Illicit Cigarettes: A

Global Pandemic

WHAT ARE THEY?

Illicit cigarette trade

Contraband: cigarettes smuggled from abroad without domestic duty paid

Counterfeit: cigarettes manufactured without authorization of the rightful owners, with intent to deceive consumers

Cigarettes smuggled with intent to evade tax (FATF 2013)

ILLICIT CIGARETTES

AROUND THE WORLD

10.7% of total tobacco

sales are ILLICIT$50 billion in global government revenues lost due to illegal cigarettes

385 billion cigarettes smoked

annually are ILLICIThttp://tobaccoatlas.org/industry/illicit_cigarettes/market_share/http://www.cbsnews.com/8301-201_162-57604573/atf-lost-track-of-420-million-cigarettes-watchdog-says/

Cigarette smuggling has become more profitable than drug trafficking

Malaysia has the highest

incidence of illicit cigarettes globally

34% of total market cigarettes are illicit (2012)

4 out of 10 cigarettes (9 billion sticks) smoked are

illegal

3rd highest cigarette prices in

ASEAN

http://tobaccoatlas.org/industry/illicit_cigarettes/market_share/http://www.cigaretteprices.netRejab, I. and Zain, Z. (2006) ‘Modus Operandi of Cigarette Smuggling’. South East Asia Tobacco Control Alliance, 1-44

Did you know?RM5

million gross income for

EVERY successful smuggling attempt

• Weak law enforcement • High profits, low penalties• Long coast lines facilitate easy smuggling via boat• Established local distribution networks

Rejab, I. and Zain, Z. (2006) ‘Modus Operandi of Cigarette Smuggling’. South East Asia Tobacco Control Alliance, 1-44

High Levels of Cigarette Smuggling in Malaysia due to…

DRIVERS OF ILLICIT

TRADE

Rejab, I. and Zain, Z. (2006) ‘Modus Operandi of Cigarette Smuggling’. South East Asia Tobacco Control Alliance, 1-44

ILLICIT CIGARETTE TRADE

LEADS TO…

1 in 7 young smokers (14-15 yrs) buy illegal cigarettes from private addresses (UK)

22% of youth smokers in Ontario and Quebec regularly smoke illegal cigarettes

50% of youth smokers purchase cigarettes in unbranded plastic bags

No age verificationAffordable (cigarettes are half the

price and can be purchased single) Easily available at private houses or

at street vendors

Increased Incidences of Youth Smoking

Callaghan et al. (2009); Mecredy (2013)

Cigarettes available at pocket money price

http://www.thestar.com.my/story.aspx?file=%2f2012%2f9%2f14%2ffocus%2f12024429

36.3% of boys in Malaysia (13-15) smoke

4.2% of girls in Malaysia (13-15) smokehttp://tobaccoatlas.org/fact_sheets/1925

ILLICIT CIGARETTE TRADE

IS A GLOBAL PANDEMIC

Illegal trade has social, economic, and health dangers

http://edition.cnn.com/2013/05/17/us/new-york-cigarette-ring/index.html

CNN report: Cigarette smuggling rings linked to terrorist funding

UK Press: IRA terrorists flood UK with potentially toxic fags

Reuters: Ukrainian smuggling tunnel to blame for human trafficking and contraband in Slovakia

Greek Press: Cigarette smuggling ring found to have Assad connections

Tobacco Asia: Illicit trade runs rampant in Malaysia

KPMG: Illicit Trade breaks another EU record for the 6th year in a row

http://www.tobaccoreporter.com/2013/05/illicit-trade-breaks-another-eu-record/

http://www.dailymail.co.uk/news/article-2336865/IRAs-cigarette-smuggling-millionaires-Former-terrorists-flooding-UK-potentially-lethal-fakes-cheating-taxpayers-billions.html

http://www.reuters.com/article/2012/07/19/us-slovakia-ukraine-tunnel-idUSBRE86I0ZO20120719

http://famagusta-gazette.com/massive-cigarette-smuggling-ring-may-have-assad-connections-p18504-69.htm

http://www.tobaccoasia.com/previous-issues/64-articles-q1-10/208-malaysia-struggles-to-curb-illicit-imports.html

