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Tag: illicit

  • Kenya: Illicit Cigarettes Jump to 37% of the Market 

    Kenya: Illicit Cigarettes Jump to 37% of the Market 

    Kenya is losing more than Sh9 billion ($69 million) annually in potential revenue (taxes and levies) to the illicit cigarette trade, a new report now indicates, with almost all of these products being smuggled into the country. The newly released findings from a study conducted by international research company Kantar indicate that the illicit cigarette trade in Kenya has soared to a record high, with more than one in three cigarettes sold in the market not paying taxes.

    BAT Kenya is calling for urgent action by the authorities to tackle and mitigate the profound implications of illicit trade in cigarettes, and said “this alarming situation calls for drastic, multipronged action to seal the loopholes and protect legitimate business in Kenya.”

    “This alarming rise in illegal cigarette trade is not only depriving the Kenyan government of vital revenue needed for the country’s economic stability, but is also undermining the security and livelihoods of thousands of Kenyans in our value chain,” BAT Kenya managing director Crispin Achola said. “The illicit trade in cigarettes is not only an economic issue, it is a matter of national security and public interest.”

    Last year, the value of smuggled and counterfeit goods seized at Kenya’s entry points, reached Sh243. 5 million ($1.9 million), according to Kenya Revenue Authority (KRA), up from Sh200 million ($1.5 million) the previous year. Reports also suggest illicit cigarettes jumped from occupying 27% of the market to 37% in just one year.  

  • Pakistan’s Illicit Cigarette Trade Surges to 58% of Market

    Pakistan’s Illicit Cigarette Trade Surges to 58% of Market

    The director of the Pakistan Tobacco Company (PTC), Asad Shah, voiced concern over the growing share of illicit cigarette trade in Pakistan, now estimated at 58% of the market. Speaking at a pre-budget media briefing, Shah highlighted that the total size of the cigarette industry in Pakistan stands at approximately 82 billion sticks annually. Despite this, only 34 billion sticks are currently taxed, a stark decline from 67 billion a decade ago.

    He emphasized the significant loss in potential tax revenue, stating that the sector could generate up to Rs 570 billion ($2 billion) annually. However, only Rs 292 billion ($1 billion) was collected during the fiscal year 2023-24, with Rs 223 billion ($781 million) received in the first 11 months of the current fiscal year.

    Shah revealed that while the legal cigarette sector holds just 42% of the market, it contributes a staggering 98% of the total tax revenue. He criticized the lack of penalties for violating minimum pricing laws, stressing that no policy can be effective without equal enforcement across the board. He also raised alarm over the sale of locally produced cigarettes without tax stamps, which undermines the government’s track-and-trace system.

    To address these issues, Shah proposed several measures, including a revision of the minimum pack price to counter the perception that cigarettes are inexpensive in Pakistan. He also recommended a significant reduction in the adjustable tax on cigarette filter material (acetate tow) from Rs 44,000 $154) per kg to Rs 4,000 (14) per kg to discourage smuggling. Authorities have already seized 450 metric tons of smuggled acetate tow this year.

  • FDA and CBP Seize $34M in Illegal E-Cigarettes in Chicago

    FDA and CBP Seize $34M in Illegal E-Cigarettes in Chicago

    The U.S. Food and Drug Administration (FDA) today (May 22) announced the seizure of nearly 2 million units of unauthorized e-cigarette products in Chicago, with an estimated retail value of $33.8 million. The seizures, which occurred in February of this year in collaboration with U.S. Customs and Border Protection (CBP), were part of a joint federal operation to examine incoming shipments and prevent illegal e-cigarettes from entering the country.

    During this operation, the team uncovered shipments of various illegal e-cigarette products, almost all of which originated in China and were intended for shipment to various U.S. states. FDA and CBP personnel determined that, in an apparent attempt to evade duties and the review of products for import safety concerns, many of these unauthorized e-cigarette shipments contained vague product descriptions with incorrect values. Upon examining shipments, the team found several brands of unauthorized e-cigarettes, including Snoopy Smoke, Raz, and others.

