#QuickBiteCompliance Day 125
The Hidden Risks of Free Trade Zones (FTZs) in Financial Crime
Imagine a place where businesses can trade freely, without the usual rules of the country they are in. Sounds great, right? These areas, called Free Trade Zones (FTZs), are designed to encourage trade and investment. But here’s the problem—some bad actors use FTZs to commit financial crimes.
Since FTZs often have loose regulations and minimal oversight, criminals take advantage of them in many ways:
🔹 Trade-Based Money Laundering (TBML) – Criminals over- or under-invoice goods to move dirty money. Example: A company in an FTZ imports a car for $1 but sells it for $100,000, disguising illegal funds as profits.
🔹 Counterfeit Goods & Smuggling – Fake luxury bags, electronics, and even medicine are moved through FTZs. Without proper checks, harmful products flood the market.
🔹 Shell Companies & Hidden Ownership – FTZs often don’t require strict record-keeping, making it easy to set up fake companies that exist only on paper to launder money.
🔹 Terrorist Financing & Sanctions Evasion – Bad actors use FTZs to move funds and ship goods to sanctioned countries, avoiding international laws.
The solution? Inclusive Regtech and Open Source AML solutions like Mulai Console help improve transparency and track suspicious activities within FTZs. By using technology to connect FTZs with local and global regulators, we can make trade safer for everyone.
💡 Financial crime doesn’t stop at borders—neither should our fight against it.
🔗 Learn more: ACAMS AML Glossary
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