Organised crime 'deeply involved in counterfeit trade'

The illicit trade in counterfeit tobacco, alcohol and pharmaceuticals in the UK is increasingly being run by organised crime networks, says a new report.

Published by the Royal United Services Institute (RUSI), the report suggests the high profit margins associated with illicit trade are used to fund other criminal activities, a fact which is "not widely understood by the British public" or acknowledged by "many politicians and officials in government."

The illicit trade in tobacco, alcohol and pharmaceuticals are particularly attractive to organised criminals as it is a low-risk and high-value activity, and there are four key trends that are helping organised crime consolidate their position in these activities, according to Calum Jeffray, one of the report's authors.

These are public acceptance- buying products despite knowing they are illicit and viewing it as a 'victimless' crime  - the diversification of criminals into low-risk activities, the ease and efficiency of selling illicit goods over the Internet and the fact that these activities tend to be low profile.

"We do not see the violence associated with other criminal activities such as drugs and gun crime," said Jeffray, although he added RUSI's report has clearly found that "organised crime is more pervasive in British society than is generally acknowledged".

According to UK government estimates there are around 5,000 organised crime groups in the country - with 36,000 members - and their activities cost the economy around £24bn ($37bn) each year. more than twice the impact of drugs trafficking.

And while the public are aware of counterfeit goods, they remain largely ignorant of the "corrosive effect" these activities have on society and still consider them to be victimless crimes.

"Illicit goods … are within easy reach of consumers," says the report. "These goods are in demand, available on tap, and represent a significant risk to public safety, community well-being and consumer health."

One major trend identified early on by the RUSI researchers was the growth in the number of Eastern European organised crime syndicates in the UK

It is often cited that the proceeds of this form of organised crime go towards funding terrorist activities, but RUSI has found little evidence for that, with its research suggesting that these are actually used to fund other criminal activities.

RUSI recommends public awareness campaigns to change society's perceptions of illicit trade and the role of organised crime. Meanwhile, the UK tax authorities should find new ways to uncover accurate information about the scale of illicit trade and set up a taskforce across multiple government departments to "explore new trends in trafficking illicit goods and services."

There needs to be greater sharing of information between HMRC, the Border Force, Trading Standards, police and other official bodies - as well as the private sector - and along with more sophisticated methods for collecting and disseminating data.

"Industry must take the lead on preventative measures such as ‘track and trace’ technology in order to secure and make it more difficult for organised crime groups to penetrate supply chains," says the report. 

The UK Medicines and Healthcare products Regulatory Agency (MHRA) welcomed the RUSI report, noting that it is "exploring the report’s recommendations, a number of which are already being addressed by the provisions of the Falsified Medicines Directive which has been implemented in the UK and is coming into force in stages."

A key conclusion from the research is that government needs to think creatively about ways to make illicit trade riskier for organised criminals, for example by increasing the penalties for those convicted rather than focusing solely on increasing the number of prosecutions.

RUSI formed a dedicated strategic hub for organised crime research last year with the aim of developing "a world class research agenda that meets the needs of policymakers and practitioners in the field."