What we’re doing to fight illegal trade

What we’re doing to fight illegal trade

The illegal tobacco trade is no trivial matter – taken as a whole it constitutes the third largest ‘supplier’ of tobacco in the world, and the estimated loss of tax revenues around the globe is approximately USD 40 billion. That means that for every 1% we can ‘take back’ from the criminals, governments are effectively increasing their revenue by USD 400 million.

We firmly believe in our right to protect our brands, trademarks and business from criminal activity, and during the three-year period 2020 to 2022 our Anti-Illicit Trade Operations (AITO) team has assisted LEAs with seizures of over eight billion illegal cigarettes or grams of illegal tobacco.

It’s essential that we – and the tobacco sector as a whole – are able to continue to play a role in the fight against illegal trade, working in partnership and cooperation providing authorities with industry expertise and quality information on criminal operations, locations and methods.

Why is it so important to fight illegal trade

WHY IS IT SO IMPORTANT TO FIGHT ILLEGAL TRADE

By avoiding the regulations that govern legitimate tobacco trade illegal tobacco falls into the hands of young people much more easily...

WHY IS IT SO IMPORTANT TO FIGHT ILLEGAL TRADE

...And if the illegal cigarettes are counterfeits that can also mean illegal ingredients, such as rat droppings, dirt, lead and cadmium. 

WHY IS IT SO IMPORTANT TO FIGHT ILLEGAL TRADE
WHY IS IT SO IMPORTANT TO FIGHT ILLEGAL TRADE

Taxpayers lose out on millions in taxes which might otherwise be used to benefit communities. 

WHY IS IT SO IMPORTANT TO FIGHT ILLEGAL TRADE

Illegal trade doesn't just cheat governments and harm customers - it hurts lawful businesses too. Not just big companies like JTI, but countless local retailers, wholesalers and other small enterprises.

WHY IS IT SO IMPORTANT TO FIGHT ILLEGAL TRADE
WHY IS IT SO IMPORTANT TO FIGHT ILLEGAL TRADE

While legitimate businesses suffer, criminal gangs prosper, funneling the high profits from illegal cigarettes into even more harmful activity: money laundering, bribery, corruption, human trafficking, the smuggling of guns and illegal drugs...even terrorism.

WHY IS IT SO IMPORTANT TO FIGHT ILLEGAL TRADE

Our global AITO program

Our global AITO program allows us the opportunity to work in public-private partnership with law enforcement agencies throughout the world.

While it is ultimately the responsibility of governments to take the lead, it’s a fight that can only be won when all parties – public and private – work together in a partnership. Our work with bodies such as OLAF, Europol and HMRC in the UK exemplifies the mutual benefits of an open, proactive relationship between law enforcement agencies and tobacco companies.

JTI are the best manufacturer for supplying A1 information and supply over 80% of our tobacco intelligence.
Jacky Marteau, Head of B Section, OLAF

In numbers: our contribution to the fight against illegal trade in 2023

What we’re doing to fight illegal trade - CV3
2172
AIT disseminations to law enforcement agencies
What we’re doing to fight illegal trade - CV3
0.687 billion
sticks/grams of illegal tobacco products seized
What we’re doing to fight illegal trade - CV3
9
illegal factories closed down

Track & Trace: Securing supply chain

JTI is committed to comply with strict regulations around the world and implement technological solutions aiming to improve supply chain security. We support the regulatory measures to combat illicit trade, such as the Framework Convention on Tobacco Protocol to Eliminate Illicit Trade in Tobacco Products and implementation of TPD2 T&T in the European Union. 

Track and Trace is one of the technological solutions that aims to enhance control over the legitimate tobacco supply chain. It allows recording of forward movement of products in the supply chain (tracking); and retrieval of their history backwards (tracing). Track and Trace facilitates identification of the point of diversion of the products from the legal supply chain; and allow manufacturers to implement preventative measures to enhance the security of their supply chains. Also, the unique identification markings on each tobacco product pack help authorities to differentiate fake and genuine tobacco products. However, it cannot solve the issue of cross-border tobacco smuggling, unless implemented globally.

