Laos

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1. Does Laos have a sanctions regime in place?

Yes. Laos has implemented several laws and regulations within the past five years which have created the framework for an anti-money laundering and countering the financing of terrorism (“AML/CFT”) sanctions regime. The primary legislation is the Law on Anti-Money Laundering and Combatting the Financing of Terrorism (No. 49/NA, 21 July 2014) (the “AML Law”) which came into force in February 2015. The AML Law’s purpose is to manage, monitor, inspect, and coordinate the country’s anti-money laundering and countering the financing of terrorism efforts to combat and prevent these offenses. This includes implementing sanctions. Since 2015, the AML/CFT framework has been expanded through new laws, regulations, decrees, and orders concerning areas such as (1) the reporting obligations of those designated as “reporting entities”, (2) the identification criteria for suspicious transactions, (3) the administrative penalties for non-compliance with obligations under the AML Law, and (4) the procedures for seizure and confiscation of funds and property of persons and entities connected to terrorism and terrorism financing.

2. Does Laos implement UN sanctions?

Yes. Under Article 40 of the AML Law, the funds or properties of persons and entities including terrorists, groups of terrorism financiers, and international terrorist organisations stipulated in UN Security Council Resolutions 1267 (1999), 1373 (2001), and other resolutions of the UN Security Council (e.g. Resolution 1988 (2011), Resolution 1989 (2011), Resolution 2253 (2015) shall be seized and frozen immediately without delay. Further, the AML Law defines “Resolution of the UN Security Council” as a “list of names of terrorism-related natural persons, groups of people, legal persons and organisations as defined in Chapter VII of such resolution”. However, the confiscation and seizure process is not provided in the AML Law which only states that if there is a lack of evidence or information involving an offense of money laundering or financing terrorism or participation in the said offenses, the court can order sequestration of funds. Instead, the confiscation and seizure process is set out in the Order of PM on the Withholding, Freezing or Seizure of Funds Relating to Terrorists or Financing of Terrorism (Revised) (No. 03/PM, 11 February 2016) which establishes the procedures on withholding, freezing, or seizing funds relating to terrorists or terrorism financing. Under this Order, the Ministry of Public Security ("MOPS”), with the assistance of the Anti-Money Laundering Intelligence Office ("AMLIO”) and Ministry of Foreign Affairs ("MOFA”), have the authority to issue orders for the freezing or seizure of funds or property associated with terrorists or terrorism financing. Although the laws and mechanisms have been put in place, the actual implementation and enforcement of these provisions is still either untested or not published.

3. Does Laos implement an autonomous sanctions regime?

Not yet, although there does not appear to be any legal basis on which the Lao PDR would be precluded from adopting an autonomous regime. The existing framework for AML/CFT sanctions regime is primarily geared towards those individuals and legal entities that have been designated in UN lists.

4. What is the nature of the sanctions regime in Laos?

See above. In relation to anti-money laundering and countering the financing of terrorism, the adoption of the AML Law is part of the country’s FATF compliance programme. The AML Law defines “reporting entities” as financial institutions together with designated non-financial businesses and professions (Article 17 AML Law). Reporting entities must monitor transactions, conduct client checks, compile data, and report on suspicious transactions to the MOPS and AMLIO. Also, financial and non-financial organisations considered as reporting entities under the AML Law and its implementing regulations are prohibited from undertaking business or transactions with individuals or legal entities that are on a UN Security Council list. Under the Decision on Reporting Suspicious Transactions Related to Money Laundering or Financing of Terrorism (No. 13/NCC, 19 October 2015) reporting entities must report all suspicious transactions that meet the criteria and indicators for suspicion to the AMLIO. In support of this legal requirement, official guidelines listing criteria for suspicious transactions have been published. Reporting entities that do not comply with reporting obligations may be subject to penalties (see section 8 below). Under the Order of PM on the Withholding, Freezing or Seizure of Funds Relating to Terrorists or Financing of Terrorism (Revised) (No. 03/PM, 11 February 2016), the MOPS, with assistance from the AMLIO and MOFA, was given authority to enforce sanctions through issuing orders on the freezing and seizure of funds and property connected to terrorism or terrorism financing. Most recently, the AML/CFT framework was expanded through the Decree on Responsibilities in Anti-Money Laundering and Counter-Financing of Terrorism (No. 127/GOV, 20 February 2020) which clarified and centralized the AML/CFT duties and responsibilities of government ministries, authorities, and reporting entities that have a duty to monitor and report suspicious transactions. In particular, the MOFA must actively monitor and inspect the names of individuals, legal entities, and organisations listed in terrorism and terrorism financing lists determined by the UN Security Council.

5. Does Laos maintain a list of sanctioned individuals and entities?

Yes. Laos uses the lists of persons and legal entities designated as terrorists or terrorism financers specified by the UN, namely, the consolidated UN Security Council Sanctions List and the ISIL (Da'esh) and Al-Qaida Sanctions List. These lists are provided on the AMLIO website. Whenever the MOFA receives updates to these lists from the UN, it is required to send these updates to the MOPS and the AMLIO. The AMLIO will then notify reporting entities as well as provide the updated list on its website.

6. Are there any other lists related to sanctions?

This information is not publicly available.

7. Does Laos have a licensing or authorization system in place?

Yes. The AMLIO has implemented an electronic reporting system that allows reporting entities to report cash transactions and suspicious transactions. The reporting system is on the AMLIO website.

8. What are the consequences for a breach of sanctions in Laos?

There is no specific offense that deals directly with a violation of any general requirement to observe or enforce the UN treaties referred to above. The AML Law provides that violating individuals, legal entities or organisations will be re-educated, disciplined, fined, or punished with criminal charges depending on the severity of the case, and be liable to pay compensation for damages. However, since the adoption of the AML Law in 2015, a number of laws, regulations, decrees, and orders have been released to assist with the implementation of the AML Law, including on punitive measures for non-compliance. 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) established the administrative measures that are available against individuals and legal entities for non-compliance with the AML Law (e.g. through failing to perform adequate client checks or compiling detailed information on suspicious transactions or properly performing reporting obligations or cooperating with officers from AMLIO). Disciplinary administrative measures consist of (1) warnings; (2) fines; (3) suspension or removal from an administrative position; and (4) withdrawal of business license or enterprise registration certificate. In addition, the Law on the Penal Code (No. 26/NA, 17 May 2017) implemented in 2018 sets out civil and criminal penalties for money laundering and terrorism financing offenses. Article 130 states that money laundering offenses 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; offenses 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 offenses committed by an organized 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 states that terrorism financing offenses 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; offenses 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 offenses committed by an organized 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.

9. Who are the relevant regulators in Laos and what are their contact details?

The three main agencies dealing with AML/CFT and the implementation of sanctions in Laos are:

Anti-Money Laundering Intelligence Unit T4 Road Phonthan Village, Saysettha District Vientiane Capital Laos T: (+856) 021 250254 http://amlio.gov.la/eng/index.php

Ministry of Public Security Nongbone Road Vientiane Capital Laos T: (+856) 021 970089 http://laosecurity.gov.la/

The Department of Treaties and Law at the Ministry of Foreign Affairs 23 Singha Road Vientiane Capital Laos T: (+856) 021 414 021 http://mofa.gov.la/

Contributor law firm

Kristy Newby

Partner, Country Managing Director

Co-Head Regional Compliance and Investigations Practice

DFDL

Unit 01

House 004 Phai Nam Road

Xieng Yuen Village

Chanthabouly

District (PO Box 2920)

Vientiane

Lao PDR

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