Publication Summary

Know Your Licensee: A Critical Pillar of AML Compliance in Free Zones

Free zones are home to thousands of businesses across diverse sectors, from DNFBPs to financial institutions. As international pressure on financial crime compliance intensifies, free zone authorities are being asked to demonstrate stronger, risk-based oversight of the entities they licence.

This briefing note explores how illicit activity can infiltrate free zones through opaque ownership structures, weak onboarding practices and insufficient ongoing monitoring. It highlights the importance of Know Your Licensee (KYL) as a practical framework to mitigate these risks and offers clear steps to enhance compliance while supporting trade and investment. Drawing on FATF recommendations, case studies and international guidance, the note sets out a proportionate approach to building KYL controls that reflect the complexity of the free zone environment and support long-term reputational resilience.

What's Inside

• Risks explained – How financial crime infiltrates free zones through TBML, shell companies, service-based laundering, tax evasion and sanctions breaches.
• Case studies – Including the Panama Colón Free Zone and the Waked Organisation, highlighting the reputational cost of weak KYL.
• Global standards & red flags – FATF, IMF, World Bank and UNODC frameworks on free zone vulnerabilities.
• AML compliance checklist – Covering governance, due diligence, UBO verification, PEP screening, monitoring and collaboration.
• Lessons learned – Why robust KYL and monitoring are essential for credibility and competitiveness.

What You’ll Learn

• How to design risk-based KYL controls suited to free zones.
• Due diligence essentials: CDD, EDD, PEPs and complex ownership structures.
• Balancing compliance with competitiveness to attract legitimate investors.
• The reputational stakes for FATF ratings and investor confidence.
• Tools to future-proof compliance: technology, automation, training, intelligence-sharing.

Who Is This For?

• Free zone authorities and regulators.
• Compliance and AML officers.
• Policymakers and government stakeholders.
• Investors and international businesses.
• Advisors and consultants.

Why Download This Briefing Note? 

• Stay ahead of FATF scrutiny and global AML/CFT standards.
• Apply KYL as a competitive advantage to build investor trust.
• Benchmark compliance with a practical checklist.
• Learn from real-world failures to avoid reputational damage.
• Position your free zone as a secure and resilient hub for trade.