Track and Trace, like any other technology, cannot prevent illicit trade by itself. But, it can support law enforcement agencies and legitimate manufacturers efforts to fight the problem, if implemented as part of comprehensive regulatory measures together with effective enforcement and deterrent sanctions.

Introducing our Seizures and Analysis team

This under-the-radar group of JTI employees are dedicated to disrupting the damage caused by criminals all over the world.

 

Seizures and analysis

From their center of operations at Crewe in the UK, the Seizures and Analysis team draw on street smarts and cutting-edge technologies in equal measure.

The team works close by the UK Distribution warehouse – a location filled with the hustle and bustle of other activity more normally associated with such a building. The concentration of diligent work is underscored by the hum of machinery. This is JTI’s nerve center in the fight against illegal trade.

It is a fitting balance given that the Seizures and Analysis team itself relies on a blend of distinctly human skillsets, laboratory instruments and digital power.

Overseen by unit manager Kathryn Sweeney, the Seizures and Analysis operations is tasked with forensic analysis, recording and reporting.

Working closely with the AITO regional teams, the Seizures and Analysis team helps build the cases which go to support law enforcement to carry out successful prosecutions.

Our forensics team in action

Our forensics team in action

Analyzing seized counterfeit products

Meet the forensic analysts and investigators

The administrative and reporting duties form both the backbone of the Seizures and Analysis operation and the starting point for the inquiries that law enforcement sends their way.

What we’re doing to fight illegal trade - Meet the analyst
Their forensic analysis determines whether products are genuine or fake and provide the first clues in discovering just how these goods got to market
What we’re doing to fight illegal trade - Meet the analyst
The global seizures database that they manage houses an unparalleled amount of knowledge and information on illegal trade: from global and regional hotspots for criminal activity to emerging trends in the way illegal cigarettes are created and diverted
What we’re doing to fight illegal trade - Meet the analyst
Specialist knowledge witness statements increase the chances of law enforcement securing successful prosecutions
In the early days we used to just see one counterfeit variant of a brand… now we’re seeing, in some cases, in excess of 50 counterfeit variants of one cigarette brand alone. Our understanding of different products and how the market changes is key to our success.
Kathryn Sweeney, Seizures and Analysis Manager

Meet the analysts

A combination of smart research work with gritty, on-the-ground experience to find the perpetrators.

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They draw on the forensic and digital data generated by the analysts, in order to spot patterns and unearth trails that lead back to the source
DSI CVG 1 CV4 - 3 counter
They trace back wholesaling suspects and suspicious factories around the globe
DSI CVG 1 CV4 - 3 counter
They suggest further action to JTI and law enforcement, allowing the most appropriate next steps to be carried out
If you buy illegal cigarettes, you do not know where they come from, what conditions they were manufactured in, who was involved in the production and where the money is going… this is what our research uncovers and it isn’t pretty.
Paul McMahon, Anti-Illicit Trade Operations Director – Europe & Americas

HOW A SEIZURES AND ANALYSIS PROJECT PLAYS OUT

The world of illegal tobacco is wide-ranging and fast-changing. It takes a constantly evolving approach to keep up with increasingly tech-savvy criminals - a challenge that our Seizures and Analysis team thrives on.

While no two operations are ever the same, it’s important that their cases are as comprehensive as possible. It’s the best way to ensure a successful handover to law enforcement and an end to the illegal activity uncovered.

Applying a microscopic attention to detail

Forensic analysis is a crucial tool for determining exactly what type of illegal trade we’re dealing with – and how we might catch those responsible.

The specific forensic tests carried out by our analysts are a powerful and closely guarded secret – it’s important to not give anything away that might help the wrong people get around such tests. What we can tell you though is that we use the latest technologies and techniques to figure out whether the items are genuine products that have been illegally diverted or dangerous fakes – and once under the microscope it becomes chillingly clear just how dangerous contaminated products can be. “[We’ve seen] rat faeces, plastics, other chemical contaminants that would never be present in a normal cigarette,” says Vincent, the manager of the analysts, “I’ve seen debris, bits of string… even dead tobacco beetles!”