World Customs Organization: Cigarette smuggling may be linked to terrorist organizations

http://www.wcoomd.org/en/topics/enforcement-and-compliance/activities-and-programmes/ef_tobaccoandcigarettesmuggling.aspx

http://edition.cnn.com/2013/05/17/us/new-york-cigarette-ring/index.html

CNN: Hamas and Hezbollah links found among NY smuggling ring

http://www.dailymail.co.uk/news/article-2336865/IRAs-cigarette-smuggling-millionaires-Former-terrorists-flooding-UK-potentially-lethal-fakes-cheating-taxpayers-billions.html

UK Press: IRA terrorists flood UK with potentially toxic fags

http://www.bbc.co.uk/news/uk-england-23086833

“Extensive customer base.” Sarah Smith (HRMC)

BBC: Dodgy cigarettes consumed by millions

http://www.telegraph.co.uk/news/uknews/1436306/Smugglers-under-10000-ceiling-will-escape-a-prison-sentence.html

Cigarette smuggling incurs LOW penalties, HIGH rewards despite considerable social, economic, and health harm

UK Press: Cigarette smuggling is a lucrative, low risk activity for smugglers

http://www.ottawacitizen.com/news/Police+break+alleged+tobacco+smuggling+ring/8554964/story.html

Canada: Clear link between drugs and tobacco smuggling

http://www.reuters.com/article/2012/07/19/us-slovakia-ukraine-tunnel-idUSBRE86I0ZO20120719

Reuters: Ukrainian smuggling tunnel contributes to human trafficking and illicit cigarettes in Slovakia

Fifteen suspected members of a massive cigarette smuggling ring.

Eleven containers stuffed with cigarette cartons, with a value of €100,000 have already left Famagusta to unknown destinations.

350 million illegal cigarettes still being sought by authorities.

Ship caught smuggling owned by member of Syrian president Bashar al Assad’s family.

http://famagusta-gazette.com/massive-cigarette-smuggling-ring-may-have-assad-connections-p18504-69.htm

Greek Press: Cigarette smuggling ring found to have Assad connection

http://www.tobaccoreporter.com/2013/04/pakistan-has-175-8-million-reasons-to-curb-smoke-smuggling/

Tobacco Reporter: Pakistan’s government crippled by illicit trade

2015 illicit trade expected to reach 27.1 billion sticks, with corresponding revenue loss of Rs21 billion

China Press: Youth recruited in cigarette smuggling activities

http://www.scmp.com/article/702243/arrests-double-trading-illicit-cigarettes

Malaysian Press: Fears rise increased excise duty may spur illicit tobacco trade

http://www.thesundaily.my/news/843338; Asia-11 Illicit Tobacco Indicator 2012Excise Duty Applied to Cigarettes (Malaysia)

Malaysian Press: Rural villages overrun with fake fags

http://www.theborneopost.com/2013/02/02/rm1-7-mln-largest-cigarette-bust-in-sabah/

The Star (2012)

Have significant societal consequences

Illicit cigarettes…Make smoking affordable to youth at pocket money price

Have clear links to organised crime

Are the most lucrative illicit activity and carries the least penalties

Inside Illicit

Cigarettes…

http://www.canada.com/victoriatimescolonist/news/canada/story.html?id=0b8b6e19-2b65-4b10-af51-aaacb5f81399

Illicit cigarettes have been found to contain:

NO regulation

NO quality control5X more cadmium

3X more arsenic

Low manufacturing

standardsDirt

Rat and mouse

droppings

Dead insects

http://www.canada.com/victoriatimescolonist/news/canada/story.html?id=0b8b6e19-2b65-4b10-af51-aaacb5f81399

http://www.canada.com/victoriatimescolonist/news/canada/story.html?id=0b8b6e19-2b65-4b10-af51-aaacb5f81399

Canadian Press: Insect eggs, mould, and human feces found in Illegal cigarettes

http://www.bbc.co.uk/news/uk-england-sussex-16786358

The Star 2011

BBC: Toxic risk of counterfeit cigarettes

This Issue Has been

Recognised by Governments

Worldwide

UK (1/09/2013): The Financial Times

http://www.ft.com/intl/cms/s/0/5d7b8b00-0fe3-11e3-a258-00144feabdc0.html#axzz2g5lPpB4W

