Smoke, Europol’s fight against the illicit tobacco trade
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- 2. Europol’s Mission “The objective of Europol shall be to support and strengthen action by the competent authorities of the Member States and their mutual cooperation in preventing and combating organised crime, terrorism and other forms of serious crime affecting two or more Member States” (Art. 3 Europol Council Decision)
- 3. Europol’s Functions EUlaw enforcement organisation collating, analysing and disseminating criminal intelligence Facilitate the exchange of information between Member States Maintain a computerised information system Provide operational analysis in support of Member State operations Provide expertise and technical support for investigations
- 4. International Cooperation 27Member States 9 Operational Agreements 18 Strategic Agreements
- 5. AWF Smoke: Theillicit tobacco trade 24 Members: Austria, Bulgaria, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Malta, Netherlands, Poland, Portugal, Romania, Slovak Republic, Spain, Sweden, United Kingdom 7 Associates: Australia, Canada, Croatia, Norway, Switzerland, US (ATF) and Eurojust
- 6. The illicit tobaccotrade Manufacturing: The legal and illegal production of tobacco products Smuggling : The unlawful importation of goods to avoid import duties and taxes Diversion : The re-routing of goods, often in duty suspension, from the genuine or intended recipient Counterfeit : The unlawful copying of tobacco products to sell as if they are genuine products
- 7. Why combat theillicit tobacco trade? Smoking is the world’s leading cause of preventable deaths (about 5.4 million pa) The illicit tobacco trade cost governments worldwide between US$ 40-50 billion (€29-37 billion) in lost revenue in 2006
- 8. The Threat IllicitTrade & IPR infringements
- 9. The Threat ProtectingEU citizens Conception Benoit.Godart Illicit Trade & IPR infringements
- 10. The Threat ConceptionBenoit.Godart Preventing Combating Organised Crime Illicit Trade & IPR infringements
- 11. The Threat ConceptionBenoit.Godart Preventing Combating Organised Crime Developing Co-operation Illicit Trade & IPR infringements
- 12. The Threat ConceptionBenoit.Godart Preventing Combating Organised Crime Developing Co-operation Harmonised legislative tools Illicit Trade & IPR infringements
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- 14. Revenue loss 10million cigarettes per 40 foot (12m) container Duty loss is estimated at £1.25 million or €1.47 million
- 15. Why combat theillicit tobacco trade? Illegal profits fund other areas of serious organised crime and terrorism
- 16. Of all goodsentering or leaving the EU passes 25% Netherlands territory. Netherlands Belgium 500 km. 60 milj. people 1000 km 220 milj. people France IItaly Germany Slide: Courtesy Rotterdam Customs
- 17. Customs seizures at EU borders Number of Articles 1999 2000 2001 2002 2003 2004 2005 2006 25,285.838 67,790.546 94,421.497 84,951.039 92,218.700 103,546.179 75,333.068 128,634.295 EC DG TAXUD Figures 2007 79,076.458 2008 178,908.278
- 18. The size ofthe problem
- 19. AWF Smoke Purpose:To support the MS in preventing and combating the unlawful manufacturing and trafficking of tobacco products Aim: Obtain a better understanding of the problems Identify new investigations Identify common denominators Identify vulnerabilities
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- 21. AWF Smoke Sub-ProjectsBlue Mist Factories and illegal manufacturing plants Majong Chinese organised crime groups involved
- 22. AWF Smoke Sub-ProjectsBaltica Focussing on the brand of Jin Ling cigarettes Exotica Emerging and unusual cigarette brands
- 23. Other work byAWF Smoke New Sub-Project proposed on Chinese parcel post Threat Assessment on Transnistria
- 24. Thank you Raamweg47, PO Box 90850, 2509 LW, The Hague, The Netherlands Telephone: 0031-70-302-5022 Fax: 0031-70-318-0839
Editor's Notes
- #3 Europol’s Mission Europol is an EU law enforcement organisation that collates, analyses and disseminates criminal intelligence. On 01/01/2010 Europol became a full EU agency under the Council Decision. Changes include: Europol mandate extended to include serious crime rather than restricting it to crime by organised groups. Legal framework changes so Europol can respond more rapidly in response to trends in crime (decisions had to be ratified previously unanimous, but now a majority of two thirds of the Member States) Financial and staff regulations will change. Europol now allowed to receive intelligence from private industry.
