Taking on a 1.6 trillion dollar problem
1 MAR 2021
Written by Alvise Giustiniani, Vice President Illicit Trade Prevention, Philip Morris International
I would say that USD 1.6 trillion is a lot of money. To tell the truth, it is such a huge number that it is nearly impossible to properly comprehend. To put it into context, it is how much Amazon, the world’s third-largest company, is currently valued at. It is the same as the annual economic output of Canada, the world’s ninth-largest economy.
USD 1.6 trillion is also the Munich Security Conference (MSC)’s conservative estimate of the total financial value of criminal cross-border illicit trade. This includes the smuggling of arms, tobacco, and pharmaceuticals.
That is USD 1.6 trillion going into the hands of criminals each year; money that funds global networks solely focused on making more profit, despite the impact on people’s lives and the cost to society as a whole.
Between 400 and 460 billion cigarettes are sold illegally each year. According to the U.S. Department of State, the illicit trade of tobacco annually costs taxpayers and governments between USD 40 billion to USD 50 billion. Again, this is money that—instead of going toward public services—goes directly into the hands of criminals to fund activities that lead to the misery and misfortune of millions across the world.
So, let’s be clear. The black market’s access to such vast resources is an issue that not only affects legitimate companies like ours, but is a significant and growing threat to national and international security.
While illicit tobacco makes up only a portion of the overall black market, the issue of illicit trade is not neatly siloed by industry. The proliferation of illicit trade in one area funds the growth of sales in another. This is why PMI works tirelessly to end illicit trade across all industries, not just where it directly affects us and our consumers.
So, how can we take on a USD 1.6 trillion problem?
We need to stay one step ahead of criminal organizations, now more than ever.
At the end of last year, I wrote about how COVID-19 has significantly changed the illicit trade landscape. Most notably the pandemic has accelerated the move of illicit sales onto e-commerce platforms. But this is just one of the many trends we are working hard to keep ahead of.
STOP: ILLEGAL reported last month on the concerning growth of counterfeit cigarette manufacturing across Europe. Counterfeit remains one of the only forms of illicit tobacco that continues to rise in the region. It is a massive growth industry for domestic and international criminal enterprises.
As ever, anti-illicit trade professionals are engaged in a constant battle to stay ahead of criminal organizations as their operations adapt and evolve in these ways. Continuously driving for research, innovation, and collaboration is an absolute must if we hope to keep pace with our adversaries.
We must harness technology to fight illicit trade and secure our supply chain.
We are truly starting to see the impact that next-generation technology can have on tackling illicit trade. Funding and incubating projects that apply cutting-edge technology to anti-illicit trade efforts will ensure that we can effectively tackle illicit trade across the world. This could be multiple applications of authentication and security technologies to track and trace products throughout the supply chain, or the use of machine learning to identify and prevent illegal online sales.
By focusing on technology innovation, we will ensure that resources can be more equitably shared across all countries, not just those that have the resources to invest in hiring more border control and customs officers.
We have to advocate for effective regulation.
To fight back against the illicit tobacco trade, and the criminal organizations that profit from it, effective and coherent regulation is crucial. This is why PMI resoundingly supports the objectives and principles of the WHO Framework Convention on Tobacco Control (FCTC) Protocol to Eliminate Illicit Trade in Tobacco Products. It is also why we are so encouraged by the growing number of countries joining this international treaty.
To tackle a global threat, we need a global response.
Criminals don’t care much for borders or bureaucracy. They will target weakness wherever they can find it. A post-COVID world makes it even more challenging to find and eradicate illicit activity; thus, cross-border, cross-industry, and public-private collaboration has never been more important.
At PMI we are dedicated to eliminating illicit trade. Within the context of our business transformation, it is a fundamental part of ensuring a smoke-free future. We are fully aware that to achieve a world without cigarettes, we must also help secure a future without illicit trade. Despite the constantly evolving nature of the challenge we face, PMI has never been as unerringly committed to ensuring that the criminals who profit from the illicit trade of any form are brought to justice.
But we also know that we can only secure this future by working alongside the many other organizations, institutions, and governments that are affected by the issue. Standing together, USD 1.6 trillion doesn’t seem quite as intimidating a number to take on.
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