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Category: Illicit Trade

  • Report: Black Marketeers Continue to Evolve with Technology

    Report: Black Marketeers Continue to Evolve with Technology

    Tobacco smugglers and black marketeers are increasingly using technologies such as social media and drones to deliver cigarettes to smokers in Europe and avoid law enforcers, a report found.

    According to the 2024 KPMG study, produced annually and commissioned by Philip Morris Products SA, the illegal networks’ flexible strategies have helped illicit consumption increase 10.8% in the EU from 2023, with criminal groups shifting toward smuggling smaller packages, more often, via budget airlines, railways, and drones. They are also increasingly bypassing physical stores to sell directly to consumers on social media.

    The report showed that criminal groups are holding less inventory, which is reflected in a decrease in the size of illicit cigarette seizures as the gangs mitigate their risks and reduce the impact of raids by law enforcers. The more recent change in tactics follows another shift from 2020, when the groups moved production closer to end-markets, partly in response to the pandemic disruption, and also reducing the chance of detection.

  • Pakistan’s Illicit Cigarette Trade Surges to 58% of Market

    Pakistan’s Illicit Cigarette Trade Surges to 58% of Market

    The director of the Pakistan Tobacco Company (PTC), Asad Shah, voiced concern over the growing share of illicit cigarette trade in Pakistan, now estimated at 58% of the market. Speaking at a pre-budget media briefing, Shah highlighted that the total size of the cigarette industry in Pakistan stands at approximately 82 billion sticks annually. Despite this, only 34 billion sticks are currently taxed, a stark decline from 67 billion a decade ago.

    He emphasized the significant loss in potential tax revenue, stating that the sector could generate up to Rs 570 billion ($2 billion) annually. However, only Rs 292 billion ($1 billion) was collected during the fiscal year 2023-24, with Rs 223 billion ($781 million) received in the first 11 months of the current fiscal year.

    Shah revealed that while the legal cigarette sector holds just 42% of the market, it contributes a staggering 98% of the total tax revenue. He criticized the lack of penalties for violating minimum pricing laws, stressing that no policy can be effective without equal enforcement across the board. He also raised alarm over the sale of locally produced cigarettes without tax stamps, which undermines the government’s track-and-trace system.

    To address these issues, Shah proposed several measures, including a revision of the minimum pack price to counter the perception that cigarettes are inexpensive in Pakistan. He also recommended a significant reduction in the adjustable tax on cigarette filter material (acetate tow) from Rs 44,000 $154) per kg to Rs 4,000 (14) per kg to discourage smuggling. Authorities have already seized 450 metric tons of smuggled acetate tow this year.

  • Cross-Border Ring Dismantled, 25M Cigarettes Seized

    Cross-Border Ring Dismantled, 25M Cigarettes Seized

    Officials seized 25 million illegal cigarettes in western Romania and uncovered a connected clandestine factory in Italy in dismantling a cross-border smuggling network. Romanian and Italian investigators, backed by the European Anti-Fraud Office (OLAF), raided a warehouse and nine homes in Romania, in addition to the Italian factory.

     “As a result of the investigations carried out, in cooperation with law enforcement authorities from Italy (Guardia di Finanze), with OLAF’s support, the criminal network was dismantled,” the Directorate for Investigating Organized Crime and Terrorism in Romania) said in a press release.

    “Additionally, approximately 2,500 boxes of cigarettes were discovered and seized, while a clandestine factory was found in Italy, which was allegedly produced for the European illegal market and operated by Romanian, Moldovan, and Italian citizens,” the police said. 

    Romanian prosecutors ordered the detention of two people connected to the searches. They are being investigated for “establishing an organized criminal group and smuggling consisting of the collection, possession, transport, receipt, storage, delivery, distribution, and sale of goods or merchandise that must be placed under a customs regime, knowing that they originate from smuggling or are intended for smuggling.” At least six others were also detained.

