Financial Crime World

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Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) Law of the Lao People’s Democratic Republic

Section 1: General Provisions

The AML/CFT Law aims to prevent and suppress money laundering, terrorist financing, and other related crimes. Reporting entities must maintain business relations and transactions with corresponding banks while adhering to AML/CFT regulations.

Article 2.6: Dealings with Corresponding Banks

Financial institutions must review the legal status of corresponding banks before establishing a business relationship. They must gather information on:

  • The nature of business operations
  • Creditworthiness
  • Management
  • Audit
  • AML/CFT implementation

If corresponding banks have ties to shell banks or their subsidiaries, reporting entities cannot establish or continue business relationships.

Article 2.7: Data Collection on Wire Transfer

Financial institutions must collect and verify information from the transferor, including:

  • Name
  • Address
  • Account number
  • Purpose of the transfer

If a financial institution acts as an intermediary, it must ensure accurate recording of transfer details before delivery to the beneficiary.

In cases where information is missing or incomplete, reporting entities must refuse payment to the beneficiary and report the incident to AMLIO.

Article 2.8: Record-Keeping

Reporting entities must maintain records on customers, business relations, and transactions for at least:

  • 10 years after business relationships end
  • 5 years from the date of transaction undertaking

Section 3: Obligations on Declaring Cash, Precious Metal, and Bearer Negotiable Instruments

The law outlines procedures for declaring cash, precious metal, and bearer negotiable instruments at border crossings.

Key Points to Note

  • Reporting entities have a critical role in preventing money laundering and terrorist financing.
  • They must maintain accurate records of transactions and customers.
  • Suspicious transaction reports must be submitted to AMLIO within three working days.
  • Confidentiality of transaction reports is essential, and management and staff can’t be disciplined or prosecuted for disclosing customer secrets if done in good faith.