Manual on a common model of investigating cigarettes smuggling For Romania, Hungary, Lithuania, Latvia and Estonia

Transcription

1 Manual on a common model of investigating cigarettes smuggling For Romania, Hungary, Lithuania, Latvia and Estonia 1. INTRODUCTION The goal of this Manual is to provide practitioners some practical ideas on how to improve their investigations mechanism regarding cigarettes smuggling, especially the criminal cases which involve an organised international character. During the discussions that took place within three round table workshops, the participants also tried to identify some of the early warning messages, elements that could raise the awareness of the investigation authorities that cigarettes smuggling cases are happening in their countries, affecting their internal state budget as well as the EU budget. The importance of creating a simple data base containing contacts of all the responsible prosecutors and investigators from all EU member states was under a special consideration and the establishing of the national contact points was identified as a must. Other topics described in the Manual are the cigarettes smuggling phenomenon in general, EU actions, the external threats identified in the 5 analysed countries, for all these countries being at the EU border, acting as the first line of defence for the economic and social interests of the entire EU, the internal legislation of these countries when talking about cigarettes smuggling as well as some of the actions enforced for tackling the smuggling phenomenon. Therefore, we consider that special attention should be paid to permanently analysing the phenomenon of illicit trade by accessing the information on current trends, modi operandi, preferable conveyance and other variable characteristics of this type of crime, in order to increase the capabilities of the law enforcement authorities for effective counteraction. The Manual is to be completed by the analysis performed by the experts in the previous project phase, named National models and systems for combating cigarettes smuggling in Romania, Hungary, Lithuania, Latvia and Estonia. More details are provided in the analysis on actions taken by EU and other topics. Cigarettes smuggling is continuously assessed as one of the most serious risk to border security by the EU member states, the analytical teams of the international organisations (such as OLAF, EUROPOL, SELEC, WCO, 1

2 EUBAM in Moldova and Ukraine, etc.) and as such is within the main priorities of all the EU border management services acting at the external borders of the EU. From the available statistics we can observe that large-scale smuggling of cigarettes into the EU takes place via its Eastern border. This illegal activity is leading to important financial losses for the EU budget and the budget of the Member States. While there are no accurate statistics on the total fraud situation, the direct loss in customs revenue as a result of cigarettes smuggling is estimated to amount to more than 10 billion a year. Tackling the influx of smuggled excisable goods, especially cigarettes originating in particular in Moldova, Ukraine, Russia and Belarus has therefore become a priority for the European Commission. Thus, the European Commission is permanently improving and modernising its Anti-Fraud Strategy. The overall objective of the Commission Anti-Fraud Strategy is to improve prevention, detection and the conditions for investigations of fraud and to achieve adequate reparation and deterrence, with proportionate and dissuasive sanctions, and respecting the due process, especially by introducing anti-fraud strategies at Commission Service level respecting and clarifying the different responsibilities of the various stakeholders. Article 325 of the Treaty on the functioning of the European Union (TFEU) requires the Commission and the Member States to counter fraud and any illegal activities affecting the financial interests of the Union. Preventing and detecting fraud is therefore a general obligation for all Commission Services in the framework of their daily activities involving the use of resources. Financial management and accountability have been strengthened. The Commission Services are responsible for the management of the operational and administrative resources allocated to them to implement EU policies or to contribute to the smooth functioning of EU institutions in a costeffective way and reducing administrative burden as far as possible. In this respect, Commission Services are responsible for taking the necessary measures to provide reasonable assurance of achieving prevention and detection of fraud and irregularities. Fraud prevention and detection are at the core of the Commission s anti-fraud policies. However, other factors are equally important, namely effective and efficient investigation, swift recovery of money unduly paid from the EU budget, and deterrent sanctions. The Member States administer nearly all the revenues of the EU budget. They also share the management of around 80 % of budget expenditure with the Commission. The remaining 20% is administered directly by the Commission Services, partly together with the administrations of non-eu countries and international organisations. 2

