Category: Illicit Trade

Pakistan Tobacco Trims Output as Illicit Trade Booms After Tax Hike

Photo: Taco Tuinstra
Pakistan Tobacco Co. (PTC) is scaling back production as it struggles to compete with illicit tobacco sales, report Pakistan Today and The Express Tribune.
In a letter to the Federal Board of Revenue, the company stated its intention to re-export four cigarette making machines due to a decline in sales volume. The company has reportedly already shut down eight of 10 production lines at its Jhelum facility.
The move comes in the wake of a steep tobacco tax hike. In February, Pakistan increased the federal excise duty by more than 200 percent, driving smokers to cheaper untaxed locally manufactured tobacco products and smuggled cigarettes. In March, production of duty-paid tobacco products plunged 50 percent, according to the Pakistan Bureau of Statistics. The overall large-scale industry, by contrast, suffered only a decline of 25 percent in the production of duty-paid products.
According to PTC representatives, volumes of duty-not-paid cigarettes and smuggled cigarettes have shot up 32.5 percent and 67 percent, respectively since January. This has bumped the illicit sector’s share to more than 42.5 percent of Pakistan’s total tobacco market.
In 2022-2023, the share of legitimate tobacco sector was 41.4 billion sticks while the illicit sector sold 41.6 billion sticks. Observers expect the February tax hike to hand an additional 11.8 billion sticks to the black market in 2023-2024.
PTC Senior Business Development Manager Qasim Tariq said that, as a result of the tax hike, the government would for the first time in Pakistan’s history lose more tax income to the illicit sector than it earned in revenue from legitimate companies.
“If the current fiscal regime prevails, damage to the national exchequer as well as the legitimate industry will be immense and tough decisions will have to be taken,” he cautioned.
A track-and-trace system to help combat illegal tobacco sales has been delayed by legal challenges and other setbacks.
May 22, 2023
Finland and Estonia Investigate Smuggling

Image: Oleksii
Finland and Estonia are investigating a criminal case involving the illegal import of millions of cigarettes into Finland from Estonia and Latvia, reports The Baltic Times.
By failing to declare imports and pay taxes, Finland missed out on approximately €2 million ($2.18 million) in revenue, according to fiscal authorities.
Finnish and Estonian law enforcement officers recently seized two freight consignments containing a total of almost half a million cigarettes. The seizures are part of a criminal case estimated to involve the illegal import of about 6 million cigarettes spread over more than 20 different occasions between March and December 2022.
Some of the cigarettes were found to be counterfeit products.
During the criminal investigation, five persons have been apprehended in Finland and Estonia.
Sanctions on Russia and the sharp fall in traffic across Finland’s eastern border have shifted many illegal imports to postal and express freight transport, the Finnish customs authority reports.
May 12, 2023
Ukraine Steps Up Crackdown on Illicit Trade

Photo: vanSemenovych
Since the start of the war with Russia, Ukraine has dismantled at least six illegal cigarette factories, reports EUreporter. These illegal facilities were found to be well-equipped operations that used relatively new cigarette machinery.
When Ukrainian President Volodymyr Zelensky took office in 2019, he announced an ambitious agenda to combat the illicit tobacco trade, stating that defending a 1,500 km border with the European Union against cigarette smuggling would be a key task as illicit tobacco trade has close connections to criminal activity, organized crime and other areas of black market trade.
However, since Ukraine’s war with Russia began in February 2022, illicit tobacco trade increased due to factors including the deteriorating economic situation, disruption of logistical channels, lower purchasing power due to inflation and a tobacco product excise tax increase. Due to the illegal cigarette trade, Ukraine has estimated that it lost over €375 million ($443.3 million) in 2021 and almost €500 million in 2022.
Other methods to battle illicit trade have included central coordination at the highest administrative level, intensified cooperation with EU member states, the strengthening regional and international collaboration, the vetting of the civil service, stronger control of customs and border inspectors, strengthening of police forces and legislation, and awareness campaigns for consumers.
May 8, 2023
Philippines: Seized Cigarettes Destroyed