Once the forensic experts have carried out their laboratory work, it’s time to take the investigation digital…
 

Forensic tobacco microscope
power of big data

Wielding the power of big data

Findings from the forensic analysis are logged and cross-referenced with the Seizures and Analysis team’s global seizures database. 

“This allows us to provide seizure information to JTI management and many government agencies,” explains Vincent. “Ultimately, we can use this information to help identify potential ‘hot spots’ and emerging threats and trends.”

It is also the starting point, if the seized product has been found to be genuine, for one of the investigators to begin determining where exactly the product has been diverted from and how. Vincent Byrne, the AITO Global Director, picks up the story: “they’ll look at the data that’s been gathered, including the track and trace data.” Track and trace is key in the fight against contraband tobacco, creating a type of ‘passport’ for every product we manufacture, logging its journey as it makes its way from the factory to the shopfront. In an investigation like this, “that data will identify the country of origin, and the particular leakage in the supply chain.” Preventative measures are then introduced to stop the smugglers accessing our products.

power of big data

Delivering a zero-tolerance conclusion

Our expertise has enabled police carry out successful raids all over the world, in support of our zero-tolerance policy on smuggling.

If we do trace the source of illegal products back to one of our customers, and find that they have been working with criminals, we will suspend or end our relationship with them - and where appropriate, seek criminal prosecution. “We once determined that one of our wholesalers had been removing track and trace labels from products he was then selling to smugglers,” recalls Vincent. “When we confronted him, he denied all knowledge, but our experts were able to identify the cartons with their labels removed in his warehouse.”

We also work hard to produce information and evidence that helps shutdown any counterfeiting operations. In 2020 for example, our analysis pointed towards an illegal cigarette factory in Greece where fake JTI products were produced and distributed illegally also in other European countries. When law enforcement raided the factory, they found people both living and working there in squalid conditions. The police ultimately seized approx. 6 million cigarettes and over 33 tons of tobacco.

police raid

PROJECT TALON: OUR Anti Illegal Trade Operations ARE FIGHTING FRAUD ON FACEBOOK AND BEYOND…

Project TALON is our ongoing Western Europe initiative, designed to disrupt the online sale of counterfeit JTI products, mainly sold through social media platforms.

These social media platforms and other emerging online marketplaces are often poorly regulated. They provide an easy outlet for criminals to sell illegal tobacco products at a cheap price, without asking for age verification. This makes minors particularly susceptible. What’s more, as a 2017 BBC investigation showed, these listings often advertised unregulated, counterfeit cigarettes that contained harmful levels of lead and cadmium.

We launched Project TALON in the U.K. in early 2015. Its impact was felt immediately, and continues to put criminals selling dangerous counterfeits out of business.

What we’re doing to fight illegal trade - CV18
24,500
The number of sites selling counterfeit goods that have been removed since Project TALON launched in 2015
What we’re doing to fight illegal trade - CV18
~ 1.5 m
The number of counterfeit JTI products contained on those sites
What we’re doing to fight illegal trade - CV18
~ 2.6 m
The face value of the tobacco products being sold on those sites
The internet project has proved to be very successful following its UK pilot. This project demonstrates how our AIT operations respond to the changing illegal trade environments and the developing tactics of criminal groups. We’ve now established similar projects in FRANCE, ROMANIA and IRELAND with proposals being considered for other markets.
Vincent Byrne, Global AITO Director

Illicit vaping products: a new danger we’re committed to fighting online and off

We work with our partners to protect both consumers and our trade marks from the harmful counterfeits being pushed by unauthorized online sellers.

The danger that illicit vaping products pose to customers was made clear by a 2019 outbreak of EVALI: e-cigarette, or vaping, product use-associated lung injury.

By February 2020, more than 2,800 people had been hospitalized as a result of EVALI – a group that, in a chilling example of how unauthorized sellers exploit vulnerable underage people, included children as young as 13.