3 In 2010, the Council adopted the multi-annual Stockholm Programme for policies in the area of justice, civil liberties and security. It called on the EU and its Member States to step up their efforts to combat corruption and other forms of financial crime. This included building capacity for financial investigations and making it clearer who are the beneficial owners of assets. Starting with 2011, several initiatives were taken to step up the fight against fraud and corruption affecting EU public money: The Commission s proposal for amending the legal framework of OLAF aimed at increasing the efficiency and speed of OLAF investigations, at strengthening procedural guarantees, at reinforcing OLAF s cooperation with Member States and at improving its governance. The European Anti-Fraud Office (OLAF) conducts administrative investigations. It draws on its experience and expertise to support other Commission Services in the prevention and detection of fraud. The Communication on the protection of EU financial interests by criminal law and administrative investigations sets out how the Commission intends to safeguard taxpayers money at EU level against illegal activities, including threats posed by corruption inside and outside the EU institutions. The Communication on the Commission anti-fraud strategy from June 2011 pointed to opportunities for improving the criminal law framework and the procedural tools for investigators and prosecutors, and to possible institutional developments such as the setting up of a European Public Prosecutor s Office, which in 2014 is still under consideration. Complementing those initiatives, the Communication on Fighting Corruption in the EU sets an EU anti-corruption reporting mechanism for periodic assessment of Member States ( EU Anti-Corruption Report ). The Commission Work Programme for 2011 also included a Proposal for a new legal framework on the confiscation and recovery of criminal assets under the heading Initiatives on Protecting the Licit Economy, implemented partially in some EU countries. There are several factors contributing to the large-scale smuggling. Exchange of operational information between competent authorities on the national and international level in the region is not always sufficient. Gaps still remain in the infrastructure and equipment at the external borders. Corruption remains a prevalent tool used by the smugglers to cover and to facilitate their illegal activities. Significantly diverging legislative provisions on penalties in Member States can give smugglers an incentive to use entry points to the EU where the lowest penalties are foreseen and/or actually applied. The high price and tax difference 3

4 between the EU and its neighbours with lower tax levels is also an important factor. So, the fight against this type of fraud is a shared responsibility and the problems related to the smuggling of cigarettes are not related or in the burden of the analysed 5 countries but to the entire EU. It requires urgent and streamlined action at all levels, i.e. from the Commission, the Member States and the neighbouring countries. It is absolutely necessary to build on the successes of the cooperation so far by further exchanging information and building strong relationships to jointly tackle the problem of cigarettes smuggling at the Eastern border. Member States with high excise rates need to exercise the appropriate internal control. Those bordering third countries need to increase controls both on internal consumption and on smuggling from their neighbours, contributing towards stopping outflows from their territory towards other Member States. To provide an effective answer to these challenges, the European Commission has identified a number of mainly short and medium-term actions to be carried out with the help of the Member States as well as Russia and the Eastern Partnership countries (Armenia, Azerbaijan, Belarus, Georgia, Moldova, and Ukraine). Although this Action Plan focuses on a particularly problematic geographical area, several actions envisaged will address the issue of cigarettes smuggling at a wider level and will therefore also be relevant for other regions. Smuggling of cigarettes is of course a global phenomenon requiring also global solutions. By proposing actions focusing on the Eastern Border the European Commission also aimed at contributing to these global efforts against smuggling. 2. THE SCALE, IMPACT AND NATURE OF SMUGGLING OF CIGARETTES The evolution and growth of the illicit tobacco market in the European Union has been remarkable in the past years. Contraband and counterfeit cigarettes can be found in all of the EU Member States. Eastern Partnership countries, in particular Moldova, Ukraine and increasingly Belarus and Russia are one of the main sources of the seized cigarettes performed by EU law enforcement agencies, and this trend appears to have increased in The main reason is the low cost of cigarettes in the expedition countries comparing to the price in the EU countries, especially in UK and Germany. Thus, the smugglers obtain huge profits in a relatively short time with low risks of being convicted to prison. The only loss would be financial, but if one 4

