also be included. The
GOL should clearly define high-risk persons to include PEPs and
others meeting the high risk profile, beyond those who are or
have been on the U.N. designation lists.
The GOL should require reporting entities to submit cases of
suspected terrorist financing. The GOL should offer disclosure
protection for individuals reporting ML/TF activity, and should
criminalize “tipping off” suspect individuals and entities that they
are under investigation.
Laos lacks a clear legal and procedural framework for the seizure
of assets. The Lao criminal code and drug laws refer to the right
of the state to seize assets of convicted drug traffickers, but the
legal and procedural processes are not specified, and thus
neither the prosecutors nor the court system have taken any legal
action regarding asset seizures. The lack of an asset forfeiture
regime could hinder Lao assistance in money laundering or
terrorist financing investigations and assistance requests. The
GOL should implement an asset forfeiture regime that includes a
system to account for forfeited assets and ensure they are
disposed of in accordance with the laws.
____________________________________________________
US State Dept Narcotics Report 2012 (introduction):
The Lao People’s Democratic Republic (Lao PDR) is a major
transport hub for opium, heroin and amphetamine-type stimulants
(ATS) and a major producer of opium. Geographically, Laos sits
at the heart of the regional drug trade in mainland Southeast Asia
and shares remote and poorly-controlled borders with Burma,
Thailand, Cambodia, Vietnam and China. Long isolated,
landlocked Laos currently has the highest economic growth rate
in the Association of South-East Asian Nations (ASEAN) and the
10th-largest in the world. However, economic development and
the improvement of Laos’ road, bridge and communications
networks have created opportunities for the illicit drug trade to
grow.
The Lao government (GOL) recognizes the threat posed by illegal
narcotics production and trafficking and has taken some actions
to address it, especially in the areas of demand reduction and
alternative development. However, the GOL possesses little ability
to act independently of international donor support. Eighty-one
percent of the GOL budget currently comes from donor aid. Lao
law enforcement suffers from a lack of training and resources to
combat internal drug crime. Additionally, Laos must police 5,000
km of mountain and riverine borders across which illegal narcotics
flow.
From 1998 to 2008, due to aggressive government action and
international cooperation, opium cultivation was reduced by 95%.
However, opium cultivation has rebounded recently, rising from a
low of an estimated 1,500 hectares in 2007 to an estimated 4,100
hectares in 2011. Although domestic ATS production has not
been publicly confirmed, drug seizures indicate that ATS tablets
are moving through Laos in increasing quantities.
The incidence of HIV in Laos is related to drug use. A rapid
assessment and response survey carried out in 2010 by UNODC
found a 17% prevalence of HIV among 46 injecting drug users
(IDUs) surveyed in the remote border regions of Houaphan and
Phongsaly provinces. Laos is surrounded by countries with a high
IDU and HIV prevalence. In Dien Bien Phu, Vietnam just 40 kms
from Phongsaly, there are a reported 6,000 IDUs with a 70% HIV
prevalence rate.
Lao law enforcement experienced some successes in the past
year, but violence as a result of the drug trade continued in 2011.
In October, two Chinese commercial vessels carrying drugs were
attacked on the Mekong River in Thailand across the border from
Laos’ Bokeo Province. Thirteen Chinese crewmembers were killed
during the encounter.
Laos is a party to the 1988 UN Drug Convention.
For Full report, click here
____________________________________________________
US State Dept Trafficking in Persons Report 2011
(introduction):
(Tier 2)
Laos is a source, and to a much lesser extent, a transit and
destination country for women and girls subjected to sex
trafficking, and men, women, and children in conditions of forced
labor in factory work, domestic labor, agriculture, and the fishing
industry. Lao men, women, and children are found in conditions of
forced labor in Thailand, Malaysia, and China. Many Laotian
migrants, particularly women, pay broker fees to obtain jobs in
Thailand, normally ranging from $70 to $200, but are
subsequently subjected to conditions of sexual servitude and
forced labor in Thailand’s commercial sex trade or in domestic
service, garment factories, or agricultural industries subsequent
to their arrival. Lao men are subjected to conditions of forced
labor in the Thai fishing and construction industry. Many Lao
nationals formally identified as victims trafficked in Thailand
choose to take the risk of attempting migration to Thailand again
after being repatriated to Laos. A small number of Lao women
and girls reportedly are subjected to conditions of trafficking in
China, where some are forced to marry Chinese men. Ethnic
minority populations are particularly vulnerable to trafficking in
Thailand, due to their lack of Thai language skills and unfamiliarity
with Thai society. Laos is increasingly a transit country for
Vietnamese, Chinese, and Burmese women who are subjected to
sex trafficking and forced labor in Thailand. Some Vietnamese
women are subjected to forced prostitution in Laos. Although
there are fewer reported instances, trafficking within Laos also
remains a problem, affecting young women and girls forced into
prostitution. Lao men and boys are victims of forced labor in the
country on agricultural plantations, including rubber plantations.
