Dutch Tax Authority & EUROPOL – Big illicit tobacco bust

One of the largest illegal cigarette factories ever uncovered in the Netherlands has been taken offline by law enforcement, with 13 arrests.

The Europol-supported operation – led by the investigation service of the Dutch tax authorities or FIOD – concentrated on an illegal tobacco factory in West-Betuwe, south of Utrecht. Along with the 13 arrests, 3.6m cigarettes and 32 tonnes of tobacco were seized along with packaging material, cigarette paper, filters and glue.

The tax loss prevented to the Dutch state revenue for the illegal production is estimated at €6m, according to Europol, and the Dutch authorities have estimated that the machinery could potentially produce 1m cigarettes a day.

The enforcement action comes just a few weeks after an illegal tobacco factory capable of making 10m cigarettes per week was raided in the German city of Kranenburg, revealing once again the extent of illicit cigarette production within the EU.

A recent study by KPMG  found that imports of illicit cigarettes from non-EU countries such as Ukraine and Belarus declined in 2019, with law enforcement reports suggesting there are “increasing volumes from illegal factories within the EU.”

The latest raid was somewhat unusual however in that the entire production cycle took place in one factory, whereas generally production is dispersed across multiple facilities so criminals can spread the risk.

“The production is believed to have been destined for the black market in countries where the retail price of cigarettes is high,” says Europol. “The factory is presumed to have produced 18m illegal cigarettes seized abroad in recent months.”

Illicit cigarettes typically contain even higher levels of toxic ingredients such as tar, nicotine and carbon monoxide than genuine brand-name products.

They also pose a greater fire risk as they do not include designs that ensure that a lit cigarette will self-extinguish if not actively smoked.

Source: SecuringInustry.com

Gucci – Pokes fun at Counterfeiters with “Fake/Not” collection

Italian designer brand Gucci has been battling counterfeiting of its products for decades, and has drawn attention to the problem with a tongue-in-cheek new collection.

According to Gucci, the “Fake/Not” collection for Fall/Winter 2020 – which includes men’s and women’s wear as well as bags and shoes – “began with a print inspired by a retro appropriation of the Gucci logo featuring the bicolour stripe.”

It goes on: “Entering a new chapter, the green and red design mixes with ‘Fake/Not’—a playful commentary on the idea of imitation.”

‘Fake’ is printed in bold lettering on one side of the item – in fact, it looks a lot like the real/fake comparisons one might see in pictures online – with ‘Not’ on the other.

Source: SecuringIndustry.com

WCO 2019 Illicit Trade Report

The WCO has issued its 2019 Illicit Trade Report (ITR), an annual publication which offers a comprehensive study of illicit trade flows through an in-depth analysis of seizure data and case studies voluntarily submitted by Member Customs administrations worldwide. 

The information captured in the ITR provides essential insight into the occurrences of illicit trade, thereby assisting Customs administrations in understanding trends and patters and making enlightened decisions to secure cross-border trade. The importance of comprehensive data analysis is indisputably a key component to support effective and efficient Customs enforcement activities. 

This year, the analysis provided in this Report is based on data collected from 137 Member administrations and the report consists of six sections: Cultural Heritage; Drugs; Environment; IPR, Health and Safety; Revenue and Security. 

For the fourth year in a row, the WCO has partnered with the Center for Advanced Defense Studies (C4ADS), a Washington, D.C.-based non-profit organization dedicated to providing data-driven analysis and evidence-based reporting, thereby enriching readers’ experience with advanced data visualization technologies and enhanced data analysis.  

Access the 2019 Illicit Trade Report here! (45MB)

Source: World Customs Organisation

Tanzania – Electronic Tax Stamp Pushes Up Revenue By 34%

THE use of Electronic Tax Stamps (ETS) for excisable goods have contributed to a 34 percent increase in revenue collected on branded products.

Due to the increase, the Tanzania Revenue Authority (TRA) has already rolled out the second phase which saw ETS being stamped on soft and carbonated drink plus bottled water.

TRA Deputy Commissioner General, Mr Msafiri Mbibo made the remarks during the on-going 44th Dar es Salaam International Trade Fair (DITF).

Mr Mbibo said since the system was introduced it has proven success showing improvement in revenue collections in which there is an increase of 34 percent.