Image: Tobacco Reporter archive
Seized fake cigarettes, raw materials and cigarette manufacturing machines were destroyed in a fire that affected three warehouses in Porac, Pampanga, Philippines, reports The Philippine Star. The items were worth about PHP4.8 billion ($86.8 million). The fire burned for 15 hours despite efforts from firefighters.
The Bureau of Customs and the Bureau of Internal Revenue had seized the destroyed items in raids across the country over the past several years. The warehouses were used as storage for what would later be used as evidence against suspects charged in court.
The warehouses are owned by Digama Waste Management Services and Greenleaf 88 Nonhazardous Waste Disposal.
May 3, 2023
Filipinos Warned Against Disposed Cigs

Image: Andrii Yalanskyi | Adobe Stock
The Philippines Bureau of Customs (BOC)-Port of Zamboanga has warned the public against buying cigarettes that have disposed of by the agency, reports the Philippine News Agency.
The confiscated smuggled cigarettes are sprayed with pesticides, according to Mike Lanza, the customs intelligence and investigation service chief of BOC-Zamboanga.
“Hundreds of people were waiting to salvage packs of cigarettes,” Lanza said, referring to a large-scale destruction of illegal cigarettes completed on April 28, which took place at a sanitary landfill in Barangay Salaan in Zamboanga City. “The drivers of the dump trucks had to stop to avoid accidents.”
According to the BOC, individuals will pay scavengers for each pack of cigarettes they can recover. “They sell the cigarettes to community sundry stores at cheaper prices,” said Arthur Sevilla, BOC-Port of Zamboanga acting district collector.
The confiscated cigarettes are drenched in water and repeatedly crushed by heavy equipment, but scavengers search for packs that may have managed to stay dry.
May 1, 2023
Philippines Government Ends Illegal Online Sales