Laos may be increasingly a destination for sex tourists from Asia.
The Government of Laos does not fully comply with the minimum
standards for the elimination of trafficking; however, it is making
significant efforts to do so. During the reporting period, the
government reported investigating 20 trafficking cases and
convicting 33 trafficking offenders, a dramatic increase from zero
convictions during the previous reporting period. However, the
government has never administratively or criminally punished any
public official for complicity in trafficking in persons. The
government also began efforts to identify and assist trafficking
victims who were deported by Thai authorities for immigration
violations. The government continued to rely almost completely on
NGOs and international organizations to provide victim assistance.
For full report click here
____________________________________________________
US State Dept Terrorism Report 2009
Since 2002, the Government of Laos has consistently denounced
international terrorism and expressed a willingness to cooperate
with the international community on counterterrorism. While
domestic opposition elements have in the past employed terrorist
tactics, such as ambushing civilian buses in 2003 and bombing
civilian targets in 2004, Lao officials at many levels saw
international terrorism as an issue of only marginal relevance to
Laos. They believed that Laos, as a small and neutral country,
would not be targeted or exploited by international terrorists.
Laos does not have a separate counterterrorism law, but the Lao
judicial system allows for the prosecution of acts of terrorism as
crimes under the Lao criminal code, and Lao officials have
amended the criminal code to strengthen counterterrorism
sanctions. Laos’ border security was weak; border officials could
not effectively control access to the country at any of the country’
s border checkpoints. Crossing the border along the Mekong
River into Burma, Thailand, and Cambodia could be accomplished
easily and without detection. Border delineation remained poor in
more remote sections of the country, especially along its land
borders with Vietnam and China. It was likely that unmonitored
border crossings by locals occurred on a daily basis. Since
September 11, 2001, Lao authorities have strengthened airport
security, and airport security forces have participated in U.S.-
supported security seminars to raise their standards, but security
procedures at land immigration points remained lax compared with
those of most other countries in the region. In addition, official Lao
identity documents, including passports and ID cards, were easy
to obtain.
Lao authorities have issued orders limiting the amount of cash
that could be withdrawn from local banks or carried into or out of
the country and strengthened reporting requirements of state and
privately owned commercial banks. Banking regulation remained
extremely weak, however, and the banking system was vulnerable
to money laundering and other illegal transactions.
____________________________________________________
Links:
Worldwide AML Legislation (International Bar Association)
None applicable
____________________________________________________
Offshore Jurisdiction Blacklists:
Information unavailable.
____________________________________________________
US State Department Money Laundering Report - 2011:
Laos is not a regional or offshore financial center. However, its
lack of a comprehensive legal and regulatory framework and
ineffective implementation of existing laws increases Laos’
vulnerability to money laundering and related financial crimes.
Illegal timber harvesting, official corruption, cross-border
smuggling of goods and currency, high value used cars, illicit
proceeds from the sale of methamphetamine and opiates,
including heroin, and domestic crime may all be sources of illicit
funds. In 2009, the Lao Government endorsed an estimate of the
value of the illicit drug economy of about ten percent of GDP or
up to $750 million. There are continued reports of illicit funds
being diverted into hotel construction, gaming operations, resort
development, mining ventures, golf courses, luxury real and
personal property, and industrial tree cropping projects.
