A freeport in Geneva is taking the unusual step of introducing biometric testing and other checks to ensure that its storage isn't being used to harbor illicit loot. The government estimates that the country's freeports hold more than 100 billion Swiss francs worth of goods.

Are freeports the new offshore Swiss bank accounts? Reports have long swirled about the amount of fine art, precious metals like platinum, luxury goods or cash that are held in freeports, or secretive vaults in Geneva, Singapore, Beijing or Luxembourg which escape public scrutiny as well as tax and duties.

In Switzerland, where they are typically operated by local government, a revised law on freeports last year sought to crack down on potential money-laundering or harboring ill-gotten goods.

Caymans of the Art World

The tax-free storage sites are also increasingly coming into focus as investors, faced with historic low interest rates and market volatility, put their money into tangible, crisis-resistant goods like gold, vintage cars, art and coins, antiquities and even fine wine.

Freeports are storage facilities where goods can be held tax-free for years, and bought and sold without a transaction tax until they are moved to a jurisdiction – in effect, a lawless and tax-free state sanctioned by Switzerland. While the Swiss government says they «have a public character and are open to all interested parties,» they are one of the last bastions of complete privacy left in Switzerland after the erosion of banking secrecy. Or, as the «New York Times» put it in 2012, freeports are the Cayman Islands of the art world.

Modigliani Hidden From View

But the freeports are also being eyed warily by critics as a potential partner for money-laundering or hiding ill-gotten goods, like war-time spoils.

A recent hint of the treasures hidden behind Geneva freeport's heavily-guarded doors came from the Panama Papers, which brought to light a Modigliani painting valued at $25 million that was allegedly looted from a Jewish art dealer by the Nazis. Such episodes are the only glimpses that the public has into how much fine art is held in freeports.

Freeports aren't legally obliged to disclose what they hold. Swiss custom authorities presumably know, but won't disclose the value or nature of goods held in freeports. A 2014 finance ministry estimate put it at over 100 billion francs.

Freeports Cracking Down

Freeports have been in operation for years, but are only now increasingly coming into focus as part of a wider international crackdown on tax evasion. Swiss customs officials have tightened rules marginally – an owner of goods must be listed, but this may still be a shell company as in the case of the allegedly looted Modigliani.

But at least one freeport is now tightening the security checks to ensure clients aren't dealing in art looted during war. 

The president of Geneva Free Port, David Hiler, said that ancient artifacts would be checked more stringently for origin by an outside firm of specialists. More notably, the free port will require the beneficial owners of goods to be identified, as opposed to merely an entity or shell company, and a biometric tracking system will be employed within the freeport should be up and running by year-end.

Swiss Dithering

Official Switzerland's response to criticism of freeports has been remarkably mild: the government has in the past insisted that customs officials are too thinly staffed to conduct more spot checks of goods. Even embarrassing revelations like Modigliani's whereabouts in Geneva don't seem to be enough to persuade Switzerland to put more personnel or attention to the issue.