Banking Systems

New private and foreign banks provide modern banking options to Lao and foreign businesses, with a total of 40 banks licensed in Laos.  Laos does not have a national deposit insurance system and supervisory standards are low. Technical expertise and the range of services offered at domestic banks are limited, though several local banks are expanding into internet banking, e-wallets, and making efforts to capture the significant “unbanked” portion of the Lao population.  While it continues to receive outside assistance, the Bank of Lao PDR engages in weak supervision of the sector.

On February 21, 2025, the Financial Action Task Force (FATF) added Laos to its “grey list” due to deficiencies in its Anti-Money Laundering (AML) and Counter-Terrorism Financing (CTF) frameworks, which require enhanced oversight and cooperation with FATF to address shortcomings. FATF’s decision follows a detailed assessment of the country’s progress based on its 2023 Mutual Evaluation Report (MER). While Laos has taken steps to address some of the FATF recommendations, including enhancing its Financial Intelligence Unit (FIU) and eliminating bearer shares, substantial weaknesses remain in its overall framework, specifically its supervision of high-risk sectors including the Golden Triangle Special Economic Zone (SEZ) and other SEZs. 

Foreign Exchange Controls

Lao PDR law states that payment for goods and services within Laos should be conducted in Lao kip, though enforcement of this law has traditionally been lax. However, On March 7, 2024, the Bank of the Lao PDR (BOL) issued “Decision on the Management of Foreign Currency Revenue from Goods and Services Exports” (Decision 333), which aims to manage foreign currency revenue derived from exports. Under Decision 333, export operators are required to convert a specified percentage of payments received in foreign currency through their import-export bank account within three business days. Commercial banks must then sell at least 30 percent of the purchased foreign currency to the BOL on or by the following business day.

In practice, the Lao economy is highly dollarized and Thai baht or American dollars are frequently used for private transactions involving imported goods. Debts should not be paid in foreign currency within the Lao PDR, except for cases in which the Bank of the Lao PDR has proposed the Lao government approved such a transaction. A holder of foreign exchange who needs to make payments within the Lao PDR can exchange for kip at a commercial bank or at a foreign exchange bureau licensed by the Bank of the Lao PDR. Those who need to use foreign exchange for any of the objectives stipulated in Lao law, such as payment for imported goods, may purchase foreign exchange at a commercial bank or a foreign exchange bureau. To facilitate business transactions, foreign investors generally open commercial bank accounts in both local and foreign convertible currency at domestic and foreign banks in Laos. Australian, Vietnamese, Thai, Cambodian, Malaysian, Chinese, and French banks currently have a presence in Laos. Bank accounts must be maintained in accordance with the Enterprise Accounting Law.

The law places no limitations on foreign investors transferring after-tax profits, income from technology transfer, initial capital, interest, wages and salaries, or other remittances to the company’s home country or third countries so long as they request approval from the Lao government. These transactions are conducted at the official exchange rate on the day of execution, upon presentation of appropriate documentation. However, many foreign-owned small businesses complain currency exchange restrictions and approval processes effectively serve as capital controls imposing a de facto limit on repatriation of capital. Foreign enterprises must report on their performance annually and submit annual financial statements to the Ministry of Finance.

Laos’s fiscal and monetary difficulties result in low levels of foreign reserves. In January 2023, the government closed all commercial currency exchanges, and the Bank of Lao PDR has imposed daily limits on converting funds from Lao kip into U.S. dollars and Thai baht, leading to difficulties in obtaining foreign exchange in Laos and frequent differences between official and unofficial exchange rates. The Bank of Lao PDR has also imposed restrictions on loans made in U.S. dollars and baht, limiting them to businesses that generated foreign currency. On August 22, 2024, the Bank of the Lao PDR and 15 commercial banks launched a centralized foreign exchange market system in Laos, known as LFX. LFX is limited to trading in three foreign currencies—the U.S. dollar, the Thai baht, and the Chinese yuan—and engages in foreign exchange spot transactions, with the Lao kip serving as the intermediary currency of exchange. The daily exchange limits are $2,000 per day for individuals and $75,000 per day for companies.

U.S. Banks & Local Correspondent Banks

There are no U.S. banks currently licensed to operate in Laos. Some Lao banks maintain correspondent banking relationships with U.S. banks; for example, BCEL has a relationship with Wells Fargo and Phongsavanh Bank has a relationship with J.P. Morgan Chase Bank. Several non-Lao banks present in Laos, such as the Australian bank ANZ and First Commercial Bank, among others, also maintain correspondent banking relationships with large U.S. banks.

For additional information, visit the U.S. Department of State Investment Climate Statement website.