Free trade zones exist in most trading economies and handle an enormous share of legitimate commerce. The feature relevant here is that goods inside a zone are, for customs purposes, often treated as not having entered the country, so the ordinary import declaration that would fix their description and origin is not made.
FATF’s trade-based money laundering work identifies zones as a recurring weak point precisely because records of what entered and what left can be held by the zone operator rather than by customs, and are not always reconciled.