Yes, Laterite is just clay, just like all the other popular aquatic substrates. It's basically inert but does have some iron oxide (rust) which is why it may have a rusty color. Sometimes it's used as potters clay.
If it's not expensive, or if you have easy and cheap access to it then use it. If it's not readily available or if it is expensive then forget about it and use a less expensive clay like molar clay sold in any garden center. There is no point going out of your way to get Laterite clay.
If used alone it could cloud the water for a while, but it can also be mixed with other materials. Put some in a bucket of water and see if it turns into mud after a few weeks.
Cheers,
