Tuesday, June 10, 2014


Most businessmen engaged in international trade are familiar with the benefits of free zones, arrival destinations where goods not yet sold can be parked, free of customs duties, by their owners. These free zone facilities have, of late, acquired a new class of clientele: high net-worth individuals who store their rare art and antiques, classic automobiles, and other top-drawer possessions there, indefinitely. Geneva, Singapore and Luxembourg are all potential recipients of these personal property items, in their respective free trade zones.  Why is this troubling from the a financial crime perspective ?

If I am a money launderer for a drug trafficking enterprise, and I find that myself or my clients are under the law enforcement microscope, I may consider parking my clients' drug cash in a free zone warehouse for a period of time, until the law enforcement agency investigating me scales back its inquires, due to a lack of evidence of ongoing bulk cash smuggling or money laundering.

Of course, I would choose to disguise my cash, as a valuable art or stamp collection, or antiques, while all the time concealing the money inside worthless items that I am claiming is a priceless accumulation of value. Alternatively, I might actually purchase that Old Master, and store it for a number of years, with art listed an only pieces of lesser value, purchases for long-term appreciation. Remember well, in the world of money laundering, you are only limited by your imagination.

As the use of free zones, for storage of prized items, rather than in-transit goods, becomes more common, expect to see financial criminals hide their profits there, effectively withdrawing them from  circulation, and effectively preventing them from being seized and forfeited by law enforcement agencies, who are looking in the financial world for the money.

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