5 considers the benefits, it is profitable if only one out of 5 transports is reaching the destination countries. In this regard, a simple estimation that the law enforcement agencies are seizing only 1 out of 10 transports makes cigarettes smuggling one of the most profitable business. The large profit margins rival those from narcotics and justify elaborate and costly concealments, the use of complex and circuitous routes, the payment of substantial kickbacks to corrupt police and customs officers, and the hiring of enforcers. The photo below best illustrates the huge differences in cigarettes prices all over Europe. Generally speaking, besides the huge profits, the incentives for smuggling of goods and cigarettes in particular are various. Among them the most significant can be mentioned, without considering these as exhaustive: - Weak border controls - for geographical reasons, borders of some countries are impossible to guard comprehensively. In many countries smuggling takes place through known entry and exit points. Inadequate controls allow smugglers to move products in large volumes. - Inadequate sanctions - in some countries sanctions for those caught are insufficient to be a deterrent. The incentive to engage in illicit trade would be reduced if the balance of risk and reward weighed more against the offenders. Fines do not deter professional smugglers. - Corruption - inadequate controls are often worsen by, or a consequence of, endemic corruption. Enforcement and controls become ineffective as a result of this phenomenon. 5

6 - Government trade facilitation policies - stimulating economic activity by the creation of low tax zones that do facilitate the subsequent smuggling of products legitimately sold to distributors using such zones. - Consumer behaviour - in many of the markets where smuggled products are sold, consumers are aware (from appearance, price and place of sale) that they are purchasing smuggled or counterfeit goods, but a lower price overrides this concern. Without demand, there would be no supply. - Local economic considerations - in some parts of the world, smuggling is tolerated as a way of providing jobs and money for the local population. The production and sale of counterfeit goods is ignored for the same reason. Traditionally, smugglers choose certain categories of goods as a source of their profit. Such goods are either the taxable ones alcohol, tobacco, oil products or the ones which have significant price difference from the place of purchase to the place of sell. By evading tax and duty payment, or relying on the price advantage, criminals maximize their profits and deprive governments of important part of the state revenue. Cigarettes smuggling holds a significantly lower risk for perpetrators than smuggling of other commodities such as weapons or drugs. Additionally, supply of these goods is easy and their acquisition from the legitimate supplier is not risk-related in contrast to drugs and weapons. Moreover, the consumer pool for such illegal commodities is always available and usually growing. Due to huge profits, this kind of crime involves organized criminal groups, which poses additional threat to the society, mainly due to the fact that accumulated financial resources are used for corruption reasons to influence law enforcement and judicial authorities. Criminals are quite inventive in elaborating lucrative schemes for disguising their traces and make it difficult for customs and police to detect cases of smuggling. Some cases will be mentioned in the manual, with the intention to serve as examples for illustrating the modi operandi utilized by smugglers. Cigarette seizures include the following three categories: genuine cigarettes produced by multi-national manufacturers which are smuggled into the EU (contraband); "cheap whites" or illegal whites which are cigarettes produced legitimately in their country of origin at very low cost and which are smuggled; and counterfeit cigarettes. 6

7 In the early 2000s, the problem of smuggling at the Eastern border of the EU related largely to the smuggling of genuine product. Today the situation is somewhat different. The majority of cigarettes entering the EU illegally via the Eastern border are either cheap whites or counterfeit. Cheap whites now account for approximately 20% of seizures in the EU and are an increasing feature of the illicit tobacco trade. Although many of the illegal cigarettes that enter the EU via the Eastern border are destined for the illegal markets in Western Europe, particularly Germany and the United Kingdom (because of the higher prices they can be sold for), a significant portion of the smuggled cigarettes is targeted on the local markets. It is estimated that in some border regions consumption of illegal cigarettes exceeds 90% of the total. Tax rises in the new Member States in line with the EU acquis have led to an increase in consumption of illicit cigarettes in some new Member States. Besides large-scale smuggling, ant-smuggling, making frequent journeys across the border with small amounts of cigarettes, is still a significant problem at certain border crossings. The negative impact of the illicit trade in cigarettes is diverse. From an economic point of view it results in significant revenue losses and harms legitimate business interests at both manufacturing and retail level. It is also leading to sales and consumption of tobacco not complying with EU tobacco control legislation. From a health point of view it may result in the rise in consumption of tobacco products and decrease public health protection, especially involving vulnerable groups such as young people. One of the less obvious but more serious impacts of cigarettes smuggling is that it is almost exclusively the domain of organised crime groups who are making substantial financial gains from their illegal activities. As cases show, these groups operate internationally and are often involved in other types of serious organised crime. In order to better understand and assess the general situation, some of the vulnerabilities and the external threats for each region should be explained. Photo 1 shows from where the cigarettes are mostly exported into EU. 7