    “The FDA, working with our federal partners, can and will do more to stop the illegal importation and distribution of e-cigarette products in the United States,” said FDA commissioner Marty Makary. “Seizures of illegal e-cigarettes keep products that haven’t been authorized by the FDA out of the United States and out of the hands of our nation’s youth.”

    In the lead up to this operation, the joint FDA and CBP team identified potentially violative incoming shipments and completed other investigative work. The team was also able to successfully implement several new internal efficiencies and procedures, building off previous operations.

    “We continue to see an increased number of shipments of vaping-related products packaged and mislabeled to avoid detection,” said Bret Koplow, acting director of the FDA’s Center for Tobacco Products. “However, we have been successful at preventing these shipments from entering the U.S. supply chain – despite efforts to conceal the true identity of these unauthorized e-cigarette products.”

    Most shipments violated the FDA’s Federal Food, Drug, and Cosmetic Act, while some products were also seized for Intellectual Property Rights violations for unauthorized use of protected trademarks. All of the e-cigarette products seized in this operation lacked the mandatory premarket authorization orders from the FDA and therefore cannot be legally marketed or distributed in the United States.

    Standard practice for products forfeited to the government include disposing of the products in accordance with the law. In the case of unauthorized new tobacco products, including e-cigarettes, that generally means they will be destroyed.

    FDA also sent, for the first time, import informational letters to 24 tobacco importers and entry filers responsible for importing these illegal e-cigarettes. The letters advise the recipients that it is a federal crime to make false statements or entries to the U.S. government, and the FDA seeks information on the steps they have taken to ensure compliance with applicable federal tobacco laws and regulations. Specifically, the letters advise the firms to ensure their import entries contain complete and accurate information moving forward. Failure to do so may also be viewed as an intentional attempt to circumvent the FDA’s review of the shipment. Firms are requested to respond to the letters within 30 days with the requested information.

  • Hungary Dismantles $67M Illegal Cigarette Network

    Hungary Dismantles $67M Illegal Cigarette Network

    The largest illegal cigarette manufacturing network ever uncovered in Hungary has been dismantled by the country’s National Tax and Customs Administration (NAV). Coordinated raids at 41 locations in May led to the seizure of over 24 billion forints’ ($67 million) worth of contraband tobacco products and equipment, NAV said in a statement.

    Authorities confiscated 156 tons of tobacco, enough to produce 13 million packs of cigarettes, 1 million packs of counterfeit cigarettes, 48.5 million empty cigarette boxes, three full cigarette production lines, processing machinery, forklifts, packaging equipment, and radio-jamming devices.

    The estimated budget loss in excise and VAT would have reached 81 billion forints ($226.8 million) had the goods entered the market.

    Six suspects, one Hungarian and five dual Moldovan-Romanian citizens, have been detained and formally charged with organized tax fraud. One additional suspect is still at large and the subject of an arrest warrant.

  • Reno Reporters Stumble into Counterfeit Zyn

    Reno Reporters Stumble into Counterfeit Zyn

    News 4-Fox 11 in Reno, Nevada, is reporting its investigation that found counterfeit Zyn products for sale at a local convenience store that looked identical to the legitimate brand. Last October, an employee of the station bought three cans of “Zyn,” which he said tasted different than usual. The cans were sent to McKinney Specialty Labs in Virginia for testing.

    “They really are misbranded and illegally on the market,” Dr. Roxana Weil, chief regulatory science officer at McKinney, said. The tested product only contained 4.5mg of nicotine, contrary to the 6mg advertised, and additionally contained six methyl nicotine, an additive that should not have been in there. The lab only tested for nicotine, so it’s unclear what else could be in the counterfeit product.

    Dr. Willie McKinney, CEO of McKinney, said, “It was a little bit of a surprise to see six methyl nicotine simply because it’s manufactured. It’s man-made.”

    Representatives from Philip Morris International, the makers of Zyn, and the store owner believe the counterfeit products likely came from a distributor.

