Illicit Trade - Tobacco Reporter

French Customs Seize 40 Tons of Counterfeits

French Customs arrested two suspected members of a criminal gang and seized 40 tons of counterfeit cigarettes in the Marseille and Paris regions.

The criminal activities were conducted by an international criminal organization operating from Asia, according to Europol. The criminal group shipped counterfeit cigarettes by container from the Caribbean, the Middle East and Africa, impersonating the names of legitimate importers.

The commercialization of these cigarettes in France would have represented a tax loss of around €15 million ($16.06 million). The volume of cigarettes confiscated during this operation represents the equivalent of approximately 10 percent of the total seizures made by French Customs in 2021.

Europol facilitated the information exchange and provided specialized analytical support. On the action day, Europol deployed an expert to France to cross-check operational information against Europol’s databases in real-time and to provide leads to investigators in the field.

In 2020, Europol created the European Financial and Economic Crime Centre to increase synergies between economic and financial investigations and to strengthen its ability to support law enforcement authorities in effectively combating this major criminal threat.

May 27, 2022

Hong Kong Police Make First E-Cig Ban Arrests

Hong Kong police arrested two men, who are being held in custody under suspicion of selling and possessing a poison in Part 1 of the Pharmacy and Poisons Regulations as well as selling alternative smoking products, according to a report in the South China Morning Post. The arrests follow the implementation of a new e-cigarette ban.

The new law went into effect last weekend, banning the import, sale and manufacture of electronic cigarettes, heated-tobacco products and herbal cigarettes. Those caught breaking the law are subject to a maximum fine of HKD50,000 ($6,370) and six months’ imprisonment. Under the law, consumers are still allowed to use vaping products.

Police seized 94 boxes of suspected nicotine-containing electronic cigarette cartridges and 74 smoking devices from a mobile retail outlet in Mong Kok.

“The government appeals to smokers to quit smoking as early as possible for their own health and that of others,” said a Department of Health spokesperson.

May 6, 2022

Bahrain Launches Digital Stamps System

Bahrain’s National Bureau for Revenue (NBR) has launched a digital stamp scheme to track excise goods, including tobacco products, from manufacturing to the point of consumption, reports the Bahrain News Agency

The goal of the scheme is to protect consumers from counterfeit or illegal products, limit attempts to smuggle excise goods into the kingdom, and ensure the effectiveness of government revenue collection.

Implementation of the digital stamps will take place in phases in collaboration with Customs Affairs at the Ministry of Interior, the Ministry of Industry, Commerce and Tourism, and the Ministry of Health. There will be three phases. The first phase will focus on cigarette products. The second phase includes implementation on all imported products through customs clearance, and the last phase includes implementation in local markets.

Registration for the scheme is required by excise payers who import tobacco products and their relevant supply chain organizations from production to the release of the products to the local market, according to the NBR.

The NBR held two virtual workshops to help prepare stakeholders for successful implementation of the digital stamps.

April 13, 2022

Report: Counterfeiting Poses Serious Risk

The Intellectual Property Crime Threat Assessment 2022 report by the EU Intellectual Property Office and Europol shows that piracy and counterfeiting pose a serious threat to the European economy as well as people’s health and well-being.

Imports of fake and illicit goods reached €119 billion ($129.61 billion) in 2019, which represented 5.8 percent of all goods entering the EU zone.

More than 66 million counterfeit items were seized by EU authorities in 2022 as pharmaceuticals, food items, cosmetics and toys, among other goods, were targeted by criminals and counterfeiters who took advantage of the pandemic.

Tobacco products, too, feature prominently among counterfeited products.

April 12, 2022

Philippines: Illegal Cigarettes Cost Country Billions of Pesos

The Philippine government is losing about PHP26 billion in taxes annually due to illicit cigarettes, according to The Manila Bulletin.

About 13 percent of cigarettes sold in the Philippines are illegal, stated PBA Party-List Representative Jericho Jonas B. Nograles, citing a Euromonitor International report.

“Euromonitor estimates [that] in some areas in Mindanao, six of 10 cigarettes sold in retail are illegal,” Nograles said.

Outside Mindanao, illegal tobacco trade is prominent in Bataan (31.6 percent), Palawan (24.8 percent), Nueva Ecija (22.2 percent) and Zambales (11.5 percent).

In 2021, the Bureau of Internal Revenue (BIR) collected nearly PHP180 billion in excise taxes from the tobacco industry. The BIR also estimated that the government lost PHP3.8 billion in revenue from 2018 to 2021 due to illicit trade.

Meanwhile, the Customs’ apprehensions on illicit tobacco products reported foregone excise taxes of PHP2.9 billion from 2019 to 2022.

April 8, 2022

Illicit Trade Surges in South Africa

A new study by Ipsos shows that illegal cigarette trade has surged in the past year in South Africa.

Illicit trade exploded during a five-month ban on tobacco sales that was implemented to prevent the spread of Covid-19 during 2020. While the ban was lifted in August 2020, illicit trade continues to be significantly higher than it was before the measure.

