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

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The following report (Working Paper) was issued in March 2019, a while back, but should not be considered too outdated for analysis and consideration, nevertheless.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