    “Our findings are that these are produced from overseas,” said Brian Weinhaus, director for illicit trade at PMI. “They are not produced in the United States.”

  • Finland Seizes 10M Cigarettes in Transnational Network Case

    Finland Seizes 10M Cigarettes in Transnational Network Case

    Finnish Customs has uncovered a large-scale cigarette smuggling operation involving more than 10 million cigarettes illegally brought into the country, with unpaid import duties exceeding €3.5 million, according to the Helsinki Times. Authorities said the cigarettes were transported using regular logistics channels in a way that closely mimicked legitimate cargo operations. The shipments were ordered, collected, and stored through standard delivery procedures to conceal their illicit nature.

    “The pick-up, transport and storage of illegal goods was ordered just as in a legal delivery,” said Janne Mikkonen, the customs officer leading the investigation. “In this case, all of the imported cigarettes were brought in by the same driver, who is one of the suspects and remains in pre-trial detention.”

    The case is linked to a broader criminal investigation that began last autumn that has grown into a transnational case involving multiple suspects and law enforcement agencies. Four suspects from Baltic countries are currently in custody in Finland, and additional arrests have been made in Estonia and Latvia, where several individuals are being held in connection with the operation. Customs officials have not ruled out further arrests and say the investigation is ongoing. The operation is considered part of an organized network that exploited legal transport systems to distribute untaxed tobacco products across borders.

  • South Africa: Corruption and Illicit Trade Threaten Economic Stability

    South Africa: Corruption and Illicit Trade Threaten Economic Stability

    Philip Morris South Africa (Pty) Ltd (PMSA) welcomed the release of the 2025 Illicit Trade Environment Index by the Transnational Alliance to Combat Illicit Trade (TRACIT), a global benchmark report aimed at providing an update on the set of legal, regulatory and policy recommendations designed to strengthen the fight against illicit trade around the world.

    The Index ranks 158 countries based on their structural resilience to illicit trade—across sectors including tobacco, alcohol, pharmaceuticals, digital commerce, and fast-moving consumer goods—and highlights how systemic challenges such as gaps in enforcement and regulatory inconsistencies can contribute to the growth of the global black market. South Africa ranks 60th out of 158 countries, indicating moderate resistance to illicit trade, but with notable vulnerabilities in areas such as supply chain control and enforcement capacity.

    “Illicit trade is not a victimless crime. It deprives the government of critical revenue, fuels organized crime, and puts legitimate businesses at a disadvantage,” said Philippe Van Gils, Director of Illicit Trade Prevention at Philip Morris International. “The TRACIT Index reminds us that a comprehensive approach is required, one that addresses corruption, strengthens enforcement, and ensures regulatory frameworks are both appropriate and effectively implemented.”

    PMSA echoed TRACIT’s call for evidence-based and risk-proportionate regulation. “In the tobacco sector, high excise taxes and overly restrictive product policies can unintentionally incentivise consumers to turn to unregulated, illicit alternatives,” the company said.

    “Policies must be crafted with the real-world impact in mind,” Van Gils said. “Excessive taxes on cigarettes without access to scientifically substantiated less harmful, affordable, and legal alternatives merely encourage the illicit market. A risk-based taxation model, where smoke-free products like heated tobacco are taxed significantly lower than cigarettes, can encourage adults who smoke to switch to better smoke-free alternatives.”

    PMSA supports TRACIT’s multi-pronged policy roadmap to improve countries’ ability to detect, deter, and dismantle illicit trade operations. PMSA is urging the South African government and private sector stakeholders to prioritise the following:

    •             Crafting a national anti-illicit trade strategy, integrating smart tax policies, robust regulatory enforcement, and corruption safeguards;

    •             Strengthening border control and customs capacity, particularly at high-risk points such as ports and Free Trade Zones;

    •             Securing supply chains with digital track-and-trace systems and enhanced due diligence requirements for manufacturers and logistics providers;

    •             Enhancing cooperation between government, law enforcement, and the private sector, both nationally and regionally;

    •             Educating consumers on counterfeit and smuggled products.

