Self-custodial wallet / non-custodial software in Laos

Law on Anti-Money Laundering and Combating the Financing of Terrorism (Law No. 67/NA, dated 17 November 2022): This is the foundational AML/CFT law in Laos, superseding previous versions. It establishes the general obligations for reporting entities, including financial institutions, and covers key aspects of AML/CFT compliance.

Decree on the Implementation of the Law on Anti-Money Laundering and Combating the Financing of Terrorism (Decree No. 37/GOV, dated 10 February 2020): This decree provides detailed guidance and procedures for implementing the provisions of the AML/CFT Law.

Instruction on the Management and Supervision of Virtual Assets (Instruction No. 001/BOL, dated 28 January 2022): Issued by the Bank of Lao PDR, this instruction is highly specific to the pilot program for virtual assets. It outlines the regulatory framework, licensing requirements, and ongoing obligations (including AML/KYC) for entities authorized to engage in virtual asset activities (mining, trading platforms, exchanges, etc.). It designates authorized VASPs as reporting entities for AML/CFT purposes.

Regulatory Approach: Restrictive / Partial Ban (for the public) with Controlled Exceptions.

For the general public and most businesses, engaging in cryptocurrency trading, exchanges, or financial services is largely prohibited or highly discouraged due to the Bank of the Lao PDR's warnings and notices.

However, the government has, at times, indicated an openness to pilot projects for specific, state-controlled uses, particularly in areas like cryptocurrency mining to monetize surplus energy, but these are exceptions and not indicative of a liberalization for the broader market.

No, not comprehensively. While Laos has a general AML/CFT law, its framework for VAs and VASPs is still considered insufficient by international standards. The FATF Travel Rule (which stems from FATF Recommendation 15 and its Interpretive Note) requires countries to regulate VASPs for AML/CFT purposes, including implementing obligations to collect and transmit originator and beneficiary information for virtual asset transfers. Laos has yet to establish this comprehensive regulatory regime.

Which VASPs are Covered:

This is the primary challenge. Laos's existing AML/CFT framework, while aiming to combat financial crime, does not yet comprehensively define Virtual Assets (VAs) or Virtual Asset Service Providers (VASPs) to bring them under direct AML/CFT supervision as required by FATF Recommendation 15 and its Interpretive Note.

Therefore, there isn't a clear list of "covered VASPs" that are currently subject to Travel Rule obligations. Any entities dealing with virtual assets operate in a largely unregulated or ambiguous legal environment concerning AML/CFT specifically for virtual assets.

APG Mutual Evaluation Reports for Laos: These reports provide the most authoritative public assessment of Laos's compliance with FATF Recommendations.

The APG 3rd Enhanced Follow-Up Report on Lao PDR (2022), for instance, highlights the ongoing deficiencies in addressing Virtual Assets and VASPs, noting that the country still needs to revise its legal and regulatory framework to ensure VAs and VASPs are adequately covered.

A General Prohibition with Exceptions: Initial stances were restrictive. However, a significant development was the Prime Minister's Order No. 001/PMO, which allowed for a controlled experiment.

The "Sandbox" Approach: The government initiated a pilot program or "sandbox" allowing a limited number of companies to mine and trade cryptocurrencies under strict supervision. This means that any entity engaging in activities that would involve custody must be part of this approved sandbox.

No specific "custodial license" exists. Instead, entities wishing to provide any form of digital asset service that involves holding client funds (even if implicitly, like an exchange) must apply for and obtain a license to participate in the government's digital asset sandbox program.

Issuing Official Warnings and Prohibitions: The BOL has repeatedly reminded the public and financial institutions that cryptocurrencies are not legal tender and pose significant risks.