Illegal tobacco trade A growing black market The black market in tobacco involves criminal gangs producing counterfeit cigarettes, cross-border smuggling and large-scale tax evasion. With weak penalties for criminals, poor border controls, low arrest rates and tobacco taxes creating disparity between neighbouring countries, it’s a problem that’s set to grow. 00:00 00:00 International Tobacco Smugglers Inc. Our video portrays a fictional tobacco conglomerate – International Tobacco Smugglers Inc., which profiles the criminal supply chain that manufactures, transports and distributes tobacco products illegally. Watch in higher quality on YouTube Download transcript (PDF 55kb) A global problem Some research indicates that up to 600 billion cigarettes a year are illegal – smuggled, counterfeit or tax-evaded in other ways. That’s up to 12% of world consumption. Cigarettes are among the most commonly traded products on the black market due to high profit margins, relative ease of production and movement and low detection rates and penalties. The shadowy nature of this trade makes the scale of it hard to estimate, but we have developed research methods to help our companies and governments to understand it better. These include market surveys, consumer research and analysing packs collected from consumers to estimate the difference between duty-paid shipments and actual consumption. Cigarettes are among the most commonly traded products on the black market due to high profit margins, relative ease of production and movement and low detection rates and penalties. We invest more than £50 million each year in the fight against the tobacco black market. A damaging trade For governments too, there is a huge cost. The illegal trade in tobacco products cheats governments out of around £30 billion each year in taxes. It’s obvious why we see illegal tobacco as a major threat to our business. Yet some governments are unaware of how bad the problem is and do not acknowledge its link to tax levels. Legitimate retailers – often small or family businesses – are also damaged as smugglers and criminals steal their trade, while rules for retailers to prevent sales to children are undermined by illegal sales away from the eyes of the authorities. Counterfeit tobacco products At nearly 40% of market share, Malaysia has one of the highest volume of illegal cigarettes in the world." Illicit Trade in Tobacco Products 2012, Euromonitor International Fakes can be almost impossible to tell from the real thing. Another problem is ‘look-alike’ cigarettes, where the criminals mimic an original design with some changes. For example, our State Express 555 brand may be copied but the numbers changed to 999. Consumers may think it’s just a new variant. Counterfeits can also be riskier to health than genuine product. They are likely to contain many times the levels of tar and carbon monoxide found in genuine cigarettes, and in some cases can contain insects and human faeces. The vast majority of fakes come from illegal operators in China, then Paraguay, the Middle East and, to a lesser extent, Eastern Europe. Raids by the authorities do take place but many operations are small, highly mobile and difficult to trace in remote areas. The makeshift factories, where the cigarettes are usually packed by hand, can vanish within hours and set up elsewhere. Crime and reward Illicit trade is not just the work of small operators. Organised crime is increasingly dominant. The rewards can be high. Just one shipping container full of trafficked cigarettes could earn a criminal gang more than US$1 million. Interpol, the international police organisation, says gangs that traffic drugs, arms and people are also behind the illicit cigarette and alcohol trade. The US Department of Justice says some also have ties to terrorist organisations. What can be done? We fully support regulators, governments and international organisations such as the World Customs Organization, the World Trade Organization, World Health Organization and European Union in seeking to eliminate all forms of illicit tobacco trade. We would like to see all our markets free of it. We see it as vitally important that governments establish workable tax regimes and economic policies that do not create conditions that encourage illicit trade, with strong border controls and effective laws to fight the black market. Stripping branding strips our rights Plain packaging External links World Trade Organization World Customs Organization World Health Organization Illegal cigarettes: Who pays the price The black market in cigarettes and other tobacco products is increasingly dominated by organised crime. This is The Man The black market in cigarettes and other tobacco products is increasingly dominated by organised crime. Our industry The global market Corporate behaviour Regulation Illegal tobacco trade Fighting the black market WHO Protocol Illegal tobacco trade map Youth smoking prevention Search BATS: LSE GBp 3423.00 (-1.00) About us Sustainable business Our industry Challenges and opportunities How we work From crop to consumer Our products Putting consumers first Innovation Tobacco and beyond Sustainability Investors Media Reporting Careers Contact us Worldwide Home Our industry Illegal tobacco trade Explore our world We are one of the world’s most international businesses and many of our Group companies have their own websites. @BATPress BAT Press Office @BATPress We are proud to have retained our status as industry leader in the #Dow Jones #Sustainability Index for the 14th year running #DJSI 14 Sep Reply Retweet Favorite BAT Press Office @BATPress Interesting new study that adds to growing body of evidence suggesting benefit of #e-cigs to smokers' health ow.ly/S4Nku 11 Sep Reply Retweet Favorite Investors Current UK share price 3423.00p -1.00p 15/09/2015 05:41 Our reporting Contact us +44 (0) 20 7845 1000 British American Tobacco p.l.c. 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