The upper crust: horders and money-launderers

A US congressional report in 2013 estimated there were 3,500 free ports across 135 countries, hosting tax-free zones spanning from car production to fine art storage.

One of those zones, and a potential model for the UK’s post-Brexit future, can be found at the end of a motorway, in a warehouse backing on to Luxembourg airport.

This is no ordinary warehouse: Le Freeport is a maximum security centre for the super-rich to store art, fine wine, vintage cars and other treasures. Roughly the size of three football pitches, Le Freeport has four bullion chambers, space for 750,000 bottles of wine, and airport landing bays designed for armoured vehicles.

The squat four-storey building is designed to look like a jewellery box, not an obvious feature to the casual viewer looking through the barbed wire fence and metal gates.

The interior is said to be luxurious, with chic rooms for wealthy clients to arrange sales or simply contemplate their treasures within the confines of the thick walls.

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The draw for super-rich clients is not having to pay import taxes, VAT or capital gains tax on anything stored or sold within its confines. Promoters say clients benefit from lower insurance premiums and the easy access to the airport tarmac.

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“In 2015, the government decided to evaluate the free port in Luxembourg and came to the conclusion that there were indeed money-laundering risks,” said Djuna Bernard, co-president of Luxembourg’s Green party in a statement.

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Since 2015 the three logistics firms licensed to work in Le Freeport have been obliged to keep records of the beneficial owner of property stored in the warehouse. Luxembourg customs officers inspect everything that arrives through the doors.

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The European parliament thinks Le Freeport remains a money-laundering risk.

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Luxembourg’s Indirect Tax Office (AED) found Le Freeport to be “high risk in relation to money laundering”, according to evidence collected by the European parliament.

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Companies working at Le Freeport also say strict laws have cost them clients.

The unexpected introduction of anti-money-laundering rules put Le Freeport at a “competitive disadvantage”, one Freeport logistics operator told the European parliament. “Clients like their privacy and are thus reluctant to provide their data. The same goes for merchants and dealers,” said the operator, who estimated Luxembourg’s tougher rules cost them up to 30 clients, who went to rivals with “more discretion”.

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There are dozens of free ports inside the European Union, but all have to abide by EU law, including an update of anti-money-laundering rules that comes into force in 2020, obliging free ports to carry out due diligence on clients.

  The Guardian

Leaving a rich possibility for less scrupulous governments. The rich don't like being told what to do. But can they trust the security in third world countries? I foresee a dilemma for the one percent.

After Brexit or a Brexit transition period, the UK would no longer be obliged to follow EU anti-money-laundering rules.

Saved by the Brexit.