8 Even though the cigarettes smuggling is affecting all the Europe, there are particular elements, with tangential influence for the participant countries, worth mentioning in order to have a clear picture of the phenomenon. Greece situation is important, and therefore mentioned, due to the number of seizures performed by authorities all around Europe that had Greece as expedition/transit country. When analysing the Central Europe problem areas, these are a few key elements that could be observed from practice: Diverted product and illicit whites coming in from Belarus, Ukraine, Russia; Illegal production facilities, including tobacco processing plants; Illicit product including illicit whites transiting Greece into Italy and the rest of Europe (or into Bulgaria, Romania); Smuggling operations into Sweden from the Baltics, or illicit whites from the UAE; Smuggling from Ukraine/Moldova via Romania into Central Europe; The illicit trade in raw tobacco; Smuggling of genuine product from the Balkans into Austria: Vienna is the gateway to the Balkans. The Balkans played a crucial role in smuggling of cigarettes into EU due to the geographical and political elements. The identified problem areas are: 8

9 The use of the Free Trade Port of Bar for transit of illicit whites and counterfeit product; Smuggling in Montenegro and Kosovo carried out through fake exports via Serbia; Suspected counterfeit factories in Bosnia and Montenegro; Smuggling of cigarettes is realised/carried out using lorries, buses or containers together with exports of other merchandise; The main routes from the Balkans direction in cigarettes smuggling are currently: Kosovo Montenegro Serbia Bosnia-Herzegovina Croatia or Hungary - Western Europe; Daily cigarettes smuggling between Serbia and Romania ant smuggling; Diplomats from African embassies involved in smuggling into EU (few cases reported by the Romanian border authorities). As it was mentioned before, the importance of Greece in the smuggling ring cannot be ignored. Greece is separated into influence zones in which several organised crime groups are operating. When making a seizure having Greece as expedition country, you can have an idea which kind of group was behind the transport by simply following the below descriptions and map. Setup of Groups Operating in Greece: Ukrainians and Russians, who appeared to form an alliance with one (or several) Bulgarian group(s) and in this manner helped Bulgarian cigarettes smugglers to further expand; From the East, a Bulgarian smuggler syndicate continued to penetrate the Greek central region. This was the result of the spin-off of a Bulgarian conglomerate headquartered in Varna; In the West and Northwest (centre: Igoumenitsa) there was the increasing spread of several Albanian groups that partly filled the gap of the Greek offshoot of the Italian Camorra; The (north)-western groups also had ties to Cyprus who to a large degree had its "merchandise" shipped from the port of Famagusta (the port was occupied by Turkish troops and is functioning illegally, without control from the Government of Cyprus); Chinese syndicate is spending great efforts to fortify its position. Several consequences of the smuggling of cigarettes in Greece for the last years: 8 factories that produced cigarettes, as well as kiosks and 159 distribution centres were closed with a total of jobs lost. Deleted: Turkish-Cypriot Formatted: Indent: Left: 0 pt 9

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11 Romania When talking about Romania, it can be mentioned that it is affected by cigarettes smuggling at all the borders, having as neighbors 3 countries that are not part of European Union, Moldova, Ukraine and Serbia, border with Bulgaria (transit country for the cigarettes coming from Turkey and Greece) and an exit border to Hungary. That is the reason why we could divide Romania in a few smuggling zones that share the illegal market: Zone no. 1: Northwest, the activities encompass an area between the customs entry point Halmeu on the border to Ukraine, the border point Petea, Urziceni, Bors, Salonta, Nadlac and Cenad on the border to Hungary, and the border point Stamora Moravita on the Serbian border. It is the most significant organisation and, according to statistics, carries out approximately 59% of the smuggling activities on the Romanian border; Zone no. 2: Northeast stretches from the River Siret on the border to Ukraine and Galati on the border to the Republic of Moldova. This is the second-most significant zone (organised crime) and accounts for 18% of all cigarette smuggling; Zone no. 3: There is an organisation comprising some 16% of cigarette trafficking, operating in the Port of Constanta, in the area of Mangalia, Midia- 11