ETS replaces the former paper stamp system, which was cumbersome and prone to human error, allowing certain tax-related malpractices to slip through the cracks.

This is one of the government’s moves geared towards improving tax administration in the country.

“We are glad that ETS shows improvement in the collection of excise duty and Value-added Tax (VAT), in the first quarter of the 2019/20 financial year the collection rose to 35.3 per cent on domestic spirits and wines compared to the corresponding period of last year,” he noted.

The taxman garnered 25.8bn/-as excise duty and VAT from domestic spirits and wines during the first quarter of the 2018/19 fiscal year, but the amount rose to 34.96bn/- during the first quarter of the 2019/2020 financial year.

Excise duty and VAT on cigarettes rose by 5.6 percent during the first quarter of the 2019/2020 financial year compared to a similar period last year.

TRA collected 56.7bn/-as excise duty and VAT on cigarettes from July to September 2019, a 3bn/-increase from a similar period of the previous financial year.

For the soft drinks, the amount collected as excise duty and VAT during the two months of August and September 2019 was 18 percent, higher than what was garnered during a similar period in 2018.

TRA collected 16.155bn/-in excise duty and VAT on soft drinks in August and September 2018, but the amount rose to 19.05bn/-during the period between August and September 2019.

Mr Mbibo said ETS has helped to eliminate counterfeit products from the market. It is, nonetheless, a promising move by the Government, and manufacturers and intellectual property owners should have reason to smile.

Commenting on how TRA is planning to ensure the surge the tax base, Mbibo said they will continue to develop friendly tax collection mechanisms so that everyone can enjoy voluntary taxation.

ETS first phase commenced on 15 January 2019 and affected cigarettes, wines, spirits, beer and all other alcoholic beverages.

The second phase began on 1 August 2019 and applied to products such as sweetened or flavoured water and other non-alcoholic beverages, except for fruit or vegetable juice.

The Regulations require each manufacturer to install an electronic tax stamp management system.

A Swiss-based firm SICPA has been contracted by the Tanzania Revenue Authority (TRA) to install and enroll all manufacturers, producers and importers onto the system.

Source: Daily News (Tanzania), 8 July 2020

Illicit cigarette use declines in EU but production rises

The consumption of illicit cigarettes fell below 8 per cent of total cigarette use last year, but was still equivalent to nearly 39bn smokes and €9.5bn in lost tax revenues, says a new report.

The latest edition of the annual study – carried out by KPMG on behalf of tobacco giant Philip Morris International – also found that imports of illicit cigarettes from non-EU countries such as Ukraine and Belarus declined in 2019, with law enforcement reports suggesting there are “increasing volumes from illegal factories within the EU.”

Illicit ‘whites’ with no country specific labelling – i.e. legally produced cigarettes that are smuggled and traded illegally, often through free trade zones (FTZs) – remain the largest element of the counterfeit and contraband (C&C) category, representing 23.1 per cent of total EU illicit consumption or 9bn cigarettes.

Counterfeit of brands owned by manufacturers participating in empty pack surveys grew to 7.6bn cigarettes, an increase of more than 38 percent over 2018’s figure, and is the highest level ever recorded by KPMG. Counterfeit consumption was the highest in the UK and Greece.

The overall picture is one of increasing sophistication by the criminal networks behind the illicit trade, with multiple production units to compensate if one is raised, and increasingly high tech manufacturing equipment. New groups are also emerging that are focusing specifically on smuggling raw and fine cut tobacco.

“Illicit manufacturers are producing counterfeit, established and new illicit white brands to order at scale for organisations and smugglers who can arrange distribution of large volumes, either in large shipments or increasingly via high frequency, low volume shipments,” says KPMG.

Criminal groups are exploiting new distribution channels, such as rail, as it is faster than traditional shipping routes, as well as courier packages which are small and hard for law enforcement to detect, according to the report.

“The continued decline of illicit tobacco trade in the EU is a positive development and reinforces the importance of supply chain control measures, strict enforcement, and collaboration in combating this issue,” said Alvise Giustiniani, vice president of Illicit Trade Prevention at PMI.

However, while considerable efforts have taken place to stem contraband cigarettes from flowing into the EU, “we are once again seeing criminal organisations shifting their operations to stay one step ahead of anti-illicit programmes, according to the company.

