Illicit cigarette trade
The illicit cigarette trade is defined as "the production, import, export, purchase, sale, or possession of tobacco goods which fail to comply with legislation" by the intergovernmental Financial Action Task Force (FTFA).
[4] Interstate 95, a highway traversing the East Coast of the United States, came to be known informally as "New Tobacco Road"[citation needed] when it became a favorite cigarette-smuggling route.
[5] Low costs of production and high levels of demand make illicit cigarettes one of the world's most trafficked illegal goods.
Illicit trade remains prevalent in Malaysia due to its long coast lines, which allow for shipments to be sent from neighbouring nations, such as kreteks from Indonesia, into the East Malaysian states of Sabah and Sarawak.
[9] Smugglers have also become increasingly more efficient in unloading, storing, and distributing smuggled cigarettes quickly in local villages; whilst avoiding customs officers.
The implementation of the Plain Packaging Act of tobacco products in 2012 in Australia has sparked debate on its efficacy on reducing the incidence of smoking among youth.
Organised crime syndicates garner wide reach through diverse distribution channels in the form of small retailers and street vendors.
Beyond these traditional distribution channels, the resale of tobacco products on the Internet is being actively developed—enabling greater reach, more discretion, and lesser chances of being caught.
[14] In 2012, French police disrupted this trend through deleting domain names of online trading sites selling tobacco products.
[14] Evidence suggests tobacco smuggling operations have been linked to terrorist organisations such as Hamas and Hezbollah, which utilize these profits to finance terrorism around the world.
Billingslea wrote, terrorist groups work with organized crime groups as well as International drug trafficking organisations due to their "established trafficking routes and business contacts for the transfer of commodity for profit", He adds, known and suspected Hezbollah and Hamas members have established front companies and legitimate businesses in the cigarette trade in Central and South America.
One criminal in particular, had known financial ties to Omar Abdel-Rahman, a cleric serving a life sentence for a conspiracy to blow up New York City landmarks.
Similarly in Hong Kong, police arrested 1,200 individuals from a wide range of gangs for drug trafficking, illegal possession of arms, and contraband cigarettes.
UK border officials have revealed that close to 50 million cigarettes are seized each month from girls as young as 15, who were given flights to Spain, accommodation and pocket money.
Illicit cigarette trade not only deprives the government of a key source of tax revenue, but also creates an imbalance in the market for legitimate industry players who operate within stringent regulations.
In Asia-Pacific (and globally) Malaysia ranks as the country with the highest share (45%) of illicit cigarettes in the total market, followed by Hong Kong (35%), and Pakistan (26.7%) in the Asian continent.
[21] Although illegal cigarettes have been associated with low-income groups, its low price and accessibility also makes it attractive to smokers in general due to increasing tobacco taxes, and affordable for youths—who have lower disposable income.
This resulted in the withdrawal of major international tobacco firms, and a tax loss of $63 million due to the proliferating illicit market.
Tobacco Atlas estimates that if illicit trade was eliminated, $31.3 billion in tax revenue would be gained, and 164,000 premature deaths would be avoided annually due to higher average cigarette prices.
[22] The WCO recommends placing greater importance on information collection and sharing on a national and International level in order to develop strategies to respond to this threat.
[14] Costs of illicit trade also go beyond purely financial measures, with repercussions such as encouraging youth uptake of smoking, and increasing health risks for consumers, as illegal cigarettes are not bound by product and ingredient checks.
[25] The study adds illegal cigarettes were responsible for providing an accessible alternative to quitting,[26] and for youth in particular, encourages initiation and continuation of smoking over the long term.
[27] In May 2016, it is estimated that possibly 14.3 percent of tobacco consumed in Australia was bought through the black market and the cost in loss of revenue earned from taxes each year was $1.4 billion.
[35] In 2017, it was estimated that total losses of the member states of the EU due to smuggling from Belarus amounted to roughly EUR 1 billion every year.
[30] The country is the host of several case of "white" smuggling mainly from Belgium to France / United Kingdom due to their lower taxes (which makes up to 50% less expensive).
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[4] It may be associated with other criminal activity, for example: In the Republic of Ireland, cigarette prices are amongst the highest in the world due to heavy excise tax: typically €15 (US$12.70, £9.70) for a pack of twenty.
A 700-meters smuggling tunnel with a narrow gauge railway was revealed in July 2012 between Uzhhorod (Ukraine) and Vyšné Nemecké (Slovakia), at the border of the Schengen Area.
This is true with all psychotropic substances and, indeed, all forms of vice that may be desirable to individuals: the more the state or even the national government tries to repress the trade in any legal or illegal substance, the higher the prices, and with them the profit margins, become—and the greater the willingness of illicit marketers to meet the demand, and with it the willingness to commit other violent crimes to prevent the closure of the illicit markets, becomes.
This published report prioritises reducing the threat of criminal terrorist activity in Canada through effectively addressing contraband activities, disrupting organized crime groups, and enhancing intelligence gathering and sharing[69] Rokok Tak Sah (Malaysia) – Launched by Royal Malaysian Customs, this campaign is aimed at educating retailers and the public about the penalties of buying and selling illicit cigarettes.
