Study on the Impacts of Anti-Money Laundering Regulations in Vientiane, Lao PDR

ABSTRACT

The purpose of this thesis is to “Study on the Impacts ofAnti-Money Laundering Regulations in Vientiane, Lao PDR”. The study employed yearly time series frequency data from 2009-2018.The study also used ordinary least square technique in the regression estimation method.The study finds that AML regulation is statistically significant and exerts a positive impact on the banks international transactions. AML regulation aims to strengthen Lao financial system and address money laundering activities.Exchange rate of LAK to Thailand baht is statistically significantand has a strong negative shock to the banks foreign transactions. Exchange rate of Lao currency to dollar and inflation are all insignificant and having a positive influence on the bank's total foreign transaction. The study further recommends that the Lao government should continue strengthens the AML regulation to meet the International standard from the Financial Action Task Force (FATF) on Money Laundering and also to address new risk, such as virtual assets or money which has gained much popularity

According to the findings,Lao PDR has legally implemented Anti-Money Laundering regulation since 2006 therefore the enforcement was in 2014. Money Laundering offences are identified on Criminal Law and the prosecution will be based on international law such as confiscating the assets that belong to Money Laundering. According to 40 Recommendation of FATF’s, Lao P.D.R has to implement all 16 initial and important guidelines.This thesis also focuses on the study the Impacts of Anti-Money Laundering Regulations in Vientiane, Lao PDR especially in banking sector. The results from this study unveiled that on the one hand,Anti-Money Laundering Law has both negative and positive impacts on economy because Anti-Money Laundering law can decrease GDP due Money-Laundering has a relationship with International Transaction, GDP Growth, Foreign Direct Investment, Exchange and Inflation. On the other hand, Anti-Money Laundering law will increase the reputation and reliability of the countries from investors’ point of view particularly it attracts overseas investors to Laos because Anti-Money Laundering law will ends unfair competitions. Moreover, Anti-Money Laundering Law will benefit Laos since the government lacks capital to enhance many development projects.


Table of Contents

Part One: Introduction 1

1.1 Background 1

1.2 Objective of the study 2

1.3 The scope of the study 2

1.4 Contribution to knowledge 2

1.5 Defenition 3

1.6 Thesis structure 4

Part Two: Literature Review 5

2.1 The meaning of money laundering 5

2.2 AML system background 6

2.3 General conception of Money Laundering 6

2.4 Money laundering background 6

2.5 Place of money laundering 7

2.6 Step of money laundering 7

2.6.1 Step 1 Placement 7

2.6.2 Step 2 Layering 8

2.6.3 Step 3 Intergation 8

2.7 Necessities of Law and regulation on Anti-Money Laundering 9

2.8 Anti-money laundering in Lao PDR 9

2.8.1 AML Framework 9

2.8.2 AML Mechanism 12

Part Three: Reseach Methodology 14

3.1 Data Collection 14

3.1.1 Source of data 14

3.1.2 Timeframe 15

3.2 Methodology 15

3.3 Model Specification 15

Part Four:Analysis and Result 17

4.1 Comment from banks on AML regulation 17

4.2 Foreign Direct Investment 17

4.3 Trend of analysis 19

4.4 Result 20

Part Five: Conclusion and Recommanced 21

5.1 Conclusion 21

5.2 Reccommance 22

Reference 25

Appendix 26

Acknowledgement 37