Freeports and Private Storage

Criminals use freeports and private storage to secure high-value illicit assets out of law enforcement's reach, preventing seizure and preserving long-term control of their wealth. The opaque nature of these facilities reduces transparency and hinders investigations, aligning squarely with the goal of safeguarding illicit proceeds post-integration.

The technique also relies on criminals hiding behind shell or offshore entities as registered owners of valuables stored in freeports. These opaque ownership structures obscure beneficial owners, thwart KYC processes, and limit investigators' ability to trace the ultimate controllers of illicit assets.

Criminals deliberately choose freeports and similar private storage in lightly regulated or tax-free zones that offer minimal AML oversight. By operating in jurisdictions with lax disclosure requirements and weak regulatory frameworks, they can store, transfer, and conceal high-value assets with little to no scrutiny, effectively sheltering illicit proceeds from law enforcement.

Aggregates negative news and legal records indicating reported fraud, contested ownership, or suspicious valuations tied to freeport activity. Aids in uncovering prior allegations or legal actions related to high-value asset storage.

Logs declared imports and exports, including valuable goods shipped across borders into or out of freeports. Detects discrepancies between declared items and actual shipments, indicating possible smuggling or unreported asset movements.

Consolidates information on freeport jurisdictions known for secrecy laws or minimal disclosure obligations. Enables risk-based assessment of storage in high-secrecy regions and helps identify cross-border activity where local regulations may hinder standard AML controls.

Contains financial statements, corporate filings, and tax returns, revealing a business’s revenue streams, expenses, and overall financial health. It can confirm the absence of legitimate income supporting significant "storage fees" or inconsistent flows from multiple shell entities to the same private storage facility.

Provides itemized records of all financial transactions, including timestamps, amounts, counterparties, and references (e.g., 'storage fees'). This enables investigators to detect repeated high-value payments to freeport or private storage operators that lack apparent commercial justification, indicating potential layering or placement of illicit funds.

Maintains records and version histories of asset documentation, including appraisal certificates or ownership filings for items stored in freeports. Enables the detection of suspicious alterations, missing records, or inconsistent documentation related to high-value assets.

Includes bills of lading, shipping manifests, and invoices for international shipments. Validates the movement of high-value assets and uncovers missing or inconsistent paperwork for items stored in or transferred through freeports.

Encompasses verified identities, beneficial ownership details, and information regarding customers’ high-value assets or transactions. Highlights instances where clients are unwilling to disclose the nature or valuation of assets for freeport storage, prompting deeper scrutiny into potential illicit use.

Captures registration, transfer, and ownership details of art, jewelry, and other high-value assets. Helps track frequent changes in ownership or inflated valuations for items in freeports, revealing possible manipulation or laundering activity.

Provides official or aggregated data on business entities, including ownership structures, directorships, and registered shareholders. Supports detecting overlapping beneficial owners among multiple shell companies using the same private storage facility.

Conduct advanced background checks and verification for clients dealing with freeports or private storage of high-value assets. This includes verifying provenance, cross-checking declared valuations with independent appraisals, identifying beneficial owners behind shell entities used to hold the assets, and applying ongoing monitoring to detect frequent changes in ownership or abrupt value fluctuations without credible explanation. These enhanced steps address the minimal oversight and anonymity exploited in freeport storage.

Require comprehensive documentation on the nature and source of high-value assets intended for freeport or private storage. Verify the true owner(s) and confirm alignment with the customer’s known wealth and economic profile. By establishing transparency at onboarding and throughout the relationship, institutions mitigate risks associated with anonymous asset holding and the potential disguise of illicit proceeds.

Implement specialized monitoring rules to flag repetitive high-value payments to freeport or private storage operators, especially when these payments are unaccompanied by supporting documentation or commercial justification. Track abrupt increases in such 'facility charges,' cross-verify stored asset details, and escalate when patterns suggest undisclosed beneficial owners or concealed laundering activity.

Corroborate asset ownership claims and valuations by referencing external sources, including public databases, stolen property registries, reputable auction house records, and art market intelligence. Investigate beneficial ownership structures for ties to high-risk jurisdictions or shell entities. This measure reveals hidden links and helps detect illicitly acquired items parked in freeports under minimal disclosure requirements.