As anticipated by numerous Reduced-Risk Products (RRP) and Anti-Illicit Trade experts, the rise in illegal sales of Reduced-Risk Products (RRPs) is growing in line with the category’s general growth, along with the increasing regulatory frameworks being imposed on the category.

Through constant monitoring and enforcement on e-commerce and social media platforms however, we’re fighting back. Distributors and retailers for our flagship vaping brand Logic are regularly assessed to ensure they comply with regulations. Where we suspect engagement in criminal activity, we proactively investigate sellers. If our suspicions are proved correct, we join forces with local and federal authorities to take action.

The key focus areas of our current investigations:

COUNTERFEIT PRODUCTS
We’re targeting any page that we suspect to be selling counterfeit Logic products – this is assessed by price, image, or expiration date of the product
COPYRIGHT VIOLATIONS
If any page or site is using our copyrighted logo or photos without an agreement with JTI, the site or page is sent a takedown notice
AGE VERIFICATIPON
We’re closing down any pages or sites that do not have an age verification system for someone purchasing our Logic products

The tangible impact of our 2020 investigations:

What we’re doing to fight illegal trade - CV23
17,000 +
counterfeit vaping products were removed from thousands of unauthorized e-commerce platforms
What we’re doing to fight illegal trade - CV23
$ 456,935 +
The value of these seized counterfeit vaping products
What we’re doing to fight illegal trade - CV23
66
investigations were also conducted on brick-and-mortar retailers offering illicit vaping products or selling to minors – sometimes both
CV counter - The tangible impact of our 2020 investigations
893
websites checked for proper age verification
CV counter - The tangible impact of our 2020 investigations
465
Websites offering counterfeit COVID-19 products reported to the authorities

Why this work is important

Rigorous investigative work doesn’t just protect our business, it protects you, the consumer.

The results of the forensic analyses really hit home just how dangerous illegal tobacco can be. From poisons and animal waste to inferior papers known to cause house fires, it’s imperative we do what we can to stop dangerous contaminated products getting into the hands of smokers.

These immediate risks largely exist because the criminals and terrorists trading in illegal tobacco are willing to cut whatever corners are necessary in order to maximize profits – which are then funneled into activities including drug-smuggling and human trafficking. By cracking down on illegal tobacco, we’re also helping crack down on other even more dangerous crimes.

Find out more about the true cost of illegal tobacco

The most powerful weapon in the fight against illegal trade is better regulation

Because even with our help, law enforcement agencies simply do not have the time, resources or remit to entirely solve the problem.

Excessive regulation actually makes things worse. Heavy taxation, bans on traditionally popular flavored tobacco products, such as menthol, and so-called ‘plain’ packaging only serve to encourage consumers to buy the cheaper alternatives offered by criminals.

Experts agree. A study published in the journal Addiction found that a quarter of current menthol smokers in the United States might look to buy tobacco from illegal sources if menthol products were prohibited, and a report on ‘The Impact of Plain Packaging on the Illicit Trade in Tobacco Products’ by Professor Peggy Chaudry and Professor Alan Zimmerman concluded that:

“Plain packaging for tobacco products will worsen the illicit trade in tobacco products [making] life easier and cheaper for counterfeiters [and] more difficult for those who are required to differentiate between genuine and fake packs, such as retailers and law enforcement agencies.”

Regulation that is well thought-through should make life harder for criminals, not easier. It should also encourage consumers to buy from legitimate vendors, reducing the market for illegal cigarettes in the process.

Read more

Uniting with other industries to fight illegal trade

From toxic cosmetics to poisonous food… the fight against illegal trade affects us all.

Though you may not realize it, dangerous counterfeit goods are all around us. Sure, it’s probably obvious that the plastic handbag you saw in a market while on holiday isn’t really ‘designer’ - but what about the cut-price cosmetics that caught your eye on an auction website recently? What about the replacement brake pads that your local mechanic ordered at a discount price and fitted to your car, or the bottles of ‘champagne’ you found on the cheap from an overseas ‘wine merchant’?

