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Freeports: Innovative trading hubs or centres for money laundering and tax evasion?

Freeports: Innovative trading hubs or centres for money laundering and tax evasion? This study aims to provide a critical overview of freeports’ trading operations and consider to what extent they may present a money-laundering and tax-evasion risk.Design/methodology/approachThis study reviews the literature surrounding freeports and offers an up-to-date narrative of their potential money-laundering and tax-evasion activities. The paper relies on secondary data from published sources referencing peer-reviewed papers and “grey-literature” material relating to freeports, offshore finance and anti-money laundering control.FindingsThis study demonstrates the attractive trading advantages offered by freeports to enable enterprise and innovation. However, the study reveals that the secretive offshore space in which freeports operate also helps to obscure beneficial ownership and illicit trade-based practices that frustrate authorities’ efforts to trace laundered monies and recover government taxes. Despite freeports’ trade offerings, stronger regulation is needed to prevent them from being abused for money-laundering and tax-evasion purposes.Originality/valueThis study provides an important insight into the money-laundering and tax-evasion risks presented by freeports and, in doing so, advances the contemporary debate on illicit activities occurring through offshore jurisdictions. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Money Laundering Control Emerald Publishing

Freeports: Innovative trading hubs or centres for money laundering and tax evasion?

Gilmour, Paul Michael
Journal of Money Laundering Control , Volume 25 (1): 9 – Jan 3, 2022
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Publisher
Emerald Publishing
Copyright
© Emerald Publishing Limited
ISSN
1368-5201
eISSN
1368-5201
DOI
10.1108/jmlc-01-2021-0002
Publisher site
See Article on Publisher Site

Abstract

This study aims to provide a critical overview of freeports’ trading operations and consider to what extent they may present a money-laundering and tax-evasion risk.Design/methodology/approachThis study reviews the literature surrounding freeports and offers an up-to-date narrative of their potential money-laundering and tax-evasion activities. The paper relies on secondary data from published sources referencing peer-reviewed papers and “grey-literature” material relating to freeports, offshore finance and anti-money laundering control.FindingsThis study demonstrates the attractive trading advantages offered by freeports to enable enterprise and innovation. However, the study reveals that the secretive offshore space in which freeports operate also helps to obscure beneficial ownership and illicit trade-based practices that frustrate authorities’ efforts to trace laundered monies and recover government taxes. Despite freeports’ trade offerings, stronger regulation is needed to prevent them from being abused for money-laundering and tax-evasion purposes.Originality/valueThis study provides an important insight into the money-laundering and tax-evasion risks presented by freeports and, in doing so, advances the contemporary debate on illicit activities occurring through offshore jurisdictions.

Journal

Journal of Money Laundering Control – Emerald Publishing

Published: Jan 3, 2022

Keywords: Money laundering; Beneficial ownership; Offshore; Tax haven; Free-trade zone; Freeport

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