Dubai
Better monitoring is required for free zones across the world to combat illicit trade, according to Gaozhang Zhu, the director of Compliance and Facilitation of the World Customs Organisation located in Belgium.
“Free zones provide significant opportunity for legitimate business and play a major role in global trade; however, bad management in free zones will result in several illicit activities such as money laundering, weapons and drug trade, and counterfeiting and piracy,” said Zhu, who was speaking at the opening of the first International World Free Zone Organisation in Dubai yesterday.
Relaxed regulation, limited taxes, reduced oversight and softened customs controls can make free zones vulnerable to a wide range of business abuses, he said.
Since free zones were found to be an easy way of doing business and moving goods, governments have been having a very difficult task of balancing between trade control and trade facilitation, he said.
“In 50 years the number of free zones has amounted to almost 4,000, and the challenges are increasing, making these zones vulnerable to illegal activities,” Zhu said.
“However, governments should have better monitoring of the business flow across their free zones,” he said.
For Zhu governments should also establish standards and develop practices and implement specific legislations and regulations that can address the threat of illicit trade in the free zones, he said.
Dr Mohammad Al Zarouni, Chairman of the World Free Zone Organisation (WFZO), said: “Most of the free zones who can’t be members of the WFZO have been proved to have businesses involved in illicit practices such as money laundering.”
“WFZO members should have a good reputation and should meet certain standards in terms of business facilitations and regulations,” he said.
“Also we cannot say that free zones accommodate or facilitate illegal activity. Most operate as an important and legitimate tool within a country’s economy, facilitating international trade and development.”
