Laos
1. Does Laos have legislation making it a criminal offence to engage in money laundering and/or terrorist financing?
The primary anti-money laundering (“AML”) legislation is the Law on Anti-Money Laundering and Combatting the Financing of Terrorism (№ 49/NA, 21 July 2014) (“AML Law”), which sets out the legal framework for the management, monitoring, and inspection of anti-money laundering and counter-terrorism financing (“AML/CTF”) efforts in the Lao PDR. The provisions of the AML Law are further supplemented by a number of subsidiary regulations and also coupled with the Penal Code (№ 26/NA, 17 May 2017) (“Penal Code”) which govern the criminal offences of money laundering and terrorism financing and the penalties attached to those offences.
2. To whom does the legislation apply?
The AML Law applies to individuals, legal entities, and organisations (both domestic and foreign) that conduct business operations inside and outside the territory of the Lao PDR that are involved in money laundering and terrorism financing. The Penal Code applies to individuals and legal entities (both domestic and foreign) that commit criminal offences within the territory of the Lao PDR.
3. What does the legislation prohibit?
The AML Law and Penal Code both prohibit money laundering and terrorism financing activities.
4. How is money laundering defined? Does underlying criminal activity have to be proven?
Article 2 of the AML Law defines money laundering as the “transformation, utilisation, displacement, exchange, acquisition, possession, transfer of true ownership of funds or other properties of a natural person, legal person or organisation that knows, knew or suspects that the properties are derived from the predicate offences to conceal or disguise their characteristics, origin, and location. This is aimed at legalising the funds or properties”. This definition is replicated under Article 130 of the Penal Code.
Further, Article 6 of the AML Law provides some examples of money laundering actions:
- the conversion or transfer of funds or assets to conceal or disguise the proceeds of crime, and assisting predicate offenders to avoid the legal consequences of such actions;
- the concealment or disguise of the origin, location, transfer, possession, movement, or ownership of rights to the funds or assets;
- the acquisition, possession, or use of funds or assets derived from predicate offences such as an illicit loan release or use of illicit funds and assets in direct investment; and
- the involvement in a conspiracy, attempting or aiding, promoting, facilitating, or giving advice on money laundering.
There is no requirement under either the AML Law or Penal Code that the underlying criminal activity (or “predicate offence” per the language used in the legislation) must be proven to establish an offence of money laundering.
5. What level of intent or knowledge is required to establish a violation?
The Penal Code does not explicitly state what level of intent or knowledge is required to establish a violation. However, the wording “knows, knew or suspects that the properties are derived from the predicate offences” suggests that a mere suspicion that the laundered assets were derived from a predicate offence is enough to establish a violation.
6. What are the potential penalties for infringing the legislation?
The AML Law provides general measures against violators including re-education, fines and criminal sanctions (as mirrored in the Penal Code).
Article 130 of the Penal Code sets out the following penalties for money laundering offences:
- offences with a monetary value under 1 billion Kip are punishable by a jail term of 3 to 7 years and a fine ranging from 300 to 500 million Kip;
- offences with a value over 1 billion Kip are punishable by a jail term of 7 to 10 years and a fine ranging from 500 to 700 million Kip; and
- offences committed by an organised group or “habitual offender” are punishable by a jail term of 10 to 15 years and a fine ranging from 700 to 900 million Kip.
Article 131 of the Penal Code sets out the following penalties for terrorism financing offences:
- offences with a monetary value under 1 billion Kip are punishable by a jail term of 5 to 8 years and a fine ranging from 500 to 800 million Kip;
- offences with a value over 1 billion Kip are punishable by a jail term of 8 to 12 years and a fine ranging from 800 million to 1 billion Kip; and
- offences committed by an organised group or “habitual offender” are punishable by a jail term of 15 to 20 years and a fine ranging from 800 million to 1 billion Kip.
7. Does the legislation have extra-territorial reach?
Yes, the AML Law extends its application to individuals, legal entities, and organisations (both domestic and foreign) that conduct business operations outside the territory of the Lao PDR that are involved in money laundering and terrorism financing.
Article 9 of the Penal Code also provides that Lao citizens who commit criminal offences outside the territory of the Lao PDR will be charged and punished for such offences if they constitute offences under the Penal Code or other Lao PDR laws defining criminal offences.
8. Are there additional anti-money laundering or counter terrorist financing regulations or obligations, such as registration or reporting obligations, for businesses or individuals that operate in particular sectors or undertake particular activities?
Under Article 17 of the AML Law, “reporting entities” are subject to several reporting obligations and compliance requirements. Both financial sector institutions and designated non-financial businesses (including casinos, auditors, law firms, and real estate agents) are deemed as reporting entities. Under the AML Law, reporting entities must: (i) establish anti-money laundering and counter-terrorism financing programs; (ii) implement internal risk assessment measures and know your customer measures; (iii) conduct customer due diligence checks; (iv) gather information on customers; (v) record data; and (vi) report on suspicious transactions to the Anti-Money Laundering Intelligence Office (“AMLIO”) and the Ministry of Public Security.
9. What are the potential penalties for failing to comply with these obligations?
The Decision on Administrative Measures Against Violators of Laws and Regulations Governing Anti-Money Laundering and Countering the Financing of Terrorism Activities (No. 9/AMLCFTC, 30 March 2016) (“Administrative Measures Decision”) sets out the penalties including: (i) written warnings; (ii) fines; and (iii) withdrawal of business operating license or enterprise registration certificate.
10. Who are the relevant enforcement authorities in Laos and what are their contact details?
The primary enforcement authority dealing with AML/CFT in Laos is the AMLIO.
Anti-Money Laundering Intelligence Unit
T4 Road
Phonthan Village, Saysettha District
Vientiane Capital
Laos
T: +856 212 502 54
Contributor law firm
DFDL
Unit 01
House 004 Phai Nam Road
Xieng Yeun Village
Chanthabouly
District (PO Box 2920)
Vientiane
Lao PDR
T: +856 212 420 68
Contact
Kristy Newby
Partner
Country Managing Director, Lao PDR
Co-Head Regional Compliance and Investigations Practice
T: +856 212 420 70
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