The Ipsos study showed: four out of five stores in the Western Cape (80 percent) now sell cigarettes below the minimum collectible tax (MCT) rate of ZAR22.79 per pack, as do almost 70 percent of outlets in Gauteng, a significant increase compared to previous research; the number of garage forecourts across the country selling illicit cigarettes has quadrupled in the last year—despite the 2020 sales ban having been lifted; a single pack of 20 cigarettes is now on sale for as little as ZAR7 in many retail outlets nationwide.

The latest Ipsos study provides compelling evidence that criminals continue to dominate South Africa’s tobacco trade.

Johnny Moloto, general manager, BAT South Africa

“This is less than a third of the MCT and down even further from ZAR8, which was the lowest price found in the October 2021 study; and products bearing trademarks licensed to or owned by Zimbabwe-based Gold Leaf Tobacco Corporation and CarniLinx, a member of South Africa’s Fair-Trade Independent Tobacco Association, continue to win this illegal price war,” BAT South Africa (BATSA) wrote in a statement.

“The latest Ipsos study provides compelling evidence that criminals continue to dominate South Africa’s tobacco trade,” said BATSA General Manager Johnny Moloto. “These criminals are hiding in plain sight, robbing the fiscus of vital revenue when it is needed most. They are destroying legitimate businesses and jobs while national unemployment rates hit record highs.”

Tobacco Reporter covered South Africa’s struggle with illicit trade in-depth in its March 2022 issue (see “Damage Done“).

April 6, 2022

Survey: Smokers Happy to Buy Illicit Tobacco

Nearly three-quarters (71 percent) of participants in a poll among U.K. smokers bought illicit tobacco in the past year, according to a recent survey reported in Talking Retail.

The figure is down from 2019, when the same survey found that 78 percent of respondents said that they had bought illicit tobacco.

One challenge for the industry is that few consumers have moral reservations about purchasing illicit products. Sixty-eight percent of survey participants said they had no issue with buying tobacco this way.

Carried out by the Tobacco Manufacturers’ Association (TMA), the survey of 12,000 smokers also found that nearly one-fifth (19 percent) of respondents bought their illicit tobacco from social media sites.

“There is positive news in this year’s survey findings, with more people reporting illicit tobacco when they were aware of it—a major uplift to 32 percent compared with 17 percent in 2017—and a decline in people purchasing illegal tobacco in every region across the U.K., with the exception of London,” said Rupert Lewis, director of the TMA.

“However, the 2021 findings still highlight the continued widespread availability of illicit tobacco as well as the entrenched perception among many consumers that it is ‘acceptable’ to trade or buy illicit

April 5, 2022

Armenian Counterfeiters Arrested in France

Authorities dismantled an Armenian criminal gang in France, detaining 11 individuals and seizing more than 2.5 tons of counterfeit cigarettes, along with €100,000 ($111,689) in cash and €150,000 in winning lottery tickets, according to Europol. Four guns and various types of ammunition were also confiscated.

The investigation was completed by French Customs with support of Europol’s European Financial and Economic Crime Centre and the French National Police. They simultaneously searched 13 sites in and around Lyon, France.

The seized cigarettes were imported from different European countries before being stored in warehouses and then sold on the black market in multiple French cities.

March 30, 2022

Belgium Shuts Down Illegal Cigarette Factory

Belgian Customs, with the help of Europol’s European Financial Economic Crime Center (EFECC), raided and shut down an illegal cigarette manufacturing factory in a former pet hotel in Arlon, Belgium, according to Europol.

Belgian authorities seized the complete cigarette manufacturing machinery and arrested 14 workers, mainly from Eastern Europe. Also seized were 4 tons of tobacco and 2 million counterfeit cigarettes.

Additionally, 40 million counterfeit cigarettes were seized in trailers in an industrial area in Duffel, Belgium. These cigarettes were presumed to have been manufactured at the illegal factory in Arlon and were most likely destined for the black market in France and the U.K.

French Customs was also involved in the investigation, seizing over 25 tons of cigarettes and 16 tons of tobacco from the same organized crime group in the city of La Longueville.

March 18, 2022

British Authorities Seize Illicit Tobacco

Authorities seized 13 million illegal cigarettes and 4,300 kilos of hand-rolling tobacco across England and Wales, reports City AM.

The operation involved raids on homes and shops conducted by Her Majesty’s Revenue and Customs (HMRC) staff, Border Force officials, police and local authorities. The raids are part of a broader strategy aiming to tackle the government’s “three ‘tiers’ of criminality,” with HMRC shutting down illegal factories abroad and Border Force intercepting smuggled products and cash at the border.

Illegal trade costs the treasury £2 billion ($2.61 billion) each year. The government has implemented high and increasing tobacco tax, raising duty by 2 percent above the rate of inflation each year in order to discourage consumption and raise revenue. As duties have increased, though, illegal trade has also increased.

According to the European Anti-Fraud Office, 70 percent of U.K. consumers buy black market tobacco products because they are cheaper than legal products.

March 15, 2022

Category: Illicit Trade