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  1. illicit-trade

    • Illicit trade is a serious and growing threat to society. Governments are losing billions in tax revenues, legitimate businesses are being undermined, and consumers are being exposed to poorly made and unlawful products. Illicit trade can take several forms: 

      - Contraband: Genuine products that have been either …

      a) bought in a lower-tax country and that exceed indicative quantities/limit
      b) acquired without taxes for export purposes

      … to be illegally resold (for financial profit) in a higher-priced market.

      - Counterfeit: Products that are illegally manufactured and sold by a party other than the original trademark owner.

      - Illicit whites: Products usually manufactured legally in one country/market, but which the evidence suggests have been smuggled across borders during their transit to the destination market under review, where they have limited or no legal distribution and are sold without payment of tax.

      - Under declaration: Products that are manufactured and distributed in the same country, a portion of which is not declared to the domestic tax authorities.

      - Illicit sales and marketing: Products made available—mostly online—in violation of national legislation, existing regulation, and an industry’s “codes of conduct.”

    • There are four main categories of illicit tobacco products:

      - Contraband: genuine products that are diverted from their intended market of destination and sold illegally
      - Counterfeit: copies of genuine products that are produced and sold illegally
      - Illicit whites: tobacco products that are legally produced in a country with the sole intention of selling them in another market
      - Under-declaration.

      Cigarettes are among the most illegally traded goods in the world.

      The illegal tobacco trade is a global issue. We are working with governments and other partners in the public and private sectors to address this problem.

    • As we accelerate toward a smoke-free future, we are doing all we can to ensure adult smokers and nicotine users are not exposed to illicit products, including increasing our efforts to secure both our supply chain and our product portfolio, and investing heavily in safeguarding the consumer’s journey toward better alternatives than continued smoking.  

      We have a zero tolerance toward illegal trade, and eliminating the black market in nicotine-containing products to protect consumers and our brands from smugglers and counterfeiters has been a long-standing priority. We do this in several ways: 

      - Supply chain controls: To ensure our products are sold legally in the markets for which they are intended, we apply anti-diversion tools such as a “know your customer” policy, volume monitoring, and track and trace technologies.

      - Product protection: We leverage innovative tools and techniques to detect and tackle illicit trade; these include the application of authentication and security technologies and the use of AI to identify and prevent illegal online sales.

      - Fostering public-private partnerships: Collaborating with law-enforcement agencies, customs authorities, and governments around the world to shut down counterfeiters, smugglers, and their suppliers.

    • Illicit trade makes cheap, unlawful tobacco and other nicotine-containing products easily accessible—undermining efforts to reduce smoking prevalence and protect youth from smoking. It has serious consequences for consumers, as these illegal goods are produced in substandard conditions, and without proper oversight.

      When the basic standards and laws around safety and quality are ignored, it presents a danger to consumers—which is the reason preventing illicit trade is central to many public health policies around the world. This is why PMI calls on regulators and policymakers to advance a sensible approach that puts public health—and the interests of adult smokers and nicotine users—front and center. This includes considering the millions of adult smokers who are turning to the black market rather than quitting cigarettes and nicotine (the best choice they can make) or, for those who don’t quit, switching to better alternatives to cigarettes.

      Illicit trade also has a direct impact on people’s lives across the globe. It fuels ruthless criminal gangs, often impacting the most vulnerable communities and populations. It hurts public services, depriving governments of tax revenue, thereby limiting their ability to invest in their societies. The proceeds from illicit trade help facilitate other serious crimes such as human trafficking, corruption, and money laundering.

    • Illicit trade has several negative impacts, including:

      - Deprives governments of tax revenues

      - Exposes consumers to unlawful products, often manufactured in unsanitary conditions

      - Threatens security—for individuals and society—as it is a major source of income for transnational criminal organizations

      - Exacerbates corruption and threatens the rule of law

      - Weakens public health policies designed to discourage smoking, with unlawful, substandard, and non-compliant products

      - Exposes minors to tobacco and other nicotine-containing products

      - Harms legitimate trade