    “Illicit trade networks are complex, well-funded, and increasingly digital,” said Van Gils. “It’s no longer enough to raise taxes or regulate products, we need modern enforcement tools, better online regulation, and a serious crackdown on corruption.”

  • Maldives’ Customs Seize 13.6M Cigarettes as Illicit Market Thrives

    Maldives’ Customs Seize 13.6M Cigarettes as Illicit Market Thrives

    Custom officials in the Maldives seized 13.6 million cigarettes at a sea cargo terminal worth MVR 122 million ($7.9 million), officials said. Inspectors found 1,360 cases of cigarettes in two 40-foot containers.

    Under the law, cigarettes must be imported with a warning message label and under a special permit, but these cigarettes lacked both. Customs did not disclose the name of the company attempting to import them.

    Officials believe the illicit cigarette market in the country is thriving. Following a doubling in import duty in the Maldives, reports said detections of Manchesters, a popular smuggled brand in the region, are being made and tax revenues have plunged suddenly.

    “High taxes and revenue losses are also encouraged by international agencies in some countries, though analysts say high taxes and economic controls of all kinds encourage disrespect for the law and corruption,” Economy Next wrote, claiming duties from cigarette imports in Maldives dropped from MVR 100 million ($6.5 million) to MVR 5 million ($325,000). “There have been some anecdotes suggesting that Maldives imports are smuggled to third countries, like Sri Lanka, through what some euphemistically call the ‘muhuda meda market’ (the market in the middle of the sea).”

  • Australian State Ups Penalties for Illicit Tobacco 

    Australian State Ups Penalties for Illicit Tobacco 

    Australia’s New South Wales government has introduced major reforms that are expected to be phased in by July 1 to combat illicit tobacco sales. They include a new licensing scheme for retailers and significantly increased penalties for offenders. NSW is following the lead of Queensland, which recently enacted similar measures.

    Under NSW’s new laws, businesses will need to obtain a tobacco retailing license or face fines of up to A$220,000 ($140,000) for corporations and A$44,000 ($28,000) for individuals. Retailers with a current Retailer Identification Number (RIN) will receive information on how to apply for a license. 

    Heavier penalties are now in effect for offenses such as selling single cigarettes or in packs of less than 20, tobacco products without health warnings, or using prohibited packaging. Corporations caught committing these offenses face fines of up to A$770,000 ($493,000), while individuals can be fined A$154,000 ($98,600). 

    The new laws have also strengthened penalties for both individuals and corporations caught selling tobacco products to minors. Individuals can be fined up to A$22,000 ($14,000) for their first offense and A$110,000 ($70,400) for subsequent offenses, while corporations face fines of up to A$110,000 for a first offense and A$220,000 for further offenses.

  • Thailand: Vape Users Can be Charged with Receiving Smuggled Goods 

    Thailand: Vape Users Can be Charged with Receiving Smuggled Goods 

    The Thai government will take tougher action against e-cigarette users, who can now be charged with receiving smuggled products, deputy government spokesman Anukul Prueksa-anurak said. The government will step up its suppression efforts of e-cigarettes and related products, prosecuting not only smugglers and distributors but now also the users. 

    Under the Customs Act, the offense carries a jail term of up to five years and/or a fine equivalent to four times as much as the prices of smuggled products plus any duty. E-cigarettes are illegal in Thailand, but that has not stopped them from being openly sold, even in areas near schools, leading to an alarming increase in vaping among young people. The recent hospitalization of teens with lung damage has drawn further attention to the problem.

    Anukul said the percentage of vape users among people aged 15-29 years rose from 5.8% in 2019 to 12.2% in 2024.

    Prime Minister Paetongtarn Shinawatra recently ordered a serious crackdown on e-cigarettes, particularly online sales channels. Anukul said that in the two months since the crackdown began, sales and the number of e-cigarette users had dropped by more than 80%.