- #4 Europol is: An EU law enforcement organisation that receives and analyses criminal intelligence. The LBs provide the apparatus for information exchange. The Europol Information System (IS) became fully operational in 2003 and all MS had access by 2005. Established the first move towards a single crime information database for the whole of the EU, with automatic uploading of data. Index system allows ELOs to search AWFs for cross matches. Will give a hit or hidden hit answer and further details can be obtained. Secure Information Exchange Network Application ( SIENA) went live at Europol on 01/07/09 . SIENA II goes live in the first quarter of 2010 extending the network beyond Europol national units to competent authorities, third party Liaison Bureaux and Third Party (National) Contact Points.
- #5 Almost European wide coverage: Europol has LBs from the 27 MS. Operational agreements (sharing personal data) with non EU countries: Australia, Canada, Croatia, Iceland, Norway, Switzerland and the USA, Eurojust and Interpol. Strategic agreements (no personal data, trends, MOs) with non EU countries: Albania, Bosnia-Herzegovina, Columbia, Former Yugoslav Republic of Macedonia, Moldova, Montenegro, Russian Federation, Serbia, Turkey. Strategic agreements with the following organisations: European Anti-fraud Office (OLAF), World Customs Organisation, UN Office on Drugs and Crime, CEPOL (the European police college), European Central Bank, European Commission, European Monitoring Centre for Drugs and Drug Addiction, Frontex (European Agency for the Management of Operational Cooperation at the External Borders of the Member States of the European Union), SitCen (EU Joint Situation Centre) and Civilian ESDP police missions. Future agreements are currently being drafted with: China, Monaco, Israel, Liechtenstein, Monaco and the Ukraine.
- #6 Members All the MS except Belgium, Luxembourg and Slovenia. However Belgium are considering joining AWF members divided into 3 groups for an annual operational cluster meeting: More operationally focussed Smaller groups of countries with similar geographical problems and interests Easier to manage logistics and decision making Allows non English speakers to attend locally.
- #7 Elements of the illicit tobacco trade Manufacturing: usually illegal production lines, set up for about €600,000-€700,000, which can be recouped in a single 40 foot load. Also cases of “out of hours” production by staff in a legal factory. In 2006 Chinese authorities raided about 2,000 illegal tobacco factories. Once set up inside the EU there are no borders to cross so less chance of detection. Smuggling: People moving goods across borders to take advantage of a difference in price in a different jurisdiction and to avoid taxes and duties. Diversion: To facilitate trade some goods can be bought and sold in duty suspension. The scheme involved bonded warehouses which companies pay a guarantee to, securing VAT and duty payments at a later date once the goods reach the end user. This system is often abused and goods do not reach the intended end consumer and no duty is paid. Counterfeit: In 2006 it was estimated that 600 billion counterfeit cigarettes were produced worldwide and about 400 billion were produced in China. A recent and worrying trend points to counterfeit cigarettes being manufactured in the former countries of the Soviet Union and smuggled into the EU.
- #8 Why combat tobacco smuggling? This is more than the populations of Madrid and Paris combined every year. Most governments have health policies to deter the young from starting smoking based on a WHO report that high prices are a big deterrent. Tobacco smuggling affects us all because the stolen revenue could have been spent on vital public services such as schools, hospitals and infrastructure.
- #14 Commercial Smuggling: We look at the smuggling of tobacco products on a commercial scale, usually in 40 foot containers like this. Cigarettes have a distinct linear image when x-rayed. This is about 3-4 tons raw tobacco and is harder to discover because it looks like many other product.
- #15 Commercial Smuggling: You can get about 10 million cigarettes into each 40 foot or 12 metre container. Depending on destination country, the revenue loss could be up to about £ 1.25 million or € 1.47 million per container. On this scale it is a huge amount of money.
- #16 Why combat tobacco smuggling? OCG and Terrorism: NCIS stated that 20% of all UK OCGs are involved in tobacco smuggling, and 20% of those who smuggle Class A drugs also smuggle tobacco. Illegal cigarette manufacturing and smuggling in Canada has been linked to the funding of Hezbollah activities in the Middle East. On 27/10/2009 the EU’s record seizure of 120 million cigarettes was made onboard the Merchant Vessel Anne Scan at Greenore, County Louth, Ireland. The estimated street value was €50m, which would have cost the organisers about €3 million to order and transport, which has been linked to Republican dissident groups. On 10/06/10 the United Nations Security Council investigative body, the Group of Experts, reported that millions of dollars in illicit tobacco revenues are reaching Al-Qaeda, the Taliban and other terrorist organisations. The report went on to state that illicit tobacco funds are financing Congolese rebels for the recruitment of child soldiers, mass rapes and murders.
- #18 IN ONE HAND, According to EU Commission figures, the seizures made by customs authorities is regularly growing.