Laos receives a large amount of development assistance from
overseas donors and there are concerns that a substantial
portion of these monies may be stolen or otherwise diverted. In
recent years a number of private sector-financed projects and/or
parastatal enterprises in the hydropower, mining, and
construction sectors have started to generate revenues to the
government, but reliable public reporting of these revenues is
often lacking and the possibility exists of theft and/or diversion.
Anecdotal evidence indicates that bulk cash generated from illicit
activities is often smuggled across borders and deposited in
accounts in Thailand, China, and Vietnam. During 2010, there
were several significant narcotics seizures by Lao law
enforcement authorities which involved bulk cash smuggling.
Invariably, part of the evidence seized by police or customs
agents in such cases includes large amounts of cash (usually in
US dollars or Thai Baht). In the largest case, nearly $175,000
equivalent in Thai Baht was part of the evidence.
The gaming industry represents a particularly large and growing
vulnerability. The Ministry of Information and Culture (MOIC) is
responsible for the regulation of casinos in Laos. However, its
regulatory regime has no known AML controls for casinos in
place. In 2010, the Lao Government approved two new special
economic zones (SEZs) in Luang Namtha, and Bokeo provinces.
Private Chinese companies fully own and manage these SEZs.
The Savan-Seno SEZ, established in 2003 in Savannakhet
Province, remains under the government’s management. The
SEZs present an additional complication for the AML regime, as it
is not clear that MOIC regulatory authority applies to casinos
located inside the SEZs. Other smaller gaming operations
apparently operate in Laos--often near immigration checkpoints
along the Mekong and across from Thailand.
DO FINANCIAL INSTITUTIONS ENGAGE IN CURRENCY
TRANSACTIONS RELATED TO INTERNATIONAL NARCOTICS
TRAFFICKING THAT INCLUDE SIGNIFICANT AMOUNTS OF US
CURRENCY; CURRENCY DERIVED FROM ILLEGAL SALES IN
THE U.S.; OR THAT OTHERWISE SIGNIFICANTLY AFFECT THE
U.S.: NO
CRIMINALIZATION OF MONEY LAUNDERING:
“All serious crimes” approach or “list” approach to predicate
crimes: All serious crimes
Legal persons covered: criminally: Not available civilly: Not
available
CRIMINALIZATION OF TERRORIST FINANCING:
Ability to freeze terrorist assets without delay: NO
UN lists of designated terrorists or terrorist entities distributed to
financial institutions: YES
(Please refer to the Department of State’s Country Reports on
Terrorism, which can be found here: http://www.state.
gov/s/ct/rls/crt/)
KNOW-YOUR-CUSTOMER RULES:
Covered entities: Banks, finance companies, loan institutions and
cash transfer companies
Enhanced due diligence procedures for PEPs: Foreign: NO
Domestic: NO
SUSPICIOUS TRANSACTION REPORTING REQUIREMENTS:
Covered entities: Banks, finance companies, loan institutions and
cash transfer companies
Number of STRs received and time frame: Not available
Number of CTRs received and time frame: Not applicable
MONEY LAUNDERING CRIMINAL
PROSECUTIONS/CONVICTIONS:
Prosecutions: None
Convictions: None
Assets forfeited: criminally: None civilly: None
RECORDS EXCHANGE MECHANISM:
With U.S.: Not available
With other governments/jurisdictions: Not available
Laos is a member of the Asia/Pacific Group on Money Laundering
(APG), a FATF-style regional body. Its first mutual evaluation was
conducted in October 2010. Once finalized, the evaluation report
will be available here: http://www.apgml.org/about/eventDetail.
aspx?EventID=65
ENFORCEMENT AND IMPLEMENTATION ISSUES AND
COMMENTS:
The Government of Laos (GOL) should place priority upon full
implementation of its existing anti-money laundering/counter-
terrorist financing (AML/CFT) decrees. The GOL should prioritize
capacity building, including training and awareness programs for
appropriate supervisory, law enforcement, FIU and prosecutorial
personnel as well as the judiciary. The GOL should also reach out
to entities subject to the reporting requirements to make them
aware of their compliance responsibilities.