Counterfeiting is rife in all major industries, with criminal gangs looking to turn a massive profit regardless of the harm it might cause to you. It’s important to be as vigilant as possible, but there are certain goods where this is extremely difficult. This is a major problem for the tobacco industry and smokers – how does the average person tell the difference between a genuine and a counterfeit cigarette?

Fake products from the pharmaceutical, food and cosmetics industries pose similar problems, but illegal tobacco makes up an overwhelming proportion of global illegal trade. They’re easy and cheap to fake, easy to smuggle and offer high profit margins at low risk – something that criminal gangs and terrorist organizations know all too well.

Counter - Uniting the fight against illegal trade
$ 509 billion
Estimated value of the volume of the international trade in counterfeit and pirated products* (excl. domestically produced and consumed)
Counter - Uniting the fight against illegal trade
6.8 %
goods imported into the EU are counterfeit*
CV counter - UNITING WITH OTHER INDUSTRIES TO FIGHT ILLEGAL TRADE
760 million
retail value of counterfeit goods seized at EU’s external borders in 2019**
CV counter - UNITING WITH OTHER INDUSTRIES TO FIGHT ILLEGAL TRADE
21.3 %
of all counterfeit goods seized at EU’s external border in 2019 were cigarettes
The risk to people from counterfeit products is massive and can’t be underestimated. Those who use illegal products aren’t aware of these risks… and we're sure if people thought about that, they wouldn’t buy it.
AITO Team

Would you still buy a bottle of vodka if you knew it had been cut with cleaning products and paint solvents?

Counterfeit alcohol is a major global problem and it’s particularly rampant during the festive period when people want to stock up for Christmas and New Year parties. According to the U.K.’s Local Government Association, stashes seized in 2016 contained antifreeze, cleaning products and paint solvents, all of which have the potential to kill when consumed.

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Would you still buy makeup that contained dangerous substances?

In 2017, U.S. customs officials seized more than 2,000 shipments of counterfeit beauty products. These often contained knock-offs made in unsanitary conditions, using substances liable to cause allergic reactions, skin rashes, swollen lips and even chemical burns.

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HOW WORKING TOGETHER YIELDS POWERFUL RESULTS

Most industries susceptible to illegal trade are able to join forces with the relevant public bodies, drawing on their respective strengths to fight back in a meaningful way.

For example, the pharmaceutical industry is able to draw on The Drug Quality and Security Act in the U.S. and the Falsified Medicines Directive in the E.U., greatly enhancing the chances of prosecuting producers and smugglers of counterfeit drugs.

Public awareness campaigns can also help curb the willingness of consumers to buy counterfeit goods. In 2012, 81 fashion brands collaborated with the French National Anti-Counterfeiting Committee to run advertising about the harm caused by fake goods. It exposed a huge audience to issues around quality, job losses and safety that could otherwise be easy to ignore.

Raids by law enforcement are a necessary, and often heroic, undertaking that severely dent criminal counterfeiting operations. The truth is that this has to work in tandem with effective regulation and legislation. A 2015 raid by Chinese police shut down an illegal Beijing factory responsible for building over 41,000 counterfeit iPhones – and according to Reuters this was the result of Chinese authorities finally taking a tougher stance on IP infringement.

IT’S INSPIRING TO SEE THE CLOSE LEVELS OF PUBLIC/PRIVATE SECTOR COOPERATION AS TOBACCO CONTROL ACTIVISTS CONVENIENTLY IGNORE THE ILLEGAL TRADE. GOVERNMENTS, LAW ENFORCEMENT AGENCIES AND TOBACCO MANUFACTURERS NEED TO WORK TOGETHER ON A GLOBAL SCALE IF WE WANT TO STAND A CHANCE AGAINST THE INTERNATIONAL ORGANIZED CRIME NETWORKS DEALING WITH ILLEGAL TOBACCO.
VINCENT BYRNE, GLOBAL AITO DIRECTOR