Source: Phil Taylor, Securing Industry, 26 June 2020

A Triangle of Vulnerability – Illicit Trafficking off the Swahili Coast

Reports such as this should serve as intelligence for any law enforcement entity within the region as well as countries impacted by such illegal activities downstream.

A triangle of vulnerability for illicit trafficking is emerging as a key geographic space along Africa’s eastern seaboard – the Swahili coast.
At one apex of this triangle is Zanzibar, a major hub for illicit trade for decades, but one that is currently assuming greater importance. Further south, another apex is northern Mozambique. This area is experiencing significant conflict and instability, and is increasingly a key through route for the illicit trafficking of heroin into the continent and wildlife products from the interior. The final apex of the triangle is out to sea: the Comoros islands, lying 290 kilometres offshore from northern Mozambique and north-east of Madagascar. Comoros is not yet a major trafficking hub, but perennial political instability and its connections into the wider sub-regional trafficking economy make it uniquely vulnerable as illicit trade continues to evolve along the wider Swahili coastal region. These three apexes are linked by illicit economies and trade routes which take little heed of modern political boundaries.

Two main factors underlie the illicit markets that form the primary focus of this study. First, the powerful market demand for illicit wildlife products from Asia (and China in particular), and second, the steady growth in the volumes of heroin moving down the coast, with landings being made further and further south. The Indian Ocean islands themselves have long had serious challenges with heroin trafficking and use, and these are being exacerbated. Developments in Zanzibar, northern Mozambique and Comoros will have a crucial impact on wider patterns of trafficking and trade across the Swahili coast as a whole. For example, as we doc- ument the trade in endangered species from Madagascar which flows to Zanzibar and Comoros, Madagascar is also seen as a potential risk area for an increase in heroin trafficking.

At the time of writing, the impact of COVID-19 in the wider region was just becoming clearer as countries entered lockdown and began to restrict some forms of trade. The effect of these developments on the illicit political economy will still unfold in time to come.

Source: A Triangle of Vulnerability – Illicit Trafficking off the Swahili Coast authored by Alastair Nelson, June 2020

Also read: The Heroin Coast

The Illicit Tobacco Trade in Zimbabwe and South Africa

The following report (Working Paper) was issued in March 2019, a while back, but should not be considered too outdated for analysis and consideration, nevertheless.

A study was conducted to explore how the illicit trade in licit goods supports organized crime, corruption, and erodes state structures. The illicit tobacco trade in southern Africa occupies a prominent place in southern African politics, due to its prominent role in the ‘state capture’ scandals that characterized politics in South Africa between 2013 and 2018. Indeed, the illicit tobacco trade occupies a prominent place in public debate in South Africa, both about crimes that may have been committed in the last five years, and about how the current administration responds to the illicit economy right now.

The study maps the key dimensions of the illicit cigarette trade in Zimbabwe and South Africa, including the key actors, the pathways of trade and the accompanying ‘modalities’ of criminality, as well as other important dimensions of the illicit cigarette market in southern Africa. It then identifies ‘good-faith actors,’ primarily in South Africa, whose positions could be strengthened by policy and technical interventions, explores opportunities for such intervention, and assesses the practi- cal solutions that can be applied to combat illicit trade and tax evasion in the tobacco industry. The paper contributes to expanding awareness among policymakers and the public of the nexus between the illicit trade in licit goods, corruption, and organized criminal networks.

Download the Report via this link.

Source: Atlantic Council

The Diffusion of Heroin in Eastern and Southern Africa

This research report “A Shallow Flood: The Diffusion of Heroin in Eastern and Southern Africa(click hyperlink to access report) draws from and analyzes field data examining three characteristics of the illicit drug economy in a selected number of countries of eastern and southern Africa:

  • Price. This part of the data identifies the retail price (i.e. street price) for heroin in a given market location, and examines factors that influence retail price variations within a particular market, and between markets.
  • Distribution system. Identifying the means by which heroin is moved between wholesale and retail vending situations, and how it is moved within and between adjacent and/or distant markets.
  • Market structure. Identifying core structural components of domestic heroin markets in the region, with particular attention to those features that enable markets to emerge and flourish, as well as factors that disrupt or deteriorate these markets.

