6th June 2024

The high price of illicit tobacco

The trade in illicit tobacco has a serious economic and human cost, says Vincent Searle.

By Vincent Searle
Trading Standards Officer, London Borough of Newham
As criminals innovate and adapt, regulators and enforcers must be vigilant and proactive in gathering intelligence
As we confront the menace of illicit concealments, it is important to recognise that this is not just a law enforcement issue but a societal imperative

In the shadows of the London Borough of Newham, a chilling reality unfolds with the discovery of five concealments of illicit tobacco products in recent months – the latest in a string unearthed in the local authority’s operational inspections.

These concealed compartments and covert rooms, meticulously crafted to evade detection, paint a grim picture of the sophistication behind the trade in illicit tobacco. But beyond the clandestine craftsmanship lies a web of consequences that imperil not just law enforcement efforts but also the very economic fabric of the UK.

A tobacco detection dog discovers a hidden cache of illicit tobacco in Newham

According to data from the Intellectual Property Office (IPO), UK Border Force (UKBF), and HM Revenue & Customs (HMRC), the surge in illicit concealments is not just a localised anomaly but a symptom of a larger, nationwide trend. Organised crime syndicates, fuelled by insatiable demand, are orchestrating a hidden economy that siphons off billions in duty and taxation, dealing a severe blow to the UK’s fiscal health.

HMRC and UKBF estimate that the illicit tobacco market in duty and related VAT amounted to £2.8bn in 2021-2022. These proceeds fuel the smuggling of weapons and illegal drugs worldwide, as well as human trafficking. The strategic efforts of HMRC and UKBF have yielded significant results, with more than 27 million illicit cigarettes and 7,500kg of hand-rolling tobacco seized in the first two years of Operation CeCe — a multi-agency, HMRC-funded initiative to stub out the trade in illicit tobacco.

In its Trading Standards Survey 2022-2023, the IPO highlighted significant trends in criminal activity. According to the data, 80% of responding authorities prioritised investigations into cigarette and tobacco fraud, with more than 40% focusing on electronic vaping products as a category linked to criminality. Moreover, retail outlets emerged as the primary location for intellectual property crime investigations, as identified by more than 80% of authorities.

Key findings indicate the consistent presence of illicit tobacco, alcohol, clothing, perfumes and counterfeit packaging in investigations over extended periods. Notably, investigations into vaping products have quadrupled over the past five years, while enquiries into cosmetics and make-up have declined since 2018. Additionally, shifts in crime locations are evident, with a decline in investigations via social media and websites since 2020, while investigations into shops have reached record levels.

The allure of the illicit trade lies not only in its profitability but also in its ability to exploit vulnerabilities in law enforcement and regulatory frameworks.

Methods of concealing illicit tobacco are becoming increasingly sophisticated

As funding for enforcement dwindles and alternative measures struggle to keep pace, criminals are emboldened to innovate. From hidden rooms to purpose-built concealments, magnetic fixings to hydraulic configurations, the arsenal of devious tactics grows increasingly sophisticated, leaving law enforcement agencies grappling in the dark.

But the consequences extend far beyond lost revenue streams. The underbelly of illicit trade is rife with exploitation, preying on vulnerable individuals ensnared in its grip. From human trafficking to labour exploitation, the human cost is immeasurable, leaving shattered lives in its wake.

As criminals innovate and adapt, regulators and enforcers must be vigilant and proactive in gathering intelligence. Policymakers and regulators need to adopt a comprehensive approach to address emerging challenges. By conducting horizon scanning, we can anticipate potential threats, risks and harms, and prevent criminals from safeguarding their illicit gains.

Unfortunately, this may lead to an increase in assaults on enforcement officers as they carry out their duties. It is critical for regulators and enforcers to remain vigilant and proactive in gathering intelligence as criminals innovate and adapt.

As we confront the menace of illicit concealments, it is important to recognise that this is not just a law enforcement issue but a societal imperative. It demands a holistic approach that combines robust enforcement measures with targeted interventions to address the root causes driving demand. Moreover, it calls for a re-evaluation of funding priorities, ensuring that enforcement agencies are equipped with the resources needed to combat the evolving tactics of organised crime.

The road ahead is fraught with challenges, but it is also laden with opportunities for meaningful change. By shining a light on illicit trade, we can confront its pernicious effects head-on, safeguarding not just the economic prosperity of Great Britain but also the dignity and wellbeing of all who call it home.

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