The GOL should ensure all entities not supervised by the Bank of
Laos, especially the casinos, are adequately supervised and
monitored for AML/CFT compliance. Laos began to address the
vulnerabilities in the gaming industry through the issuance of a
new Prime Ministerial Decree in 2010 on the establishment of
SEZs. The legislation prohibits the establishment of casinos in
any new SEZ; however, this rule does not apply to the three SEZs
currently in operation. At least one “gambling gaming” operation
opened at a hotel in Boulikhamxai Province in 2010, apparently
financed and/or operated by Vietnamese business interests.
During 2010, there was also a public announcement that “internet
online gambling” operations would be opened during 2011 under
a joint investment agreement with a well known gaming
corporation based in Manila.
Reporting entities designated in the anti-money laundering (AML)
decree, other than financial institutions, are not believed to be
supervised at all for AML purposes. The Bank of Laos issued a
guideline for suspicious transaction reporting, but to date the Anti-
Money Laundering Intelligence Unit (AMLIU) has received only a
small number of reports and none are known to have resulted in
referrals to law enforcement. AMLIU does not currently have the
data, analytic capacity, or technical and procedural means to
detect and refer such cases.
The GOL requires enhanced due diligence for “high risk
persons.” However, the AMLIU defines a “high risk person” as any
individual who is or has been listed in the “black lists” of the
United Nations, and does not clearly state that other individuals
who meet a set of high-risk criteria can also be included. The
GOL should clearly define high-risk persons to include PEPs and
others meeting the high risk profile, beyond those who are or
have been on the U.N. designation lists.
The GOL should require reporting entities to submit cases of
suspected terrorist financing. The GOL should offer disclosure
protection for individuals reporting ML/TF activity, and should
criminalize “tipping off” suspect individuals and entities that they
are under investigation.
Laos lacks a clear legal and procedural framework for the seizure
of assets. The Lao criminal code and drug laws refer to the right
of the state to seize assets of convicted drug traffickers, but the
legal and procedural processes are not specified, and thus
neither the prosecutors nor the court system have taken any legal
action regarding asset seizures. The lack of an asset forfeiture
regime could hinder Lao assistance in money laundering or
terrorist financing investigations and assistance requests. The
GOL should implement an asset forfeiture regime that includes a
system to account for forfeited assets and ensure they are
disposed of in accordance with the laws.
____________________________________________________
US State Dept Narcotics Report 2012 (introduction):
The Lao People’s Democratic Republic (Lao PDR) is a major
transport hub for opium, heroin and amphetamine-type stimulants
(ATS) and a major producer of opium. Geographically, Laos sits
at the heart of the regional drug trade in mainland Southeast Asia
and shares remote and poorly-controlled borders with Burma,
Thailand, Cambodia, Vietnam and China. Long isolated,
landlocked Laos currently has the highest economic growth rate
in the Association of South-East Asian Nations (ASEAN) and the
10th-largest in the world. However, economic development and
the improvement of Laos’ road, bridge and communications
networks have created opportunities for the illicit drug trade to
grow.
The Lao government (GOL) recognizes the threat posed by illegal
narcotics production and trafficking and has taken some actions
to address it, especially in the areas of demand reduction and
alternative development. However, the GOL possesses little ability
to act independently of international donor support. Eighty-one
percent of the GOL budget currently comes from donor aid. Lao
law enforcement suffers from a lack of training and resources to
combat internal drug crime. Additionally, Laos must police 5,000
km of mountain and riverine borders across which illegal narcotics
flow.
From 1998 to 2008, due to aggressive government action and
international cooperation, opium cultivation was reduced by 95%.
However, opium cultivation has rebounded recently, rising from a
low of an estimated 1,500 hectares in 2007 to an estimated 4,100
hectares in 2011. Although domestic ATS production has not
been publicly confirmed, drug seizures indicate that ATS tablets
are moving through Laos in increasing quantities.
The incidence of HIV in Laos is related to drug use. A rapid
assessment and response survey carried out in 2010 by UNODC
found a 17% prevalence of HIV among 46 injecting drug users
(IDUs) surveyed in the remote border regions of Houaphan and
Phongsaly provinces. Laos is surrounded by countries with a high
IDU and HIV prevalence. In Dien Bien Phu, Vietnam just 40 kms
from Phongsaly, there are a reported 6,000 IDUs with a 70% HIV
prevalence rate.