The flow of heroin from Asian production points to the coastal shores of eastern and southern Africa is not new. Whereas the first heroin transit routes in the region in the 1970s relied heavily on maritime transport to enter the continent, a number of transport modes and urban centres of the interior have increasingly become important features in the current movement of heroin in this region. Interior transit hubs and networks have developed around air transport nodes that use regular regional and international connections to ship heroin. As regional air routes proliferated and became more efficient, their utility and value for the heroin trade increased as well. Heroin is also consolidated and shipped over a frequently shifting network of overland routes, moving it deeper into the African interior in a south-westerly direction across the continent.

Consequently, a shallow flood of heroin has gradually seeped across the region, and this has had a significant impact on the many secondary towns found along the continent’s transcontinental road networks. These places, in turn, have spawned their own small local heroin markets, and become waypoints in rendering sustainable the now chronic, metered progression of heroin’s resolute geographic diffusion across the region.

The impact of this creeping spread of heroin on regional state development has been significant and, paradoxically, symbiotic. The emerging illicit African drug market environments may represent credible threats to the development and security of the region’s nascent independent state institutions and structures. At the same time, these markets have also presented new and considerable sources of economic livelihood and opportunity for the continent’s ever-expanding population of poor, disenfranchised and vulnerable people. A surrogate ‘drug working class’ has emerged as a socio-economic sequela to more traditional, yet increasingly limited, licit income opportunities.

The purpose of this report is to examine the diffusion of heroin across eastern and southern Africa. This will be achieved through an analysis of retail heroin prices, distribution systems and domestic marketplaces. The report provides an analytical summary of heroin market data collected across the countries of the region, with specific retail price points, commentary on domestic heroin distribution systems and structures, and a discussion of the common structural characteristics evident across the region that enable, embed and sustain these heroin markets.

Source: Authored by Jason Eligh, Global Initiative against Transnational and Organised Crime, 28 May 2020

WCO – COVID-19 Update

Counterfeit medical supplies and introduction of export controls on personal protective equipment

The WCO reminds the general public to exercise extreme caution when purchasing critical medical supplies from unknown sources, particularly online. The use of these goods may cost lives. 

While the world is gripped by the fight against COVID-19, criminals have turned this into an opportunity for fraudulent activity. There have been an alarming number of reports quoting seizures of counterfeit critical medical supplies, such as face masks and hand sanitizers in particular. 

Customs and law enforcement agencies in China, Germany, Indonesia, Uganda, Ukraine, United Kingdom, United States and Vietnam, to name but a few, have reported such seizures in the past three weeks. 

Moreover, there was a significant increase in seizures of counterfeit and unauthorized face masks and hand sanitizers during Operation Pangea XIII, a collaborative enforcement effort by the WCO, Interpol, Europol, Customs administrations, Police forces and other law enforcement agencies. This Operation, held from 3 to 10 March 2020, resulted in the seizure of 37,258 counterfeit medical devices, of which 34,137 were surgical masks. 

Online retailers have also announced a surge in sales of counterfeit goods. In particular, a US company reported the removal from its marketplace of a million products claiming to cure or prevent COVID-19. Tens of thousands of listings were removed because of price hiking, particularly for products in high demand such as masks. In one operation, US Customs and Border Protection seized counterfeit COVID-19 test kitswhich had arrived at Los Angeles International Airport (LAX) by mail from the United Kingdom. This seizure triggered a joint investigation by the City of London Police’s Intellectual Property Crimes Unit (PIPCO), the Medicines and Healthcare products Regulatory Agency (MHRA) and the United States Food and Drug Administration (FDA), resulting in one arrest and the seizure of 300 more kits and 20 litres of chemicals for the production of such kits. 

Given the shortages and the activities of market speculators, another important trend is the introduction of export licences for certain categories of critical medical supplies, such as face masks, gloves and protective gear. In particular, on 11 March 2020 Vietnam adopted Decision 868/QD-BYT by the Ministry of Health, introducing export permits for medical masks. The European Union (EU) introduced a temporary export licensing scheme for personal protective equipment as of 14 March 2020 (see Commission implementing Regulation 2020/402). Other countries, such as Brazil, India, Russia, Serbia and Ukraine, have also followed suit. 

The EU’s dual-use export control regime will also continue to be applied to more sophisticated items such as full face masks, protective gear, gloves and shoes, specifically designed for dealing with ‘biological agents’. The full list of such items can be found in Annex I to EU Regulation 428/2009, as amended.  