  • FDA and CBP Seize $34M in Illegal E-Cigarettes in Chicago

    FDA and CBP Seize $34M in Illegal E-Cigarettes in Chicago

    The U.S. Food and Drug Administration (FDA) today (May 22) announced the seizure of nearly 2 million units of unauthorized e-cigarette products in Chicago, with an estimated retail value of $33.8 million. The seizures, which occurred in February of this year in collaboration with U.S. Customs and Border Protection (CBP), were part of a joint federal operation to examine incoming shipments and prevent illegal e-cigarettes from entering the country.

    During this operation, the team uncovered shipments of various illegal e-cigarette products, almost all of which originated in China and were intended for shipment to various U.S. states. FDA and CBP personnel determined that, in an apparent attempt to evade duties and the review of products for import safety concerns, many of these unauthorized e-cigarette shipments contained vague product descriptions with incorrect values. Upon examining shipments, the team found several brands of unauthorized e-cigarettes, including Snoopy Smoke, Raz, and others.

    “The FDA, working with our federal partners, can and will do more to stop the illegal importation and distribution of e-cigarette products in the United States,” said FDA commissioner Marty Makary. “Seizures of illegal e-cigarettes keep products that haven’t been authorized by the FDA out of the United States and out of the hands of our nation’s youth.”

    In the lead up to this operation, the joint FDA and CBP team identified potentially violative incoming shipments and completed other investigative work. The team was also able to successfully implement several new internal efficiencies and procedures, building off previous operations.

    “We continue to see an increased number of shipments of vaping-related products packaged and mislabeled to avoid detection,” said Bret Koplow, acting director of the FDA’s Center for Tobacco Products. “However, we have been successful at preventing these shipments from entering the U.S. supply chain – despite efforts to conceal the true identity of these unauthorized e-cigarette products.”

    Most shipments violated the FDA’s Federal Food, Drug, and Cosmetic Act, while some products were also seized for Intellectual Property Rights violations for unauthorized use of protected trademarks. All of the e-cigarette products seized in this operation lacked the mandatory premarket authorization orders from the FDA and therefore cannot be legally marketed or distributed in the United States.

    Standard practice for products forfeited to the government include disposing of the products in accordance with the law. In the case of unauthorized new tobacco products, including e-cigarettes, that generally means they will be destroyed.

    FDA also sent, for the first time, import informational letters to 24 tobacco importers and entry filers responsible for importing these illegal e-cigarettes. The letters advise the recipients that it is a federal crime to make false statements or entries to the U.S. government, and the FDA seeks information on the steps they have taken to ensure compliance with applicable federal tobacco laws and regulations. Specifically, the letters advise the firms to ensure their import entries contain complete and accurate information moving forward. Failure to do so may also be viewed as an intentional attempt to circumvent the FDA’s review of the shipment. Firms are requested to respond to the letters within 30 days with the requested information.

  • PMI India Pushing T&T to Curb Illicit Trade

    PMI India Pushing T&T to Curb Illicit Trade

    Philip Morris International Inc.’s India affiliate, IPM India, today hailed India’s decision to roll out pack-level Track and Trace (T&T) as a game-changing move against illicit tobacco trade and a major step toward modernizing regulatory enforcement. Approved under Section 148A of the Central Goods and Services Tax (CGST) Act, this is a move to protect revenue, tighten enforcement, and bring greater transparency and accountability to India’s tobacco market. Starting with cigarette packs, the government has chosen a high-impact strategy to curb illicit tobacco trade. The proposed mechanism may incorporate Unique Identification Markings on packs, which will enable enforcement agencies to easily distinguish tax-paid products from illegal ones—strengthening oversight across retail shelves, supply chains, and field operations. The proposed T&T mechanism will be a practical, real-world solution designed for immediate impact—and a critical foundation for a more modern, technology-driven regulatory system.

    Similar systems have been successfully deployed in UK, Russia, Jordan, Gulf Cooperation Council (GCC), where PMI has worked with national authorities to build scalable, locally adapted traceability frameworks. Across all markets, the outcome have been consistent: better visibility, stronger compliance, and measurable reductions in illicit trade.

