Organised crime and illicit tobacco: TSI reports

CigarettesOn Wednesday 12 February at the Royal United Services Institute, Whitehall, the “On Tap: Organised Crime and the Illicit Trade in Tobacco, Alcohol and Pharmaceuticals in the UK” report was released. Gavin Terry, TSI’s lead officer for Intellectual Property reports.

The report was commissioned by the Home Office on behalf of the Home Secretary and “is the culmination of a twelve month study conducted in three regions of the UK – the northwest, east and southwest of England.”

The report launch event was attended by more than 60 representatives from government, industry, law enforcement, trading standards, overseas diplomats and the BBC. The audience listened intently to an interesting array of speakers.

The impressive panel was chaired by Professor Malcolm Chalmers, research director and director of UK Defence Policy at the Royal United Services Institute (RUSI). The panel also consisted of the report authors Charlie Edwards and Calum Jeffray of RUSI, Linda Scammell, Medicines and Healthcare  products Regulatory Authority’s (MHRA) senior policy adviser, Mark Jackson MHRA Head of Intelligence and Professor Dick Hobbs a criminology expert from the London School of Economics (LSE).

Initially Edwards and Jeffra  presented a summary of their key findings, the most important point being that organised crime is behind the illicit trade and is a threat to national security and public safety.

The authors made the point that we tend to speak about organised crime and the illicit trade as if they were two separate things whereas the illicit trade is organised crime — they are one and the same. This differentiation between the two leads to a public perception that organised crime is unacceptable whereas the illicit trade is low level and acceptable.

In terms of scale and scope organised crime and the illicit trade is booming.

An example of illicit cigarettes seized during Operation Henry

Illicit cigarettes seized during Operation Henry

There appears to be an information deficit on the illicit trade. As a result of this deficit, law enforcement tends to focus on the criminal threats that they have the most information about. This does not necessarily mean that law enforcement is targeting the most significant threats. Organised crime groups are continually diversifying in order to exploit low risk crime areas where their involvement is not perceived.

There is a lack of data, evidence and intelligence sharing between organisations, statutory agencies and the private sector. This lack of intelligence sharing is compounded by the lack of a UK intelligence overview assessing the threat as a whole. In this context, the fact that organised crime groups drive and control the illicit trade is rarely addressed at a regional or national level.

The illicit trade is, however, an international issue and this is evidenced by the fact that the  (OECD) has set up its Task Force on Charting the Illicit Trade (TF-CIT).

Currently, the law enforcement response to the illicit trade is proving challenging to the relevant agencies as evidenced by HMRC’s statement that “the relationship between tobacco smuggling and organised crime is a particularly difficult issue to judge with any degree of confidence.”

In the report the authors identify four key trends that facilitate illicit trade including: Acceptability, diversification, accessibility and invisibility.

Acceptability relates to the fact that the illicit trade is seen as acceptable by the public in the context of the global recession combined with high taxation regimes, particularly in the case of tobacco products. This is compounded by perceptions that illicit trade is a form of victimless crime. These ideas lead to a high level of public tolerance of the illicit trade.

Diversification is evidenced by the move from drug smuggling to tobacco smuggling by many organised crime groups. This diversification has also been driven by the evolution of pan European organised crime groups which have led to an element of displacement within traditional organised crime structures.

Accessibility and wide availability of illicit goods are a direct result of inadequate enforcement across Europe. The growth of low cost air travel has also led to greater accessibility to cheaper market places and enabled more smuggling. Linked to these factors the role of the internet cannot be overlooked as the internet has become a key driver of the international illicit trade.

Invisibility derives from the fact that the internet enables greater anonymity and offers additional global networking opportunities. Use of the internet is linked to the use of legitimate postal and courier services as importation channels this also adds to the invisibility of organised crime groups. The virtual nature of much of the illicit trade also leads to lower levels of violence in comparison to other forms of organised crime.

These factors as a whole have led to the anonimisation of the crime types in the illicit trade and have led to an attractive risk reward balance which is attractive to organised crime groups.

In the report author’s opinion the Illicit Trade pose a Tier 2 Security Threat to the UK in the context of the government’s National Security Strategy report ‘A Strong Britain in an Age of Uncertainty’.

In summary their key findings were:

  1. Illicit trade offers low risk high reward opportunities to organised crime groups
  2. Smuggling thresholds are little and often
  3. There is a significant lack of data and evidence and a need for greater collaboration

They identified  the following five areas for improvement:

  1. Intelligence gathering and handling reform
  2. A strategy to address the drivers of the illicit trade
  3. HMRC Improvement, especially closer working and intelligence sharing with trading standards
  4. Development of the role of the private sector
  5. The government approach, particularly as criminal penalties are perceived as low by criminals

MHRA then outlined its response to the illicit trade in unlicensed medicines including the ongoing interventions under Operation Pangea, which in 2014 saw 8.4million illegal doses seized across Europe, of which 50 per cent of seizures were in the UK.

Hobbs made the closing remarks by stressing the need to end the differentiation between the illicit trade and organised crime.

He stated that this was not year zero, as what we term as ‘the illicit trade’ has been a developing crime trend over the past 10/20 years. There is also a great deal of cross over from the drugs trade and there is already a wealth of academic research on the organisational structures and methods utilised in the drugs trade.

Hobbs emphasised the case that diversification within organised crime groups was a key driver of the illicit trade. From his research there was clear evidence that the crime families involved in armed robberies in the 1960s and 1970s, later moved in to control the drugs trade and many had now moved into the lower risk, but high reward, illicit trade.

He detected new vulnerabilities particularly in parcel and courier services, forwarding agencies and the transport industry in general. He asked — has a proper risk assessment of these supply channels been made?

He added there were clearly new entrant criminals attracted to the illicit trade by the ease and accessibility of the internet which is a key enabler and can lead to criminals without a footprint. There is a need to focus on the business enablers such as the internet, but I cannot stress that Interagency co-operation is vital.

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