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

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.

Crime and corruption remain significant challenges in the Lao People's Democratic Republic, with widespread issues affecting various sectors of the economy. Despite the government's efforts to combat corruption through the establishment of anti-corruption laws and agencies, enforcement remains weak, and corruption continues to deter foreign investment and business activities.

Laos is also a hub for various criminal activities, including human trafficking, drug trade, and illicit logging, often exacerbated by poverty and limited economic opportunities. The country's governance structure, characterized by a one-party system and restricted civil society, further complicates efforts to address these issues, as law enforcement agencies struggle with capacity and training, leaving the nation vulnerable to organized crime.

Laos, officially known as 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. Despite a forecasted GDP growth of 3.7 percent in 2023, the economy faces challenges such as high public debt, currency depreciation, and inflation, which has severely impacted urban households. The government is actively working to improve the investment climate by implementing reforms aimed at diversifying the economy, enhancing infrastructure, and fostering sectors like agriculture, tourism, and light manufacturing, while also addressing issues of corruption and regulatory ambiguity that deter foreign investment.