    “This is a landmark reform and a visionary step towards a cleaner, more modern, and a transparent market,” Navaneel Kar, Managing Director, IPM India said. “With thoughtful execution, India’s T&T system can reshape the fight against illicit tobacco trade—boosting public trust, strengthening government revenues, and accelerating the modernization of enforcement practices. Eliminating illicit tobacco trade has been a longstanding priority for us and remains integral to our broader efforts in driving operational excellence and building a sustainable future. PMI has long invested in technologies that protect supply chain integrity globally, and we are committed to partnering with the Indian government to make this initiative a success.”

  • Hungary Dismantles $67M Illegal Cigarette Network

    Hungary Dismantles $67M Illegal Cigarette Network

    The largest illegal cigarette manufacturing network ever uncovered in Hungary has been dismantled by the country’s National Tax and Customs Administration (NAV). Coordinated raids at 41 locations in May led to the seizure of over 24 billion forints’ ($67 million) worth of contraband tobacco products and equipment, NAV said in a statement.

    Authorities confiscated 156 tons of tobacco, enough to produce 13 million packs of cigarettes, 1 million packs of counterfeit cigarettes, 48.5 million empty cigarette boxes, three full cigarette production lines, processing machinery, forklifts, packaging equipment, and radio-jamming devices.

    The estimated budget loss in excise and VAT would have reached 81 billion forints ($226.8 million) had the goods entered the market.

    Six suspects, one Hungarian and five dual Moldovan-Romanian citizens, have been detained and formally charged with organized tax fraud. One additional suspect is still at large and the subject of an arrest warrant.

  • Reno Reporters Stumble into Counterfeit Zyn

    Reno Reporters Stumble into Counterfeit Zyn

    News 4-Fox 11 in Reno, Nevada, is reporting its investigation that found counterfeit Zyn products for sale at a local convenience store that looked identical to the legitimate brand. Last October, an employee of the station bought three cans of “Zyn,” which he said tasted different than usual. The cans were sent to McKinney Specialty Labs in Virginia for testing.

    “They really are misbranded and illegally on the market,” Dr. Roxana Weil, chief regulatory science officer at McKinney, said. The tested product only contained 4.5mg of nicotine, contrary to the 6mg advertised, and additionally contained six methyl nicotine, an additive that should not have been in there. The lab only tested for nicotine, so it’s unclear what else could be in the counterfeit product.

    Dr. Willie McKinney, CEO of McKinney, said, “It was a little bit of a surprise to see six methyl nicotine simply because it’s manufactured. It’s man-made.”

    Representatives from Philip Morris International, the makers of Zyn, and the store owner believe the counterfeit products likely came from a distributor.

    “Our findings are that these are produced from overseas,” said Brian Weinhaus, director for illicit trade at PMI. “They are not produced in the United States.”

  • Finland Seizes 10M Cigarettes in Transnational Network Case

    Finland Seizes 10M Cigarettes in Transnational Network Case

    Finnish Customs has uncovered a large-scale cigarette smuggling operation involving more than 10 million cigarettes illegally brought into the country, with unpaid import duties exceeding €3.5 million, according to the Helsinki Times. Authorities said the cigarettes were transported using regular logistics channels in a way that closely mimicked legitimate cargo operations. The shipments were ordered, collected, and stored through standard delivery procedures to conceal their illicit nature.

    “The pick-up, transport and storage of illegal goods was ordered just as in a legal delivery,” said Janne Mikkonen, the customs officer leading the investigation. “In this case, all of the imported cigarettes were brought in by the same driver, who is one of the suspects and remains in pre-trial detention.”

    The case is linked to a broader criminal investigation that began last autumn that has grown into a transnational case involving multiple suspects and law enforcement agencies. Four suspects from Baltic countries are currently in custody in Finland, and additional arrests have been made in Estonia and Latvia, where several individuals are being held in connection with the operation. Customs officials have not ruled out further arrests and say the investigation is ongoing. The operation is considered part of an organized network that exploited legal transport systems to distribute untaxed tobacco products across borders.

