17 arrests in illicit tobacco crackdown in Europe

A UK-EU operation targeting the illegal trade in tobacco has led to the seizure of 67m cigarettes, with 17 people taken into custody.

The joint operation took place between November 2 and 13 - involving enforcement agencies in the UK and 15 EU member states – and has dismantled a criminal network focused on illegally diverting cigarettes to the black market, sidestepping an estimated €30m ($37m) in taxes.

The value of cigarettes is estimated at around €36m, with the bulk of the seized shipments produced in Belarus, according to Europol.  The operation also intercepted 2.6 tonnes of tobacco, and the largest seizures were in Lithuania, the UK, Poland, Ireland, Romania, Sweden, Latvia and Croatia.

The fraud took the form of a so-called mechanism of duty suspension abuse, according to Europol. Duty suspension allows organisations in in tobacco products supply chain to pay duty at a later stage, for example during storage at a factory or warehouse.

In the scam, cigarettes produced inside the EU and declared for export or intra-EU delivery were moved under duty suspension, but either never left EU customs territory or were not delivered within the EU as indicated.

Cigarettes that were withdrawn from transit regime or released into free circulation in the EU under that suspension were distributed illegally without payment of taxes and duties

A recent study by KPMG – commissioned by tobacco giant Philip Morris International – showed that consumption of illicit cigarettes fell below 8 per cent of total cigarette use last year, but was still equivalent to nearly 39bn smokes and €9.5bn in lost tax revenues.

It also suggested that imports of illicit cigarettes from non-EU countries such as Ukraine and Belarus declined in 2019, with “increasing volumes from illegal factories within the EU.”