• UK parliament home affairs committee investigates link between smuggling, organised crime, and paramilitaries

• Government enlists support from UAE to crack down on manufacturers in the Middle East

http://www.leinsterleader.ie/news/business/news/organised-crime-links-of-illegal-cigarette-trade-highlighted-at-naas-meeting-1-4838596

• Former Assistant Garda Commissioner highlights lack of public awareness on the link between organised crime and illegal cigarette purchase

Ireland (28/02/2013): Leinster Leader

EU (6/06/2013): Published Communication

http://ec.europa.eu/anti_fraud/documents/2013-cigarette-communication/1_en_act_part1_v9_en.pdf

• European Commission publishes strategy booklet detailing necessary steps for combatting cigarette smuggling and illicit trade

• Recommendations include securing supply chain, modernising infrastructure and strengthening enforcement at major entry points (e.g. Greece)

Australian Crime Commission

http://www.crimecommission.gov.au/publications/organised-crime-australia/2013-report/crimes-mainstream-economy

• The Australian Customs and Border Protection Service pursued legislative changes to increase the penalties available for tobacco smuggling

• The option of jail terms up to 10 years came into effect in November 2012

Malaysia (30/09/2013): Anti Illicit Trade of Tobacco Products Press Conference

Dato' Sri Mohamed Khalid Bin Yusuf, the former Director General of Royal Malaysia Customs Department, highlighted the need for close cooperation in tackling the issue."The Illicit trade in tobacco products is a global phenomenon involving trans-national criminal syndicates. Malaysia's long coastline and borders makes it an attractive target for the illicit cigarette trade. This trade seriously undermines Government revenue, and is linked to crime in our neighborhoods owing to its funding of other illegal activities. Addressing the problem requires strengthening international collaboration, a focused and coordinated approach among all national enforcement bodies, and mutual assistance between government, industry, and NGOs."

http://www.iticnet.org/Public/PublicDocLanding.aspx?id=41&type=Brussels

Global Initiatives to Combat

Illicit Trade

WHO: Protocol to Eliminate Illicit Tradeo International Treaty aimed at combatting illegal

tobacco trade via control of supply chain and international measure

o Parties commit to establishing global tracking and tracing system to reduce, and eventually eradicate illicit trade

o Protocol signed by representatives of all 6 WHO regions

http://www.who.int/mediacentre/news/releases/2013/fctc_20130110/en/

European Union: Stepping up the fight against illicit tobacco

o Aims to focus resources on addressing all aspects of the problem:

• Secure supply chain more effectively• Strengthen enforcement efforts through cross-

department and cross border information sharing

• Modernise infrastructure for better detection• Address major entry points and weaknesses• Increase effectiveness of penalties

http://ec.europa.eu/anti_fraud/documents/2013-cigarette-communication/1_en_act_part1_v9_en.pdf

UK: Get Some Answers about Youth Smoking Prevention and Support for Quitting Smoking

o Website created by The North England Tackling Illicit Tobacco for Better Health Programme

o Aims to inform and increase awareness of illegal tobacco, its impact, and consequences

o Website provides:• FAQs• Forums for discussion• Link to Crime Stoppers to report

illicit trade• Links to Quit Smoking resources

(NHS)

http://get-some-answers.co.uk/

Ireland: Retailers Form Body to Campaign Against Illicit Trade

o Established in 2009 by retailers fighting against illicit tobacco trade

o 3,000 members and 15 corporate sponsorso Aims to:

• To raise awareness about cigarette smuggling and illegal cigarette selling among the public, media, and political system