Image: Tobacco Reporter archive
The Philippines government is set to remove 15,000 more noncompliant electronic cigarette sellers in online marketplaces, reports The Philippine Star.
“We have monitored almost 15,000 sellers online,” said Ruth Castelo, trade undersecretary. “We’ve advised platforms to remove almost 15,000 we observed that were noncompliant. These sellers all have cases already.”
Unregistered vapor products are subject to the Vape Law, which came into effect Dec. 28, 2022, and prohibits flavors, colorful caricatures on packaging and selling products within 100 meters of schools, among other restrictions.
“If online platforms would just strictly follow, there is no need to remove the sale of this product from them,” said Castelo. “It’s already indicated which products they can’t sell, but some still evade detection.”
April 28, 2023
Unfit for the Counter
Unwrapping the issue of counterfeit and noncompliant vapes
By Lee Bryan
Photo: uliab
It feels as though you can’t check the news these days without reading about rogue traders dishing out vapes to kids or stumbling across the latest report about Trading Standards—the U.K. authority charged with enforcing consumer protection legislation—seizing a few thousand counterfeit devices.
National newspaper headlines about youth vaping and environmental damage have changed public perceptions on the reduced-risk product, and evidence shows that many people wrongly believe vapes are equally or more harmful than cigarettes, leading some smokers to decide against making the switch.
The U.K. government has historically been pro-vaping, taking an evidence-based approach and encouraging smokers to switch as part of its smoke-free 2030 ambitions. However, a minority within the industry who flout the law and put their profits above all else are putting all of this at risk for the sake of their own greed.
The vape sector is primarily a community of well-intentioned retailers, manufacturers, distributors and activists whose main priority is to help adult smokers move away from combustible tobacco, and as the head of a leading vape compliance firm, I’ve seen this firsthand.
The unscrupulous sellers, who provide so much ammunition to the mainstream media, are as much at odds with the rest of the harm reduction community as they are with regulators and health officials. They must be stopped before they take vaping from being one of the most popular and effective stop smoking tools available in the U.K. to public enemy No. 1.
Where Are Brands Falling Short?
As a leading authority on vape regulations, we at Arcus Compliance understand how complex the road to a compliant status can actually be and recognize the challenges of meeting legal obligations.
Even those with the best intentions can fall foul of regulations if they don’t have the right knowledge, and our job is to help them navigate this often difficult terrain.
In fact, we conducted an industry-wide analysis that uncovered the most common ways that vaping products fall short of regulatory requirements. These included:
inadequate checks to ensure e-liquid recipes do not contain inappropriate substances in specific markets;
copying competitors’ labeling;
notifying the wrong product type to the regulator;
reusing former identifier codes for new products; and
lacking systems for tracking adverse safety events.
In many cases, these can be put down as simple mistakes, but errors like these can make the regulatory process more expensive and complicated for brands.
They can also bring a product’s journey to approval to a grinding halt and land it in hot water with the Medicines and Healthcare products Regulatory Agency (MHRA), the body responsible for overseeing the U.K. market.
It’s critical that brands avoid these common pitfalls and ensure their vape products are up to standard across the board, especially when tensions over industry compliance are so high.
Wholesalers and retailers must also step up and play a role here by demanding only the highest levels of compliance from products and brands, not only to protect their own reputations but also the reputation of the entire sector.
Recognizing the need for further regulatory support in the industry, Arcus Compliance recently teamed up with distributor Phoenix 2 Retail to deliver a “Pre 2 Post-Market Compliance Testing Program.”
This collaborative effort aims to support and maintain industry standards while also encouraging the evolution of policies that raise the bar when it comes to responsibility.
Sadly, there’s no denying that a small pool of traders are knowingly going against the law to line their own pockets—typically by selling to minors or pedaling youth-appealing products.
They cast a dark cloud over our industry and deserve to feel the full force of the law, which is why I welcome the recent comments of Neil O’Brien, the parliamentary under-secretary of state at the Department of Health and Social Care, to clamp down on regulatory noncompliance, set up a Trading Standards “flying squad” to enforce the rules and tackle illicit vapes and underage sales and to set up a national test purchasing scheme—something for which the U.K. Vaping Industry Association has long been advocating.
Policies like these represent a significant forward step in combatting the noncompliant sector, and I’m confident that they can be the foundation on which we can level up accountability and responsibility in the U.K. vaping arena.
By coming down hard on those who flout the law, policymakers can protect young people, prevent underage sales and allow the compliant vape industry to thrive.
Where Does Policy Need to Go From Here?
While the government’s renewed determination to stop rogue traders and prevent youth access is wholly welcome, we can’t allow ourselves or our politicians to make the mistake of thinking the problem is now solved—the reality is that we are a long way from the finish line.
If nothing else, lawmakers should take onboard other recommendations put forward by the UKVIA, including increased fines of up to £10,000 ($12,409) per instance for those caught selling to minors and a retail registration scheme.
It’s also high time we reviewed the arbitrary limit on e-liquid volume for vapes. If we were to increase this from the current legal maximum of 2 mL to a more substantial 10 mL, we could make e-cigarettes far too expensive for young people to buy while ensuring vapes remain competitively priced against cigarettes.
More urgently, regulators need to tighten their grip around product and packaging by introducing more checks during the market approval process.
It still amazes me that brands don’t have to upload any pictures to the MHRA when they apply for permission to sell in the U.K., and making this one, relatively small, adjustment could make a big difference to the compliance issue by preventing products with child-appealing imagery—i.e., cartoon characters and copycat candy designs—from ever making it onto the shelves.
Preemptive strategies like this will help wash away vapes that are blatantly trying to catch the attention of kids, reaffirm the industry as adult-focused and could prove to be an invaluable tool in the fight to eliminate youth use and underage access.
The government must now build on the new momentum brought forth by its newly announced measures by engaging in conversation with industry experts and implementing balanced policies that target the illegal market while supporting vaping as a public health tool.
Regulators, retailers, health officials and advocates together are perfectly positioned to pioneer a new age of vape compliance—I only hope we can seize this critical opportunity.
Lee Bryan is the CEO of Arcus Compliance.
April 25, 2023
Singapore Officials Seize Vaping Products

