There are currently over 3000 Free Trade Zones of one form or another in 135 countries around the world. In it’s report on FTZs dated March, 2010, FATF highlighted the following systemic weaknesses that make FTZs vulnerable to money laundering abuse:
- Inadequate anti-money laundering (AML) and combating the
financing of terrorism (CFT) safeguards; - Relaxed oversight by competent domestic authorities;
- Weak procedures to inspect goods and register legal entities, including inadequate
record-keeping and information technology systems; and - Lack of adequate coordination and cooperation between zone and Customs authorities.
Please find below a list of countries that have Free Trade Zones:
| Traditional EPZ Model | Hybrid EPZ Model | Commercial Free Zone | Single Factory | Freeport | |
| Asia and the Pacific | Taiwan China Korea Indonesia Vietnam Philippines Bangladesh India Malaysia Pakistan Sri Lanka | China Indonesia Lao PDR Korea Philippines Thailand Vietnam | China Japan Malaysia | Fiji | China Hong Kong India Indonesia Korea Macau Malaysia Philippines Singapore |
| Americas | Argentina Bahamas Belize Dominican Republic Guatemala Jamaica Nicaragua Peru Trinidad and Tobago Uruguay Venezuela | Bolivia Brazil Colombia Costa Rica Cuba Ecuador El Salvador Haiti Honduras | Argentina Bahamas Belize Brazil Canada Colombia Curacao Panama | Jamaica Mexico | Bahamas Chile Colombia Panama |
| Middle East and North Africa | Algeria Iran Sudan | Bahrain Egypt Syria Tunisia Turkey United Arab Emirates | Israel Jordan Kuwait Lebanon Libya Morocco Oman Tunisia Turkey United Arab Emirates Yemen | Iraq Jordan | |
| Central and Eastern Europe and Central Asia | Slovenia | Belarus Albania Bosnia and Herzegovina Bulgaria Croatia Hungary Kazakhstan Kyrgyz Republic Latvia Lithuania Macedonia Moldova Poland Ukraine | Czech Republic Estonia Latvia Romania Serbia Montenegro Slovak Republic Ukraine Uzbekistan | Russian Federation | |
| Sub-Saharan Africa | Cameroon Cape Verde Equatorial Guinea Gambia Ghana Kenya Mozambique Namibia Nigeria Senegal South Africa Tanzania Togo Uganda Zambia Zimbabwe | Benin Djibouti Gabon Liberia Mauritius Tanzania Togo | Burundi Madagascar Malawi Mali Mauritius Senegal Seychelles |
Further Information:
Free trade zones (FTZs); these are typically general purpose fenced in, duty-free areas offering warehousing, storage and distribution facilities for trade, transhipment, and re-export of products. These are located in most ports around the world.
Export Processing Zones (EPZs) are industrial areas focusing on assembly and manufacturing of intermediate imports aimed primarily but not exclusively at foreign markets. Particular sectors include labor- intensive, light manufacturing such as garment production and the assembly of electronics. EPZs also promote linkages with the domestic economy by encouraging technology transfer and innovative industrial strategies. Certain types of EPZs are sometimes called Hybrid Export Processing Zones because they combine the traditional export focus of an EPZ with a sub-divided area in which non-export oriented activities can take place.
Enterprise zones are economic development areas intended to revitalize specific urban or rural areas where they are located through tax incentives and financial grants. These are most often found in the developed world.
Freeports typically the largest of the zones, accommodate all types of activities including tourism, retail sales, and on-site residence, and accompany a broader set of incentives and benefits. Freeports are different from traditional FTZs as they are not seen as export drivers but areas promoting overall economic growth linking the zones with the overall economy of the nation. This has also resulted in greater expansion and liberalization of the core set of policies present in most free zone programs. The European Union allows inward processing relief and other customs schemes that produce some of the benefits of free ones without requiring formal zone definition. In the UK, for example, free ports do not offer significant benefits beyond inbound processing relief schemes. As a consequence ports like Rotterdam have marketed themselves as “freer than a Freeport”.
Single factory EPZ schemes provide incentives similar to export processing zones but are not a zone at all, rather a single factory located anywhere in a country which receives the special duty free privileges of zones. In the United States they are also called sub-zones.
Foreign Trade Zones is the name of the specially designated zones in the United States. They are established in or adjacent to a port of entry in which all types of merchandise may be held without being subject to U.S. Customs duties and other taxes.
Special Economic Zones (SEZs): SEZs extend the relaxed tax and administration characteristics of FTZs to investment arrangements, labour laws, management practices, and wage rate policies in specific areas of the country. Originally this structure applied only to China but versions now exist in India and elsewhere. China has proposed applying special treatment within SEZs to promotion of real estate, tourism, infrastructure development and banking.
Sources: BearingPoint, ILO database;
WEPZA (2007); FIAS research.
FATF