12 Navodari, Free Zone of Agigea-South Constanta, and navigable zone of the Danube Black Sea Canal, Sulina and on the Danube Delta; Zone no. 4: Along the border to Bulgaria, the Danube Region, and Serbia, activities comprise some 7% of smuggling. The main border crossings used by the networks along the "Green Border" of Ukraine/Romania are: Romania/Hungary - Nadlac, Petea, Urziceni, Bors, Varsand Romania/Ukraine - Halmeu, Siret Romania/Moldova - Sculeni, Ungheni. From the cases investigated by the Romanian authorities the following elements are more significant: Networks are transnational: Ukrainian, Moldovan, Romanian and Hungarian; The main types of cigarettes smuggled into Central and Western Europe are Winston, Jin Ling, Viceroy, Pall Mall, Marlboro, LD; The main focus of increasing smuggling activities is in the tri-border area of Ukraine, Hungary, Romania, followed by the border area between Romania/Moldova and Serbia; Eastern Hungary tends to be used for intermediate storage. Hungary 12

13 Smuggling of cigarettes is a constant problem in Hungary. The main features reported by the relevant authorities are: smaller amount per attempt, green border attempts, Belorussian products implication, more violence at reveals. In the border zone of the Hungarian-Ukrainian border strip cigarettes smuggling vehicles represent the biggest risk, which mainly have the following features: models having a passenger cabin and cargo bay bigger than usual, these vehicles are being driven by a single person only at relatively high speeds. At the BCPs modified vehicles with concealed compartments represent the biggest risk in general. Gangs specialized on cigarettes smuggling seems to possess more and more thorough comprehension of the investigation procedures, patrolling and controlling techniques. They also have special knowledge of the local geographical territory (escape routes, unused paths, river crossing points etc.) and use state of the art technical equipment (e.g. special communication devices professional hand held radios, night vision devices, binoculars, strong and specialized vehicles working efficiently in off road conditions, special keys for barriers, tactical sticks). The parcels of contraband cigarettes are often floated through the border river Tisza, and then the perpetrators carry it by foot to the storage places located near the state border. From these depots the products are transported by passenger cars to Western Europe or distributed in the regions (mainly in Eastern-Hungary and Budapest). The cars used for the transport and distribution of the contraband products are in general modified for the purpose of concealment. Distribution of the smuggled products is focusing on the markets. Smuggling activity is primarily concentrated on the Hungarian-Ukrainian border just like in the past. Though bootlegging also exists through the border crossing points (small amount of contraband cigarette is transported through the BCP regularly, then collected in a depot and distributed), due to the thorough and detailed control of the traffic at the BCPs, most of the contraband activity migrated to the green border. This increased activity in the green border area is caused by the reinforced and harmonized cooperation of the law enforcement agencies at the BCPs, their adequate structure responding to the emerging new challenges and the successful anti-smuggling campaigns. In case the perpetrators attempt to 13

14 smuggle tobacco products through the border, they use extremely sophisticated concealing methods. Smugglers prefer to use new, leased or rented vehicles. At the BCPs small amount of cigarettes are being smuggled in passenger vehicles. More significant quantities are floated downstream on the river Tisza (which is the natural border between Hungary and Ukraine) and/or carried on foot or by small (quad) or bigger (4x4 SUVs, pick-ups) vehicles. These cigarettes are then being deposited in shacks, private houses, and are destined for the Western-European market in vehicles registered in other European countries. Boats, inflatable boats, rails are also commonly used means. The main actors are Hungarian nationals and foreign citizens (EU or third countries citizens) without being possible to make a clear division between them. In general terms, Hungary is mainly a transit country with evolving end-user characteristics e.g. Jin Ling is not rated as a consumed cigarette brand as high as at seizures. This is because of the price level, and the opportunity to earn more profit in further countries to west. As for the routes, not all the main ones can be identified, because of the internal border, e.g. Belorussian smuggled cigarettes can go through third countries green border, and even through Romania to Hungary. The Government reforms in tightening of tobacco sales could have direct effect on illegal tobacco business. In the 2 nd quarter of 2014, some 6,000 stores hold tobacco licenses, down from 42,000.While it s difficult to judge how large Hungary s black market is, the number of seized contraband cigarettes has skyrocketed to 85 million taken from January to October 2013, compared to 68 million for all of Hungary banned smoking in public areas in Deleted: The government has seen a dramatic decrease in the amount of cigarette tax revenue, which dropped to 425 bn forints ( 1.45bn EUR) from 466 bn forints ( 1.64bn EUR) in Some see the government s efforts to curb smoking as working. The authorities reported that there are a lot of people who are now smoking less mainly because the price of cigarettes has gone up in two years, they ve gone roughly from 600 forints ( 2.1) per pack to 1,000 forints ( 3.5) but also because of the tobacco reform, as there are towns where there are absolutely no cigarettes for sale. 14