Image: Zerophoto | Adobe Stock
Authorities in Singapore seized more than 85,000 vaping products in a warehouse raid conducted by Singapore’s Health Sciences Authority (HSA), reports Channel News Asia.
This is the largest seizure of e-cigarettes and other vaping products by HSA, surpassing a haul in 2021 where more than SGD2.2 million ($3 million) worth of products were confiscated, said HSA and the Singapore police in a joint press release. The latest seizure has an estimated value of more than $5 million.
The raid was the result of HSA following up on leads from investigating a group of people suspected of selling illegal vaping products.
On March 28, six individuals were detained by the police at a multi-story car park at Block 592 Montreal Link. “The driver of a van was allegedly found to be distributing parcels containing e-vaporizers to five persons purportedly assisting in the delivery to buyers,” said the authorities.
Under the Tobacco (Control of Advertisements and Sale) Act, it is an offense to import, sell or distribute vape products.
Those found guilty for the first time can be fined up to SGD10,000, jailed for up to six months or both.
Subsequent offenses double the penalties to a fine of up to SGD20,000, a jail term of up to a year or both.
Vaping is illegal in Singapore. The purchase, use and possession of all vaping products are also prohibited.
April 3, 2023
Fines and Jail for Undeclared Manufacture

Image: MasterSergeant | Adobe Stock
A Belgian court handed out fines and prison sentences to several companies and individuals for undeclared cigarette manufacturing, reports The Brussels Times.
The illegal cigarettes were manufactured and stored in a warehouse in Gosselies that was placed under surveillance in 2022. Another warehouse was discovered in a furniture factory in Anderlecht.
A truck carrying 16 pallets of undeclared cigarettes manufactured in Belgium was checked near Jabbeke.
The company running the Gosselies manufacturing was fined €36,710,000 ($39,580,338), and its head was also fined that amount as well as receiving a one-year prison sentence.
Another company was fined €36,710,000 along with a suspended prison sentence for the amount exceeding €36,600,000. All manufacturing and transport equipment was confiscated.
The other accused were fined €36,710,000 and received suspended prison sentences of six months, nine months and two years for the amount exceeding €36,600,000.
March 21, 2023
Call for Action Against Noncompliant Vapes

Photo: zef art
The Chartered Trading Standards Institute (CTSI) has called for stronger actions against noncompliant vape products in the U.K., reports Convenience Store.
Stating that the rise in noncompliant products is “getting out of hand,” the CTSI has asked for “clearer direction from government” and greater resources to fight the noncompliant trade.
The CTSI has also suggested that manufacturers publish batch numbers of noncompliant products and introduce restrictions to stop youth vaping, including prohibiting cartoon characters or light-up vapes, restrictions on packaging colors and the promotion of vapes on social media platforms such as TikTok. The group also suggested looking at where the products are positioned in stores and increasing the sanctions available for those producers, suppliers retailers who don’t comply with the law.
Vaping industry representatives applauded the CTSI’s position. “We share the CTSI’s concern over the growth in illicit and underage vape product sales and fully support their call for more resources,” the U.K. Vaping Industry Association said in a statement.
“We also agree wholeheartedly that restrictions need to be explored to address youth vaping without impacting on adult smokers who wish to switch to vaping in order to quit their habits.
“That’s why we are leading the way in forming a Youth Access Prevention Taskforce to develop detailed proposals to deal with the situation, and these include on-the-spot fines of up to £10,000 ($12,176.32) per instance for retailers who are found to be selling to minors and for selling illicit products; a national registration scheme for all retailers, meaning only those outlets that meet qualifying criteria can legally sell vapes; and a national test purchasing scheme that will ensure constant monitoring of retailers’ selling vapes to ensure that they are not turning a blind eye to purchases involving minors.
“Critical to the success of our proposals will be a ramping up of enforcement, and this requires major funding in resources on the ground.
“By Trading Standards’ own admission, resources are sadly lacking, and the government needs to step in and look at this situation as a matter of urgency. Our proposals are designed to support this funding need as monies will be raised from the fines and registration scheme.
“We will be presenting our proposals to government and parliamentarians at the end of March.”
March 13, 2023