According to Diego Alonso's comments from the mappingGIS blog1, this error is related to QGIS version 2.14. With the upgrade, the standalone installer eliminated the msys folder from GRASS 7 algorithms.
To bypass this error, go to Processing -> Options -> Provider and deactivate all GRASS folders from previous versions. Set these paths as blanks. Then, activate GRASS 7 and fill in
GRASS7 folder field with its corresponding path.
1. Alonso, D. Cómo configurar LAStools en QGIS para manejar datos LiDAR. mappingGIS blog. Post from 8th, April, 2015.