15 It is worth mentioning the good cooperation observed at international but also at national level, especially between the Prosecutor office and the National Tax and Customs Administration (NTCA). The good cooperation between customs and police is also worth to mention. For the sake of seamless flow of information the police and the customs authority operate one single duty post at the city of Nyíregyháza near the Ukrainian border strip which enables the direct exchange of information and the coordination, harmonization of joint controls. The support is coming also from the Hungarian government which is hoping to harness EU funds to strengthen the fight against cigarettes smuggling. One idea is to develop the quantity and quality of technical equipment s deployed by the NTCA in order to fight the cigarettes smuggling in the field of detection and intelligence (for example unmanned aircraft system). The acquisition would be financed by the EU s Hercules programs, which offers money to member states to strengthen cooperation with the EU s Anti-Fraud Office (OLAF), as well as to combat smuggling. Several other programs/projects have been developed in the last years by NAV, and the success of these projects could serve as best practice for other countries. 15

16 According to 14 billion cigarettes are sold in Baltic States every year. Additional 20 to 30 percent of cigarettes are sold in black market.the most popular cigarettes in the black market of Baltic States are cheap, low class brands (for example Prima ), mainly produced in Russia, Belarus and Ukraine. According to unofficial data, in the domestic market Latvian smugglers make profits of around 6 to 7 million US dollars. Due to unpaid taxes, state budget loses around 10 million US dollars. Profits Estonian smugglers gain from contraband cigarette trade should be approximately the same. In Lithuania in this kind of business smugglers are able to earn about million US dollars. It seems that contraband cigarette trade in local black market is business of small organized groups or solitary traffickers. Large smuggling groups operate mostly in the United Kingdom, Germany, Sweden, Denmark, Netherlands, Belgium, Norway and Austria. According to unofficial data, every three months around 13 million pounds are brought into Lithuania, Deleted: 6 16

17 earned selling contraband cigarettes in the UK black market. In Lithuania there are 6 or 7 large contraband rings, but only part of these rings trade in UK black market. It is suspected that Lithuanian citizens are involved in around 30 domestic and international organized groups that smuggle cigarettes to Western Europe, Scandinavian and Northern countries. Deleted: In total, around 30 Lithuanian organized groups In 2013, an average of cigarettes were brought from Russia illegally to Estonia per person arriving from Russia to Estonia, which is 5.5 times less than in 2012, when the average was 84.47, as the state targeted law violators caught with small amounts of cigarettes at the border, LETA/Public Broadcasting. Amount of cigarettes smuggled from Russia to Estonia falls by over 5 times in Estonia is transit but also an end-user country. The cigarettes not allowed for handling are taken to Estonia from third countries hidden into some legal goods (e.g. computer cases, air conditioners, boxes of towels etc.) and forwarded from here into Scandinavia. Smaller quantities of cigarettes not allowed for handling are taken for end users over land border from Russia. The actors/perpetrators are mainly Estonian nationals and non-citizens living permanently in Estonia. The main routes reported by the authorities were cigarettes are smuggled from Russia, Ukraine, Belarus or Eastern-European countries through Estonia to Scandinavia. It was also reported that a large quantity of cigarettes not allowed for handling from the Philippines was introduced to the Republic of Estonia and from here further to the Kingdom of Sweden. The Latvian main features of cigarettes smuggling are the not so different from Estonian. Latvia is mainly a transit country and in most cases cigarettes are smuggled from Belarus and Russia. These are the so-called cheap/illegal white cigarettes of local brands that are produced legally. Cigarettes arrive both via railroads and ground vehicles, most often concealed with other declared goods, such as coal, timber, chips and granules. On rare occasions, cigarettes are smuggled via maritime transport. The parties involved in these illegal transactions are mostly Latvian, Lithuanian and Estonian, as well as Russian and Belarusian citizens. The main routes at the external land border are the routes of smuggling from Russia and Belarus; at the external sea border the main gates are at Venstpils and Liepāja; as for the internal border of air transportation, the Riga Airport plays the major role. The Lithuanian features are mostly the same and the recent economic recession contributed to the increase of cigarettes smuggling. Cigarettes smuggling cases were reported at all the borders, with cigarettes originated from Belarus, Russia mainly Kaliningrad, China via the Klaipeda Port, having as final destination 17

