A few centuries ago, freeports were quiet harbors where pirates could safely leave their looted treasures. Time has passed, a lot has changed, the scope of freeports has changed, but the essence has remained almost the same. Almost, because, as a rule, there is no information about the illegal origin of values.
Today, freeport is a kind of high-end depository, usually located near the airport. Its main advantage is that any valuables arriving at its warehouse are considered as transit goods and are not subject to taxes or duties. Formally, for tax law, they are still en route, but in practice this route can be lasting for years.
Freeports are a kind of domestic offshore, located in the centers of global civilization. Moreover, security and confidentiality measures in freeports are not inferior to, and sometimes even superior to the offshore measures. Freeports are becoming more and more popular all over the world, and the development of Asian markets gives a special impetus to this business. Not without a reason, one of the largest freeports is located in Singapore.
Freeport as a Personal Depository of the Super-Rich
Despite the fact that freeport are, actually, a warehouse, in practice these premises are more like museums. The reason for this is the specifics of the stored goods. Freeport is a real depository that holds works of art, precious metals, jewelry, antiques, vintage cars, collection wines and cigars.
Of course, such valuables require a special environment, so the freeport areas are fitted with special equipment that allows maintaining the necessary temperature and humidity for each type of stored valuables. Special attention is paid to security, i.e. biometric keys, hundreds of cameras, round-the-clock security guards.
In addition to storage, the services of freeports are in demand thanks to the possibility of holding presentations, wine tastings and exhibitions. The owners want to be able to hold business meetings, present the goods to potential buyers or just brag in front of their friends, and freeports are ready to provide this opportunity.
Largest Freeports of the World
The number of freeports in the world is continuously growing, especially in recent years. The exact value of all valuable items stored in freeports is unknown, but the European Salon of Fine Arts estimates it to be about USD 100 billion.
Singapore Freeport was opened in 2010, next to Changi Airport which is Singapore’s main airport and the main aviation hub in Asia. Freeport provides solutions for safe storage of valuables, as well as the ability to perform transactions without paying taxes and duties. Collectors may temporarily move objects of art from the freeport to museums in Singapore, also without paying any fees.
In addition to the highest safety standards and special conditions for all types of stored valuables, Freeport Singapore also offers restoration services, equipped offices and showrooms for special exhibitions. The clients of Singapore Freeport include such companies as Malca-Amit Singapore, Christie’s Fine Art Storage Services, Stamford Cellars and Fine Art Logistics.
In Luxembourg, that claims to be the main European financial center, the freeport opened in the autumn of 2014. The demand for its services turned out to be huge, 60% of premises were booked a few months before the opening.
Le Freeport Luxembourg is a four-storey building with a total area of 22,000 square meters. Despite the fact that it is a warehouse, inside the Luxembourg Freeport is more like a museum. For example, you can see the works by Vhils, a street art artist from Portugal, in the hallways.
In the Luxembourg Freeport, in addition to special rooms for objects of art, there are also four wine cellars that maintain the right temperature and humidity for each type of drink.
For Luxembourg, freeport has become one of the most important ways to attract investments, as well as an opportunity to become one of the leading art markets.
Switzerland was the first country to open freeports on its territory. Today, there are over 10 freeports and about 250 free customs zones in Switzerland. The largest Swiss freeports are located in Geneva and Zurich.
The Geneva Freeport was founded in the 19th century and was originally used as a warehouse for grains. Later it became a warehouse for storing transit cargoes. And yet in the 21st century it became the world’s largest “private museum.” According to the French magazine “Connaissances des Arts”, in 2013, the Geneva Freeport stored about 1.2 million objects of art, as well as an impressive number of gold bars and about three million bottles of collection wines.
The freeport area is about 150,000 square meters which is equivalent to 22 soccer fields. Located near the city center, freeport is of strategic interest to the Canton of Geneva. It also replenishes the budget by 10 to 12 million Swiss francs annually.
Freeports and Financial Crime
Despite such a stunning financial success, freeports are now subject to the scrutiny of governments and international organizations that claim that freeports can be used for money laundering, financial optimization, and to support the illicit arms trade and terrorism.
Confidentiality of information on the freeport clients and stored valuables allows, in the opinion of certain experts, bypassing the legislation governing the sale of objects of art and other valuables.
Particular attention to the market of art and antiques in recent years is due to the actions of terrorists in Syria, who, having gained access to historic values, seek to sell valuable goods. The Director of the Freeport of Geneva, David Hilaire, evaluated the possible risks as high and expressed his willingness to fund systematic audits with the involvement of experts to avoid cases of stolen antiques and objects of art.
The Swiss Federal Audit Office noted in its 2014 report that freeport opportunities can be used to commit illegal acts, which damages the reputation of Switzerland. As a result, the Board of the Geneva Freeport was forced to strengthen the procedures of client verification.
According to the Freeport President, access to the premises will only be possible using a biometric ID card, and clients who find themselves involved in illegal trade or other illegal activities will lose this access and leave the territory of the Freeport.