Illicit trade in the UAE zones:

TRACIT’s latest report examines how structural design features of Free Trade Zones—when paired with weak oversight—enable illicit trade at scale, using the Jebel Ali Free Zone (JAFZA) as a systemically important case study.

JAFZA is one of the world’s largest logistics hubs, handling approximately USD 200 billion in goods annually. Its scale, regulatory autonomy, and operational opacity create conditions in which illicit trade is not incidental but predictable, with risks that extend far beyond the UAE.
Key findings
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  • FTZs structurally enable illicit trade. Operational flexibilities—limited customs presence, transshipment freedoms, and uneven regulation—are routinely exploited by criminal networks. International evidence shows that illicit trade through FTZs is global, multi-sectoral, and networked across zones.

  • JAFZA is a high-risk FTZ due to scale, autonomy, and opacity. Once goods enter the zone, they fall outside effective customs control. There is no permanent customs presence, unsupervised repackaging and relabeling, opaque company and shipment information, routine misuse of the “in-transit” designation, and fragmented interagency coordination.

  • Illicit activity operates at an industrial scale across sectors. Tobacco (including illicit white cigarettes), pharmaceuticals, apparel, cosmetics, and fast-moving consumer goods are all affected, with exports and re-exports routinely exceeding legitimate demand in their destination markets.
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  • Risks are escalating. As momentum builds around OECD Clean Free Trade Zone certification and the proposed U.S. CLEAN FTZ Act, zones that remain outside emerging standards face growing reputational, commercial, and diplomatic consequences, including heightened scrutiny from financial institutions and partner governments.
TRACIT's recommendations

The report identifies targeted, standards-aligned reforms that can materially reduce illicit trade risks while preserving legitimate trade facilitation, including:
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  1. Establishing effective customs oversight inside the zone, supported by risk-based inspections and data access.

  2. Strengthening transparency, KYC, and record-keeping requirements for all operators.

  3. Ending the routine reclassification of suspect shipments as “in-transit” in lieu of seizure.
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  4. Aligning JAFZA’s governance with emerging international standards to restore confidence among governments, investors, and financial institutions.
MEDIA CENTER
  • TRACIT Media Release​
Mitigating Illicit Trade in Free Trade Zones: A Focus on Jebel Ali Free Zone
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Transnational Alliance to Combat Illicit Trade (TRACIT) is an independent, non-governmental, not-for-profit organisation under US tax code 501(c)(6).
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