Lao law enforcement experienced some successes in the past
year, but violence as a result of the drug trade continued in 2011.
In October, two Chinese commercial vessels carrying drugs were
attacked on the Mekong River in Thailand across the border from
Laos’ Bokeo Province. Thirteen Chinese crewmembers were killed
during the encounter.
Laos is a party to the 1988 UN Drug Convention.
For Full report, click here
____________________________________________________
US State Dept Trafficking in Persons Report 2011
(introduction):
(Tier 2)
Laos is a source, and to a much lesser extent, a transit and
destination country for women and girls subjected to sex
trafficking, and men, women, and children in conditions of forced
labor in factory work, domestic labor, agriculture, and the fishing
industry. Lao men, women, and children are found in conditions of
forced labor in Thailand, Malaysia, and China. Many Laotian
migrants, particularly women, pay broker fees to obtain jobs in
Thailand, normally ranging from $70 to $200, but are
subsequently subjected to conditions of sexual servitude and
forced labor in Thailand’s commercial sex trade or in domestic
service, garment factories, or agricultural industries subsequent
to their arrival. Lao men are subjected to conditions of forced
labor in the Thai fishing and construction industry. Many Lao
nationals formally identified as victims trafficked in Thailand
choose to take the risk of attempting migration to Thailand again
after being repatriated to Laos. A small number of Lao women
and girls reportedly are subjected to conditions of trafficking in
China, where some are forced to marry Chinese men. Ethnic
minority populations are particularly vulnerable to trafficking in
Thailand, due to their lack of Thai language skills and unfamiliarity
with Thai society. Laos is increasingly a transit country for
Vietnamese, Chinese, and Burmese women who are subjected to
sex trafficking and forced labor in Thailand. Some Vietnamese
women are subjected to forced prostitution in Laos. Although
there are fewer reported instances, trafficking within Laos also
remains a problem, affecting young women and girls forced into
prostitution. Lao men and boys are victims of forced labor in the
country on agricultural plantations, including rubber plantations.
Laos may be increasingly a destination for sex tourists from Asia.
The Government of Laos does not fully comply with the minimum
standards for the elimination of trafficking; however, it is making
significant efforts to do so. During the reporting period, the
government reported investigating 20 trafficking cases and
convicting 33 trafficking offenders, a dramatic increase from zero
convictions during the previous reporting period. However, the
government has never administratively or criminally punished any
public official for complicity in trafficking in persons. The
government also began efforts to identify and assist trafficking
victims who were deported by Thai authorities for immigration
violations. The government continued to rely almost completely on
NGOs and international organizations to provide victim assistance.
For full report click here
____________________________________________________
US State Dept Terrorism Report 2009
Since 2002, the Government of Laos has consistently denounced
international terrorism and expressed a willingness to cooperate
with the international community on counterterrorism. While
domestic opposition elements have in the past employed terrorist
tactics, such as ambushing civilian buses in 2003 and bombing
civilian targets in 2004, Lao officials at many levels saw
international terrorism as an issue of only marginal relevance to
Laos. They believed that Laos, as a small and neutral country,
would not be targeted or exploited by international terrorists.
Laos does not have a separate counterterrorism law, but the Lao
judicial system allows for the prosecution of acts of terrorism as
crimes under the Lao criminal code, and Lao officials have
amended the criminal code to strengthen counterterrorism
sanctions. Laos’ border security was weak; border officials could
not effectively control access to the country at any of the country’
s border checkpoints. Crossing the border along the Mekong
River into Burma, Thailand, and Cambodia could be accomplished
easily and without detection. Border delineation remained poor in
more remote sections of the country, especially along its land
borders with Vietnam and China. It was likely that unmonitored
border crossings by locals occurred on a daily basis. Since
September 11, 2001, Lao authorities have strengthened airport
security, and airport security forces have participated in U.S.-
supported security seminars to raise their standards, but security
procedures at land immigration points remained lax compared with
those of most other countries in the region. In addition, official Lao
identity documents, including passports and ID cards, were easy
to obtain.