- #19 The size of the problem: As with every illicit area, the magnitude of the problem, in whatever crime field, is always difficult to evaluate. There is a grey area between the reality (facts which actually happened) and facts which are reported to the competent authorities. The figures we normally use to assess the phenomenon are based on reports made by the law enforcement community, but these represent only “the tip of the iceberg”. As this is the tip, we may never be able to exactly quantify the whole. Interpretation is always subject to discussion or debate. For example, when figures are increasing, these may be related to more intensive law enforcement efforts, or it may well be that the illicit activity actually is growing. Despite the latter remark, study and figures are regularly published (OECD Study, UNICRI, EU DG TAXUD, WCO) and the proposed European observatory would compile and complete this overview on that area.
- #20 AWF Smoke Started in January 2005 and now 24 of the MSs contribute (not included are Belgium, Luxembourg and Slovenia). Associated to the work file are: Australia, Canada, Croatia, Norway, Switzerland, the USA (ATF) and Eurojust. Belgium are currently considering joining. Cross match tobacco related intelligence from across Europe to assist MS investigations.
- #21 Tobacco prices: You can buy a genuine packet of Marlboro cigarettes in Belarus for €0.65 and the same packet retails for €7.18 in the UK. In April 2010 in Ireland 20 cigarettes cost €8.55 – taxes due Excise/VAT €6.71 Ireland has seen a huge increase in tobacco smuggling. OCGs are targeting the joint Irish and UK markets and the weaker land border between the two countries. Norway also has high duty rates and therefore tobacco prices, but is outside the EU and therefore OCGs risk a further customs inspection on goods entering the country.
- #22 Sub Projects AWFS can be further subdivided into subprojects focussing on smaller target groups or specific phenomenon. These include: Blue Mist – Illegal cigarette factories (During the past 2 years alone about 20 illegal factories have been dismantled in EU Member States) Majong – Chinese OCGs (aims to focus on Chinese OCGs manufacturing counterfeit cigarettes and their involvement in the transportation and distribution of tobacco)
- #23 Sub Projects AWFS AWFS can be further subdivided into subprojects focussing on smaller target groups or specific phenomenon. These include: Baltica – Focussing on the emerging threat of Jin Ling ( cooperation with a ZKA Task Group to pool all available information on Jin Ling) Exotica – New and rare brands of cigarettes (establish to find links between seizures of uncommon cigarettes brands) Cheap White cigarettes. This is the tobacco industry term for cigarettes manufacturer both legally and illegally outside the control of the large tobacco manufacturers, whose supply chains are heavily regulated. They have no legitimate market and are therefore manufactured purely for smuggling. They are often of reasonable but consistent quality, which are in direct competition with counterfeit cigarettes, whose quality often varies considerably. The UK went from about 70% of all seizures in 2006 being counterfeit cigarettes to about 45% last year with 45% being cheap whites. 36% of the German illicit market is Jin Ling. Open Source work: The team conduct wide open source research in a variety of languages This helps us identify numerous tobacco seizures from around the world and gain abetter understanding of how this affects the EU. Capital cigarettes case. Over the course of 5 days in February 2010, AWF Smoke identified similarities between 3 separate seizures totalling 17 million Capital cigarettes. 1 French seizure and 2 open source Italian seizures. We established the cigarettes were manufactured in the UAE and destined for the UK market. We coordinated the efforts of 8 MSs and the Greek authorities are willing to start an investigation if there is sufficient intelligence.
- #24 Other work by AWF Smoke In a cluster meeting in April 2010, France proposed a new sub-project on tobacco being smuggled into the EU via parcels from China: This method of smuggling accounted for 24 tonnes or 9% of all the tobacco seized in France in 2009. The UK has a similar problem with between 4 million cigarettes being seized via this method in the first quarter of 2010. The UK has offered us full access to each seizure, however they made 3,900 in March 2010 alone, which will swamp the team. More analytical resources are needed to take this project on. The project has support from France, Ireland, Netherlands, Germany and the Customs Cooperation Working Party (CCWP) are coordinating an EU effort to combat this phenomenon. In a cluster meeting in October 2009 the Transnistrian region of Moldova was highlighted as a major source of counterfeit and genuine smuggled cigarettes. In cooperation with the MSs, EUBAM and tobacco manufacturers the team are trying to gain a better picture of the problem and to galvanise efforts to combat it. Imperial Tobacco estimate that 24% of all the counterfeit cigarettes referred to them by LEAs are from this region, accounting for 850 million cigarettes from 2005 to 2010. Open sources highlight the possibility of state sponsored tobacco production. Other commodities also affected including drugs, people and weapons trafficking and the associated money laundering.