Lao People’s Democratic Republic Country Summary

FATF Status

Laos is on the FATF List of Countries that have been identified as having strategic AML deficiencies

Latest FATF Statement - 21 February 2025

In February 2025, Lao PDR made a high-level political commitment to work with the FATF and APG to strengthen the effectiveness of its AML/CFT regime. Since the adoption of its MER in August 2023, Lao PDR has made progress on some of the MER’s recommended actions including increasing FIU resources and eliminating bearer shares. Lao PDR will continue to work with the FATF to implement its FATF action plan by: (1) enhancing its understanding of ML/TF risks; (2) improving risk-based supervision of casinos, banks and reporting entities in SEZs, including fit and proper checks; (3) enhancing the quality and quantity of financial intelligence analysis and spontaneous dissemination to law enforcement agencies; (4) ensuring law enforcement agencies receive training and guidance on money laundering; (5) demonstrating an increase in ML investigations and prosecutions in line with Lao PDR’s risk profile, with an emphasis on crimes with a transnational element that require international cooperation; (6) developing a national confiscation policy consistent with its ML/TF risks; (7) demonstrating that relevant competent authorities are taking measures to identify, seize and, where applicable, confiscate proceeds and instrumentalities of crime in line with the risk profile; (8) monitoring FIs’ and DNFBPs’ compliance with TFS PF obligations; and (9) addressing technical compliance deficiencies in Recommendations 5, 6, 7 and 10.

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 in Laos significantly hampers economic growth and deters foreign investment, despite the government's efforts to implement anti-corruption laws and improve governance under Prime Minister Thongloun Sisoulith. The Lao State Inspection and Anti-Corruption Authority oversees corruption analysis, yet enforcement remains weak, and bribery is common in business dealings. Additionally, Laos faces challenges related to human trafficking, counterfeit goods, and drug trade, with criminal networks deeply embedded in both the economy and 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 before the COVID-19 pandemic. In 2023, GDP growth is forecasted at 3.7 percent, driven by sectors such as mining, hydropower, and infrastructure, although challenges such as high inflation, currency depreciation, and public debt exceeding 125 percent of GDP persist. The government is focusing on diversifying the economy and enhancing the investment climate to attract foreign investment, particularly in agriculture, light manufacturing, and tourism.

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 face challenges such as bureaucratic complexities, corruption, and a lack of skilled labor, which can deter investment. However, recent increases in foreign direct investment, particularly in sectors like mining and hydropower, indicate a growing interest in the Lao market, supported by the government's initiatives to enhance infrastructure and facilitate trade.