  • Australian Police Seize $14M in Tobacco Smuggling Bust

    Australian Police Seize $14M in Tobacco Smuggling Bust

    South Australian police said two men were arrested as they seized more than 7 million cigarettes, 3.9 tons of loose tobacco, and A$9 million ($5.8 million) in cash, combing for what officials said totaled a A$22 million ($14.1 million) bust.

    On May 6, Eyre Western Police stopped a vehicle containing a large quantity of illicit tobacco products. Further investigation led detectives to search an industrial premises in Adelaide’s northern suburbs, which was allegedly being used as a statewide distribution warehouse supplying retail outlets with illicit tobacco products.

    Detective chief inspector Brett Featherby said the confiscation of products, assets, and cash would result in a “significant disruption to the criminal syndicates operating in South Australia.”

    The bust follows a $1.5m seizure of illegal tobacco and $444,000 in cash in Mid North and Eyre Peninsula raids in April.

  • South Africa: Corruption and Illicit Trade Threaten Economic Stability

    South Africa: Corruption and Illicit Trade Threaten Economic Stability

    Philip Morris South Africa (Pty) Ltd (PMSA) welcomed the release of the 2025 Illicit Trade Environment Index by the Transnational Alliance to Combat Illicit Trade (TRACIT), a global benchmark report aimed at providing an update on the set of legal, regulatory and policy recommendations designed to strengthen the fight against illicit trade around the world.

    The Index ranks 158 countries based on their structural resilience to illicit trade—across sectors including tobacco, alcohol, pharmaceuticals, digital commerce, and fast-moving consumer goods—and highlights how systemic challenges such as gaps in enforcement and regulatory inconsistencies can contribute to the growth of the global black market. South Africa ranks 60th out of 158 countries, indicating moderate resistance to illicit trade, but with notable vulnerabilities in areas such as supply chain control and enforcement capacity.

    “Illicit trade is not a victimless crime. It deprives the government of critical revenue, fuels organized crime, and puts legitimate businesses at a disadvantage,” said Philippe Van Gils, Director of Illicit Trade Prevention at Philip Morris International. “The TRACIT Index reminds us that a comprehensive approach is required, one that addresses corruption, strengthens enforcement, and ensures regulatory frameworks are both appropriate and effectively implemented.”

    PMSA echoed TRACIT’s call for evidence-based and risk-proportionate regulation. “In the tobacco sector, high excise taxes and overly restrictive product policies can unintentionally incentivise consumers to turn to unregulated, illicit alternatives,” the company said.

    “Policies must be crafted with the real-world impact in mind,” Van Gils said. “Excessive taxes on cigarettes without access to scientifically substantiated less harmful, affordable, and legal alternatives merely encourage the illicit market. A risk-based taxation model, where smoke-free products like heated tobacco are taxed significantly lower than cigarettes, can encourage adults who smoke to switch to better smoke-free alternatives.”

    PMSA supports TRACIT’s multi-pronged policy roadmap to improve countries’ ability to detect, deter, and dismantle illicit trade operations. PMSA is urging the South African government and private sector stakeholders to prioritise the following:

    •             Crafting a national anti-illicit trade strategy, integrating smart tax policies, robust regulatory enforcement, and corruption safeguards;

    •             Strengthening border control and customs capacity, particularly at high-risk points such as ports and Free Trade Zones;

    •             Securing supply chains with digital track-and-trace systems and enhanced due diligence requirements for manufacturers and logistics providers;

    •             Enhancing cooperation between government, law enforcement, and the private sector, both nationally and regionally;

    •             Educating consumers on counterfeit and smuggled products.

    “Illicit trade networks are complex, well-funded, and increasingly digital,” said Van Gils. “It’s no longer enough to raise taxes or regulate products, we need modern enforcement tools, better online regulation, and a serious crackdown on corruption.”