Lao authorities have issued orders limiting the amount of cash
that could be withdrawn from local banks or carried into or out of
the country and strengthened reporting requirements of state and
privately owned commercial banks. Banking regulation remained
extremely weak, however, and the banking system was vulnerable
to money laundering and other illegal transactions.
____________________________________________________
Links:
Worldwide AML Legislation (International Bar Association)
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*Please note that FATF deems that a country has significant aml deficiencies if
any of the 'Core' Recommendations, R1, R5, R10, R13, SRII, or SRIV are rated
either Partially of Non-Compliant. These are marked in red.
For FATF to remove a country from the regular follow-up process, it has to be rated
Compliant or Largely Compliant in the above mentioned Core Recommendations
and the following Key Recommendations: -
R3, R4, R23, R26, R35, R36, R40, SRI, SRIII, SRV
Please also note that any risk assessment should take into consideration all
follow-up reports.
any of the 'Core' Recommendations, R1, R5, R10, R13, SRII, or SRIV are rated
either Partially of Non-Compliant. These are marked in red.
For FATF to remove a country from the regular follow-up process, it has to be rated
Compliant or Largely Compliant in the above mentioned Core Recommendations
and the following Key Recommendations: -
R3, R4, R23, R26, R35, R36, R40, SRI, SRIII, SRV
Please also note that any risk assessment should take into consideration all
follow-up reports.
Key Findings from 2011 MER
1. There is a lack of awareness of AML/CFT international
standards and the required implementation measures, which is
compounded by a lack of dedicated resources and insufficient
political commitment to undertake the required reforms.
2. The Lao PDR has not undertaken a formal AML/CFT risk
assessment, although drug related illicit proceeds is estimated to
be about 10 percent of GDP or USD750 million. While opium
cultivation fell by 94 percent and opium addiction by 80 percent in the
last decade, the Lao PDR has emerged as a key transit and
storage country for ATS, precursors and heroin from
neighbouring countries.
3. There has been a significant expansion of the banking sector. In
the past two years, six new commercial banks commenced
operations. There are now 23 banks with total assets of USD
576 million that accounts for 99.2% of the financial sector’s total
assets.
4. There are major deficiencies in the criminalisation of ML in
Article 64 of the Penal law, including the physical and material
elements of the ML offence required in Article 3 of the Vienna
Convention and Article 6 of the Palermo Convention; and gaps
in predicate offences, notably organised crime, terrorism and
financing of terrorism (FT). There is the absence of a freezing
mechanism and a deficient mutual legal assistance (MLA) framework
on criminal matters.
5. There is no terrorism or FT offence and the measures adopted to
implement UN Security Council Resolutions (UNSCRs) are insufficient
and contain major deficiencies. The absence of a FT offence has an
impact on other related issues such as the investigative powers
of law enforcement agencies; freezing, seizure and confiscation of
terrorist funds; FT as a ML predicate offence; and the possibility of
affording MLA.
6. There has been no confirmed case of ML investigation, prosecution
or conviction.
7. Only 28 suspicious transaction reports (STRs) have been
submitted to the Anti-Money Laundering Intelligence Unit (AMLIU)
since 2007. Further, AMLIU has never disseminated a STR,
and any report to be disseminated must first be approved by
the Bank of Lao (BOL) senior management.
8. The key ML preventative instrument is AML Decree 55. The
Decree contains a range of basic preventative measures but
despite the wording of some provisions consistent with the FATF
standards, the Decree does not meet the FATF definition of
law, regulation or other enforceable means due to a lack of
sanctions. The exception is the inclusion of sanctions in the Decree for
STR reporting violations.
9. Implementation of AML Decree 55 has occurred only in the
banking sector. The overall implementation of Decree 55 within the
commercial banking sector is difficult to assess due to the absence
of AML/CFT supervision by the AML regulator, AMLIU. There
has been no implementation of AML Decree 55 provisions by
competent authorities for the DNFBP sectors in the Lao PDR.