• To raise awareness about the effects of illicit tobacco on retailers

• To liaise with relevant law enforcement authorities

http://www.retailersagainstsmuggling.ie/

Singapore Customs: Don’t Get Burnt Initiative Highlighting Penalties for Illicit Trade

http://www.customs.gov.sg/insync/Issue10/spreadingthemessage.html

o To warn the public about the dangers and stiff penalties for activities involving tobacco trade

o Encourages citizens to report illegal activitieso Educates the public about identifying illegal cigarettes

through: Radio Cable Outdoor and print advertisements Roadshows Community engagement

o 30.4% decrease in number of illegal cigarette buyers caught

Royal Malaysian Customs: Educating Retailers and Public about ‘Rokok Tak Sah’

o Aims to educate retailers and the public about the penalties of buying and selling illicit cigarettes

o Brochures and newspaper advertisements deployed to raise awareness of identifying illegal cigarettes

o Customs officers increased enforcement efforts to seize illegal cigarettes and fine retailers facilitating sales to the public

http://www.customs.gov.my/

Convener of Hong Kong Fronts Campaign Against Illicit Tobacco

http://www.stopit.hk/?page_id=2&lang=en

o Advocacy organisation tackling the serious problems arising from the illicit tobacco trade in Hong Kong

o Represents those affected by illicit trade:• Small businesses• Trade associations• Individuals

o Aims to educate the public about social, economic and health dangers arising from illicit trade

Royal Canadian Mounted Police Publish Contraband Tobacco Enforcement Strategy

o Aims to nationally reduce the availability of, and decrease the demand for contraband tobacco

o Works with youth to prevent involvement in crimes as an offender or victim

o Prioritises reducing the threat of criminal terrorist activity in Canada

http://www.rcmp-grc.gc.ca/pubs/tobac-tabac/tobacco-tabac-strat-2008-eng.htm

How can you identify illicit

cigarettes in your area?

Illegal Cigarette Brands in Malaysia

http://get-some-answers.co.uk/what-is-illegal-tobacco.aspx

Illicit cigarettes may have one or more of the following:•No pictorial health warnings •Poor detailing on cigarettes•No tax stamps or security marks•Unlisted importer or manufacturer•Unregistered brands•Less than 20 cigarettes per pack•Unusual taste•Very cheap price

Identifying illicit cigarettes

Report any information to:• Local police • Customs • Crime Stoppers

In summary….The prevalence of illicit tobacco trade undermines all tobacco

control efforts—propagating societal and economic issues that need to be urgently addressed through global cooperation to

combat illicit trade.

Hopefully this document was able to illustrate the scale and severity of this global pandemic, and will support efforts to

combat illicit trade worldwide.

By: Wern Tze Chan, Coventry University

Get Informed on Illicit Tobacco Trade• http://geocurrents.info/economic-geography/global-patterns-of-tobacco-related-economic-issues• http://tobaccoatlas.org/industry/illicit_cigarettes/market_share/• http://www.cigaretteprices.net• http://www.who.int/mediacentre/news/releases/2013/fctc_20130110/en/• http://www.cmaj.ca/content/185/7/E287.full.pdf+html?sid=928e4611-57e7-415c-8a24-91451d482af0• http://www.cmaj.ca/content/181/6-7/384.full.pdf+html?sid=928e4611-57e7-415c-8a24-91451d482af0 • http://www.theglobeandmail.com/life/health-and-fitness/health/conditions/young-smokers-choosing-

contraband-cigarettes/article4268143/• http://www.mysihat.gov.my/v2/promosi/images/stories/pusatmaklumat/itcreport.pdf • http://www.thenews.com.pk/Todays-News-3-202410-Body-to-curb-sale-of-illicit-cigarettes• http://www.rcmp-grc.gc.ca/qc/nouv-news/com-rel/2012/10/121009-eng.htm • http://www.ontario.ca/illegaltobacco• http://www.health.gov.au/internet/yourhealth/publishing.nsf/Content/Phillip-Morris-Limited~Phillip-

Morris-Limited-5• http://www.keep-it-out.co.uk/home.aspx• http://www.stopillegalcigarettes.co.za/article/228• http://www.customs.gov.sg/insync/Issue10/spreadingthemessage.html• http://www.wcoomd.org/en/topics/enforcement-and-compliance/activities-and-programmes/

ef_tobaccoandcigarettesmuggling.aspx• http://www.wcoomd.org/en/topics/enforcement-and-compliance/activities-and-programmes/~/

media/WCO/Public/Global/PDF/Topics/Enforcement%20and%20Compliance/Activities%20and%20Programmes/Illicit%20Trade%20Report%202012/WCO%20REPORT%202013%20-%20BR.ashx

• http://www.thesundaily.my/news/834852