Restrict or refuse services related to freeport storage if a client fails to provide credible information on an asset’s origin, ownership, or valuation. This may include suspending payments to the facility or freezing accounts until thorough verification is completed. By withholding services under opaque conditions, institutions minimize exposure to hidden, high-value assets of questionable legitimacy.

Systematically scrutinize trade and shipping records for high-value items entering or exiting freeports, confirming that declared valuations, shipping routes, and counterparties align with legitimate commercial purposes. Detect misinvoicing, multiple internal trades with no valid business rationale, and suspicious cross-border movements intended to mask ownership or inflate asset values beyond regulatory oversight.

• High-value jewelry is stored in freeport vaults, where the record-keeping requirements imposed by operators are often lax.
• Shell or offshore entities pay storage fees and officially register as owners, concealing the jewelry’s true beneficiary.
• The small, portable nature of jewelry makes it easy to transport or sell without drawing attention, facilitating hidden transfers of illicit wealth.

• Criminals place high-value metals (e.g., gold, platinum) and gemstones (e.g., diamonds) into freeports under opaque corporate structures, shielding their identities from authorities.
• Freeports’ minimal disclosure requirements help conceal both beneficial owners and the true origin of the assets.
• Once stored, these items can be privately sold, traded, or physically transferred across borders without triggering standard customs checks or reporting, facilitating further layering of illicit funds.

• Artworks and collectibles are often stored in private facilities with limited transparency, enabling criminals to remain anonymous or use shell companies as registered owners.
• The subjective and frequently fluctuating valuations of art facilitate the justification of large financial movements through reappraisal or manipulation of declared worth.
• Internal trades and silent ownership changes in freeports further obscure the provenance and trail of funds linked to these assets.

• High-end watches, automobiles, and similar luxury items are stored in duty-free zones under nominal or corporate ownership, concealing the true beneficiaries.
• The lack of public documentation in these storage facilities prevents authorities from easily identifying suspicious asset flows.
• Criminals can transfer ownership through private sales with minimal oversight, disguising the movement and layering of illicit proceeds.

• Provide long-term, high-security storage of valuables outside standard banking channels.
• Allow owners to register vault access under corporate or offshore entities, hiding true beneficial owners and the nature of stored assets.
• Minimal regulatory scrutiny hampers law enforcement efforts to trace or seize illicitly acquired art, jewelry, or precious metals.

• Facilitate secure, discrete storage of artworks, enabling criminals to obscure beneficial ownership and asset origin.
• Allow frequent changes in registration or valuations without transparent public records, impeding AML investigations.
• Nominee or shell entities may pay for custodial fees, further concealing the true owners and sources of funds.

• Enable formation of foreign shell entities with minimal disclosure requirements, helping criminals shelter ownership of freeport-stored valuables.
• Provide layers of anonymity through nominee directors or shareholders, keeping beneficial owners and asset transfers off official records.
• Facilitate payment arrangements for storage fees and internal trades while obscuring the true source of funds.

These providers enable criminals to form and maintain corporate or foundation structures that underpin freeport storage by:

• Incorporating and administering shell or offshore companies that hold high-value assets.
• Arranging nominee directors or shareholders to create additional layers of anonymity.
• Managing payment and document filings for storage fees, further complicating financial institutions’ due diligence efforts.

Illicit operators utilize freeports and private storage to conceal criminal proceeds by:

• Placing high-value assets (art, jewelry, precious metals) in secure facilities with minimal disclosure requirements.
• Bypassing standard customs or border checks and maintaining anonymity through shell or offshore registrations.
• Retaining the ability to discreetly transfer or retrieve valuables, reducing transparency for financial institutions attempting to trace illicit funds.

Art dealers, auction houses, and custodians can be exploited by criminals storing or trading art in freeports through:

• Inflating or manipulating asset valuations with limited transparent recordkeeping.
• Granting frequent changes to ownership or registrations, obscuring beneficial owners from financial institutions.
• Permitting discreet acquisitions or disposals of high-value pieces, complicating efforts to trace or seize illicit assets.

These entities, including offshore companies (ID 256) and private interest foundations (ID 278), obscure the beneficial ownership of freeport-stored assets by:

• Registering high-value items under corporate names or foundation structures, thereby masking the true owners.
• Conducting internal trades and paying storage fees under layered corporate identities, which limits financial institutions’ visibility.
• Facilitating anonymized transactions across multiple jurisdictions, thus hindering the detection of illicit origins.