The WCO urges its Member Customs administrations to remain vigilant in these difficult times.

Please consult the relevant section of the WCO’s website regarding COVID-19 information, including changes in legislation, new trends and patterns, and initiatives by partners and Member administrations. 

The WCO stands ready to continue working with all its partners to disrupt the supply chains of counterfeit products that put the lives of millions of people at risk.

Source: WCO Website, 23 March 2020

Top Wildlife Detective Shot in Cold Blood

Recent good news reports indicating a decrease in rhino poaching have been marred by the sudden death of one of law enforcements top detectives.

Colleagues and friends of Lieutenant Colonel Leroy Bruwer are in shock after the leading rhino-poaching detective was gunned down in an apparent assassination.

Leroy (49), commander of the Hawks in Mbombela (formerly Nelspruit), was shot dead in his car on Tuesday morning while on his way to work.

The investigation is ongoing but according to a police statement, he was shot with a heavy-calibre weapon.

Pieter Smit, commander of the Mbombela police’s quick-response unit, says his heart broke when he arrived on the scene and saw his colleague and friend’s lifeless body.

“Hate, sadness and tears with mixed feelings,” Pieter, who was one of the first people to arrive on the scene, wrote on Facebook.

Leroy’s body had been unrecognisably mutilated by the AK-47 gunfire, Pieter continued his Facebook post. He says the only way he knew it was Leroy is because he called his friend’s number and saw the cellphone ringing in the car.

“It breaks the heart of a grown man. Leroy, you were an honest policeman and worthy officer. You didn’t deserve this.

“I salute you. Rest in peace, colleague and friend.” 

Brigadier Hangwani Malaudzi, Hawks spokesman, says a specialised task team has been formed to investigate the murder. “We’re hoping for a breakthrough soon.”

He adds Leroy was a formidable detective and made many breakthroughs in the fight against rhino poaching.

“All the evidence points to Leroy having been the target. It looks like an assassination,” Malaudzi says.

Police are following up on all leads to find the suspects.

Source: Picture and article by Jacques Myburgh, News24, 19 March 2020

National Treasury – calls for written comments on proposal on export taxes on scrap metal

Following the announcement made by the Minister of Finance in the 2020 Budget Review regarding the introduction of export taxes on scrap metal, the National Treasury today publishes for consultation the basic approach for such tax. This proposal is related to the phasing out of the current price preference system for scrap steel, and follows the recommendations from a feasibility study conducted by the International Trade Administration Commission (ITAC).   

Given the need to consult all stakeholders, including possible winners and losers, the consultation will take place in two phases.  The first phase will be a shorter and broader public comment process on the objective, implementation, functioning and economic and financial impact of such an export tax, including the level of rates and base for such a tax. Comments on the impact to current firms and industries, and the implications for the tax and trade system will also be welcome, as well as comments on strengthening the administrative capacity of SARS to implement such export taxes.  

The first phase will be followed by a more intensive second phase of public comment, on the proposed legislative provisions to give effect to specific export taxes on scrap metal, to be included in the 2020 draft Taxation Laws Amendment Bill (TLAB).  The first phase will commence immediately and run up to the end of April 2020, while the second phase will commence with the publication of the Taxation Laws Amendment Bill in mid-July and run up to the end of August/September 2020. 

As recommended by ITAC, the proposed export taxes to apply to scrap metal are as follows

Scrap metal category Equivalent specific tax (Rand per tonne) Ferrous metals (including stainless steel) R1000.00 per tonne Aluminium R3000.00 per tonne Red Metals R8426.00 per tonne Other (waste and scrap metals) R1000.00 per tonne  

Written comments on the proposal on export taxes on scrap metal must be submitted by no later than 9 April 2020.    

Upon receipt of the comments and submissions on the proposal on export taxes on scrap metal, the National Treasury (working with the Department of Trade, Industry and Competition and other governmental stakeholders) will engage directly with stakeholders until the end of April through technical workshops to discuss the comments received.  Thereafter, the proposed provisions on the export taxes on scrap metal will be developed for inclusion in the TLAB, which will be published in mid-July 2020 for public comment. 

