OLAF signals more plans to tackle illicit tobacco trade

The European Anti-Fraud Office (OLAF) is making moves to further crackdown on the growing illicit tobacco market in Europe.

According to Margarete Hofmann, director for policy at OLAF, the agency is currently preparing a new action plan to tackle the illicit trade, which is estimated to be a $40bn to $50bn a year problem.

The expectation is the action plan will be adopted by the European Commission later this year, Hofmann told EURACTIV.com in an interview.

“The fight against the illicit tobacco trade will remain a key priority for us,” she said.  

The action plan follows an OLAF-organised conference last month that highlighted the poor public awareness of the link between smuggled tobacco and organised crime, and even terrorism funding, which emphasised the need for an EU-level strategy to combat the illicit trade.

At the conference, Hofmann announced that the European Commission was working to include tobacco and cigarette smuggling in an upcoming EU counter-terrorism strategy, while Members of the European Parliament had voted on a non-legislative resolution urging EU countries to proactively track suspicious transactions and share intelligence with other EU states in a bid to crackdown on terrorist financing. 

Several countries, notably France, have called for sanctions relating to the trade of illicit tobacco and cigarettes to be harmonised across the EU to act as a deterrent, although the EU Tobacco Products Directive, which includes track and trace security features, is scheduled to come into force next year.

However, Hofmann has previously noted the need to adapt to the new challenges of the illicit tobacco trade.

The scale of the illicit tobacco problem in Europe is a growing concern, especially as authorities speak of rising levels of the trade in Balkan states and countries situated at the eastern border of the EU, such as Belarus.

In the interview with EURACTIV.com, Hofmann particularly noted illicit cut tobacco and cheap whites as growing problem areas, while contraband and counterfeit cigarettes still make up a large chunk of the illicit market.

Illicit cut tobacco, also known as ‘chop-chop’ or ‘bulk tobacco’, is shredded loose leaf tobacco sold in unlabelled pouches outside legitimate channels and which is smoked as roll-your-own cigarettes, while cheap whites are legally produced cigarettes that are smuggled and traded illegally.

“Trends suggest that the illicit cut tobacco products account for a high share of the overall cut tobacco market in Central and Eastern European countries,” Hofmann said.

She added: “Cheap whites are an increasing problem in the EU. This influx of cheap whites coming from outside the EU tends to manifest itself in large seizures. In the last two years, a large majority of cigarettes seized with OLAF’s assistance were cheap whites.”  

In one sweep in collaboration with Ukrainian authorities last year, OLAF seized more than 2.5 million cheap whites at the EU external border.

The main source of cheap whites tends to be from the UAE, Belarus and the Far East, she said. 

EU policy makers have pointed to the oversupply of genuine products being manufactured and the exploitation of free trade zones as reasons behind the growing trade in illicit tobacco and cigarettes.

According to Hofmann, the illicit tobacco trade remains broadly stable in the EU although there are variations between countries.

“All in all, the illicit tobacco trade is estimated to cost the EU and its member states some €10bn a year. This deprives our governments of valuable revenue.”