10. Key recommendations made to the Lao PDR include:
• criminalise ML and FT consistent with international requirements;
• provide a clear legal framework and mechanisms for freezing and
confiscation, both for ML and FT;
• improve the operational effectiveness of AMLIU through enhanced
STR reporting, analysis and autonomy with STR dissemination;
• introduce binding and enforceable requirements for
preventative measures both for the financial and DNFBP sectors,
beyond STR reporting;
• enhance regulation and supervision for AML/CFT purposes;
• ensure that the competent authorities are properly designated
and provided with adequate funding, qualified staff and technical
resources, and effective AML/CFT training;
• enhance licencing requirements for all financial institutions,
particularly banks;
• introduce effective, proportionate and dissuasive civil or
administrative sanctions, applicable
to financial institutions and DNFBP; and
• provide an appropriate legal framework and mechanisms for MLA
and extradition.
Click here to view full Mutual Evaluation Report (pdf file)
1. There is a lack of awareness of AML/CFT international
standards and the required implementation measures, which is
compounded by a lack of dedicated resources and insufficient
political commitment to undertake the required reforms.
2. The Lao PDR has not undertaken a formal AML/CFT risk
assessment, although drug related illicit proceeds is estimated to
be about 10 percent of GDP or USD750 million. While opium
cultivation fell by 94 percent and opium addiction by 80 percent in the
last decade, the Lao PDR has emerged as a key transit and
storage country for ATS, precursors and heroin from
neighbouring countries.
3. There has been a significant expansion of the banking sector. In
the past two years, six new commercial banks commenced
operations. There are now 23 banks with total assets of USD
576 million that accounts for 99.2% of the financial sector’s total
assets.
4. There are major deficiencies in the criminalisation of ML in
Article 64 of the Penal law, including the physical and material
elements of the ML offence required in Article 3 of the Vienna
Convention and Article 6 of the Palermo Convention; and gaps
in predicate offences, notably organised crime, terrorism and
financing of terrorism (FT). There is the absence of a freezing
mechanism and a deficient mutual legal assistance (MLA) framework
on criminal matters.
5. There is no terrorism or FT offence and the measures adopted to
implement UN Security Council Resolutions (UNSCRs) are insufficient
and contain major deficiencies. The absence of a FT offence has an
impact on other related issues such as the investigative powers
of law enforcement agencies; freezing, seizure and confiscation of
terrorist funds; FT as a ML predicate offence; and the possibility of
affording MLA.
6. There has been no confirmed case of ML investigation, prosecution
or conviction.
7. Only 28 suspicious transaction reports (STRs) have been
submitted to the Anti-Money Laundering Intelligence Unit (AMLIU)
since 2007. Further, AMLIU has never disseminated a STR,
and any report to be disseminated must first be approved by
the Bank of Lao (BOL) senior management.
8. The key ML preventative instrument is AML Decree 55. The
Decree contains a range of basic preventative measures but
despite the wording of some provisions consistent with the FATF
standards, the Decree does not meet the FATF definition of
law, regulation or other enforceable means due to a lack of
sanctions. The exception is the inclusion of sanctions in the Decree for
STR reporting violations.
9. Implementation of AML Decree 55 has occurred only in the
banking sector. The overall implementation of Decree 55 within the
commercial banking sector is difficult to assess due to the absence
of AML/CFT supervision by the AML regulator, AMLIU. There
has been no implementation of AML Decree 55 provisions by
competent authorities for the DNFBP sectors in the Lao PDR.
10. Key recommendations made to the Lao PDR include:
• criminalise ML and FT consistent with international requirements;
• provide a clear legal framework and mechanisms for freezing and
confiscation, both for ML and FT;
• improve the operational effectiveness of AMLIU through enhanced
STR reporting, analysis and autonomy with STR dissemination;
• introduce binding and enforceable requirements for
preventative measures both for the financial and DNFBP sectors,
beyond STR reporting;
• enhance regulation and supervision for AML/CFT purposes;
• ensure that the competent authorities are properly designated
and provided with adequate funding, qualified staff and technical
resources, and effective AML/CFT training;
• enhance licencing requirements for all financial institutions,
particularly banks;
• introduce effective, proportionate and dissuasive civil or
administrative sanctions, applicable
to financial institutions and DNFBP; and
• provide an appropriate legal framework and mechanisms for MLA
and extradition.
Click here to view full Mutual Evaluation Report (pdf file)
| Further Tables |
| Last Updated: 16 April 2012 |