Further, as part of the TLAB consultation process, National Treasury will also engage with stakeholders through the usual workshops held after the receipt of written comments on the draft Bill.  The Standing and Select Committees on Finance in Parliament are expected to make a similar call for public comment, and convene public hearings on the TLAB before the formal introduction of the Bill in Parliament. Thereafter, a response document on the comments received will be presented at the parliamentary committee hearings, after which the 2020 draft Taxation Laws Amendment Bill will then be revised, taking into account public comments and recommendations made during committee hearings, before the Bill is tabled formally in Parliament for consideration.  

The proposal on export taxes on scrap metal is included in Chapter 4 of the 2020 Budget Review, which can be found on the National Treasury (www.treasury.gov.za) website.   

Due date for written comments: 9 April 2020  

Source: National Treasury website, 10 March 2020

Illicit Cigarettes – Hong Kong customs intercepts four shipping containers

Photo: Winson Wong

Hong Kong customs has uncovered HK$85 million worth of smuggled cigarettes in the largest seizure of its kind in two decades, after authorities acted on intelligence indicating a syndicate was shipping the haul into the city in four containers.

Some 31 million cigarettes were stashed in the containers from Yokohama in Japan. They were then shipped through different ports in South Korea, Vietnam and mainland China, according to Lee Hoi-man, deputy head of the Revenue and General Investigation Bureau under customs.

He said the circuitous route was used by smugglers to avoid detection.

“The containers were shipped into three to four different ports before they came to Hong Kong,” Lee said adding that the contents listed on import documents were changed to throw off law enforcement in various jurisdictions.

Four men – one mainlander and three Hongkongers – aged between 24 and 41 were arrested in the operation on Monday. They were still being held for questioning on Tuesday evening.

Information on the containers was shared to a global database operated jointly by customs from different countries, under an anti-smuggling campaign code-named “Project Crocodile”.

A law enforcement source said the containers were left idle at another port since December, but were then suddenly moved across different countries before arriving in Hong Kong, one at a time since last Friday.

Lee said: “It is possible smugglers believed our frontline officers were tied up in dealing with the coronavirus outbreak.” He added that some of the contraband items were believed to be destined for countries in eastern Europe as some cigarette brands seized in the operation were popular there.

Hong Kong customs began investigating the syndicate in mid-December before identifying the four containers.

On Monday afternoon, officers from the Revenue and General Investigation Bureau swooped into action and seized 22 million sticks of cigarettes stashed in three containers at yards in Yuen Long, Sheung Shui and Man Kam To, arresting the four men.

At the Sheung Shui site, officers also seized 3,500 bottles of duty-not-paid liquor worth HK$2.5 million.

On Tuesday, the fourth container which had arrived from Shenzhen a day before was selected for inspection. Nine million cigarettes were found in it.

Lee said the combined haul had an estimated street value of HK$85 million, and was the biggest seizure of its kind in two decades in a single operation.

He said his team was working with overseas counterparts to determine the exact origin of the shipment and track down the ring leader and core syndicate members.

In Hong Kong, importing or exporting unmanifested cargo carries a maximum penalty of seven years in jail and a HK$2 million fine.

Source: Article by Clifford Lo, South Morning Post, 18 February 2020

South African Customs – Recent Illicit Goods Busts

Customs teams from Durban, Cape Town, Gauteng and the Free State recently dealt a blow to non-compliant traders by busting drugs, illicit cigarettes and undeclared fuel.

Customs officers at OR Tambo International Airport (ORTIA) were responsible for several major drug busts over the past couple of weeks, including the following:

  • On 8 February, a female passenger arriving from Sao Paulo was stopped and her luggage scanned, which revealed suspicious images. After searching her luggage, officers discovered packages wrapped in black tape and containing a white powdery substance. The powder was tested and confirmed to be cocaine, valued at approximately ZAR54 284 349. Officers also searched a male passenger arriving on the same flight and discovered three body wraps on his torso, containing a white powdery substance. The contents were tested positive for cocaine, valued at about ZAR9 057 566. On the same day, officers intercepted a male passenger about to board a flight for Hong Kong and searched him. They discovered body wraps on his upper torso containing cocaine valued at about ZAR11 700 000.
  • On 2 February, a male passenger arriving from Sao Paulo was stopped by Customs officers and his luggage searched. After a luggage scan revealed irregular images, officers searched his bags and discovered packages wrapped in black tape containing cocaine, valued at about ZAR5 850 000.
  • On 27 January, in a similar incident to the above, a male passenger arriving from Sao Paulo was arrested after Customs officers discovered a false compartment in his luggage, which contained cocaine valued at about ZAR6 750 000.

In all the above incidents, the suspects and goods were handed over to the SAPS for further investigation.

In the Durban incident, officers became suspicious of two containers of goods arriving on a vessel in the Durban harbour from China.

The containers, which were declared to contain glassware and household goods, were placed for examination at a cargo depot in Durban. 

Upon inspection by Customs officers on 5 February 2020, the containers were found to contain various suspected counterfeit goods, and several cartons with tablets packed in plastic packets.

Members of the Customs detector dog unit reacted positively to the cartons, which were tested and found to contain Methaqualone (Mandrax).

There was a total of 15 cartons, each containing 20 000 Mandrax tablets with a street value of about ZAR24 million. The case has been handed over to the SAPS for further investigation.

In Cape Town, officers were responsible for a massive bust of illicit cigarettes, one of SARS’ key focus areas when it comes to illicit trade (particularly in terms of lost revenue due to the fiscus). 

After receiving an alert from the Compliance Risk and Case Selection team about a possible mis-declaration of a container on a ship arriving in South Africa, a detention notice was issued to the shipping liner and the goods were detained in December 2019.

After following the required legal processes, a Customs Branch Physical Inspection team searched the container at the Cape Town harbour on 20 January 2020.

During the inspection, the team discovered 1050 master cases of “LEGATE” cigarettes, each case containing 50 cartons of 10 packets, with an estimated street value of about ZAR3 150 000.

If the consignment of cigarettes was not detected, the potential loss of revenue would have amounted to about ZAR12 208 350 in Customs & Excise duties and VAT. 

The Western Cape Customs Branch Inspection team has handed over the case to Criminal Investigations from further investigation.

In the Free State, Customs officers dealt a blow to another key area of illicit trade, ie. ghost exports or false declarations of fuel. On 31 January 2020, officers stopped a truck coming from Lesotho through the Ficksburg border post. They had become suspicious of this particular trucking company, as they had recently changed their route to using South Africa as a transit route from Mozambique to Lesotho. 

Officers noticed that the same truck had driven through the border into Lesotho the day before, having declared the truck full with fuel they acquired in Mozambique. The following day it re-entered South Africa, with the driver claiming that the truck was empty (which could indicate a possible ghost export in which they were trying to avoid paying taxes and duties/levies).

They then asked the driver to park the truck at the depot for inspection. However, after the truck was taken to the depot, the truck driver disappeared and the truck company’s lawyer was called to attend an inspection. 

Customs officers then discovered the truck contained 26 000 litres of diesel, with the owners having failed to pay duties and taxes totalling ZAR176 000 due to the fiscus. The truck was detained for further investigation.

And in a similar incident, two trucks were stopped at the Maseru Bridge border post on 4 February for falsely declaring fuel coming from Mozambique to Lesotho. The trucks contained 39 388 litres and 39 414 litres of petroleum respectively. Both were detained for further investigation. 

Source: South African Revenue Service [SARS]

Cooperative Law Enforcement forces Rhino Poaching into decline

The Department of Environment, Forestry and Fisheries recently released a report on rhino poaching in the country for 2019. Minister Barbara Creecy said wildlife trafficking constitutes a highly sophisticated form of serious transnational organised crime that threatens national security.

“The aim is to establish an integrated strategic framework for an intelligence-led, well-resourced, multidisciplinary and consolidated law enforcement approach to focus and direct law enforcement’s ability supported by the whole of government and society.”

She paid tribute to rangers who battle poaching in the conservation areas on a daily basis. In 2018, 769 rhinos were killed for their horns in South Africa. During 2019, rhino poaching declined, with 594 rhinos poached nationally during the year.

This decline can be attributed to a combination of measures implemented in line with government’s strategy, including improved capabilities to react to poaching incidents, linked to better situational awareness and deployment of technology; improved information collection and sharing among law enforcement authorities; better regional and national cooperation and more meaningful involvement of the private sector, NGOs and donors.

“A decline in poaching for five consecutive years is a reflection of the diligent work of the men and women who put their lives on the line daily to combat rhino poaching, often coming into direct contact with ruthless poachers,” Creecy said.

Some 2 014 incursions and poacher activities were recorded in the Kruger National Park (KNP) in 2019. A total of 327 rhino were lost as a result of poaching.

The department reported that 31 elephants were poached in South Africa in 2019. Of them, 30 animals were in the KNP and one in Mapungubwe National Park.

This is a decrease in the number of elephants poached in 2018, when 71 were killed for their tusks. During 2019, some successes have also been recorded through the number of arrests and convictions linked to rhino poaching and the illicit trade in rhino horn, that reflects the joint and integrated work of law enforcement entities, including the Stock Theft and Endangered Species Unit of SAPS, the Hawks, SANParks, provincial park authorities and environmental management inspectors (Green Scorpions) and Customs as well as the National Prosecuting Authority.

High-profile cases that remain on the court roll in the Lowveld include:

  • State vs Jospeh Nyalungu and nine others in Nelspruit Regional Court. Provisional date for trial is May 25.
  • State vs Rodney Landela in Skukuza Regional Court. Trial date set for
  • February 19.
  • State vs Petrus Sydney Mabuza, Nozwelo Mahumane, Moshe Thobela and Romez Khoza. Trial date set in the High Court of Mpumalanga in Mbombela for July 27 and August 14.
  • State vs Petrus Sydney Mabuza and Joseph Nyalunga. Trial date set in the High Court of Mpumalanga in Mbombela on May 25 to June 19.

Since the last report on the rhino poaching situation and efforts being made to address the crime, rhino horn samples have been received for analysis from Vietnam to determine if the horns confiscated are linked to crimes in South Africa.

The Hawks have also received very good cooperation from China, Hong Kong, Malaysia, Singapore, Vietnam and Japan in their efforts to combat wildlife trafficking.

While acutely aware that criminal elements will continue to take advantage of the socioeconomic pressures and drive demand for illegal wildlife products, the department said it was working with a number of communities, NGOs and donors, and identified various community developmental programmes, including awareness programmes.

Source: Hazyview Herald, 13 February 2020

USCBP extends secure e-commerce supply chain pilot

Customs and Border Protection (CBP) has expanded its pilot of a new, voluntary scheme to try to improve the security of low-value shipments entering US borders.

The Section 321 Data Pilot is focused in particular on e-commerce, and aims to improve data-sharing between online marketplaces, carriers, technology firms and logistics provider to help protect American consumers from illicit goods arriving by air, ocean, truck, or rail.

That includes, “illicit narcotics, unregulated prescription drugs, brand counterfeits, and unsafe food and beauty products”, according to the CBP, which plans to run the pilot until August 2021.

Nine companies have been selected to participate in the pilot, including e-commerce giants Amazon and eBay, carriers Zulily, FedEx, DHL and UPS, as well as technology firm PreClear and logistics providers XB Fulfillment and BoxC Logistics.

CBP has said that it plans to expand access to all interested and qualified participants “in early 2020.”

The participants will provide cargo origin, content, tracking, recipient and other information to CBP upfront, in addition to the information that is currently legally required for Section 321 shipments – in other words one shipment per day for eligible importers, individuals or companies with a value of $800 or less.

CBP says it wants to see whether having that additional information will enable it to perform “more effective and efficient targeted screening” of these low-value shipments.

Research published in 2018 has suggested that two-thirds of counterfeit goods intercepted by customs around the world are discovered in small parcels sent through postal or courier services.

In part because they are harder for customs officials to track and seize, and also because in many jurisdictions they have not required detailed manifests for their contents. The US stepped up the manifest requirements for Section 321 shipments from January 1, 2019.

CBP broadened the scope of the 321 Data Pilot last month, shortly after the pilot was launched in August, to include ocean shipments and international mail which weren’t included in the original plan.

“Combined with the exponential growth of the online shopping market in the US over the past five years, CBP has seen a significant increase in small, low-value packages,” said the agency in a statement.

“Today, CBP processes more than 600 million express consignment and international mail shipments a year – approximately 1.8m a day. The unprecedented growth in volume of these low-value shipments requires creative solutions to interdict illicit and dangerous products to enter the US.”

Source: article by Phil Taylor, Securityindustry.com, 20 January 2020