18 other EU countries, mostly UK and Germany. An interesting modus operandi was identified by Russian authorities on May 2014 when a Lithuanian drone was detained over the territory of Kaliningrad region. The main purpose was smuggling cigarettes. The homemade drone aircraft was carrying boxes with up to 10 kilograms of tobacco stuck to it with sticky tape. The FSB estimated that the body of the drone cost about 300 rubles (less than US$10).The amateur drone with a four-meter wingspan rose to an altitude of up to 2,000 meters and dropped the smuggled cigarettes in a designated area. The investigating authorities informed that the aircraft had GPS installed, allowing the drone operator to control the flight via a 3D card from the ground. A Lithuanian citizen was identified as responsible for controlling the aircraft from Kaliningrad and has since been detained, according to RBK news agency. He is said to have crossed the border into Kaliningrad legally. Upon arrival, he reportedly met a 51-year-old resident of Kaliningrad region who helped him buy the cigarettes to smuggle into Lithuania.The supply that the Lithuanian tried to smuggle home contained some 500 packs of cigarettes worth about 25,000 rubles (nearly $700). The Kaliningrad RU border service is now checking whether the drone could have been used for purposes other than just cigarettes smuggling, as it has a camera that can take pictures and broadcast videos online. Investigators suggested the drone was built and launched by a criminal organization operating in Russia and Lithuania, and may have been used for other unlawful purposes. The specificity of the region is given by the vicinity of Kaliningrad Region. This aspect requires additional details as long as on the territory of Kaliningrad there is one of the biggest cigarettes factories which produces the brand Jin Ling. As a general estimation, Europe is being flooded by smuggled Russian-made cigarettes worth at least $1 billion a year. A network of factories and routes has 18

19 been put together across Europe, following large-scale smuggling routes previously supplied by major multinational tobacco companies. The new underground smoking trade involves only one brand, Jin Ling, which is turning up in more cities and countries across Europe every month. Jin Ling, virtually unknown to the authorities a few years ago, has grown so rapidly that now rivals Marlboro as the top smuggled brand being seized in the European Union. The organization behind this fast expanding black market, the Baltic Tobacco Factory (BTF) of Kaliningrad, Russia, has links to two of the world s largest tobacco companies. Its factory network in Russia and Ukraine was previously owned and run by subsidiaries of Japan Tobacco International (JTI) Group, the world s number three producer. The investigation has identified a network of Russian and East European companies, including 5 factories believed to play roles in manufacturing the contraband cigarettes being smuggled to the West. The Russian-run factory network now claims to be able to produce more than 24 billion cigarettes annually. This would be equivalent to 7 percent of legal EU cigarette imports. Originally imported from China, Jin Ling features a king-size packet design that closely resembles the legal Camel brand in color, typestyle, and layout. Instead of a camel, the packs are illustrated by a mountain goat. Jin Ling cigarettes have no legal market in any European country, according to customs officials. The brand is never advertised and cannot be bought in shops. It is only sold illegally on black markets across Europe. The ten-country investigation of Jin Ling was done by the International Consortium of Investigative Journalists (ICIJ), a nonprofit network of independent journalists. Baltic Tobacco Factory s headquarters is in Kaliningrad, a slice of Russian territory annexed by the Soviet Union after World War II and wedged between Poland and Lithuania. The freewheeling Russian enclave is known as a hotspot for smuggling and organized crime. In the city of Kaliningrad, the regional capital, Baltic Tobacco s eight-acre complex of factories, offices and warehouses is discreetly set back from main roads. From the riverbank, an unmarked wandering track leads eventually to the company s three-story redbrick office block. No signs or nameplates mark or identify the factory or the office buildings. From Kaliningrad, BTF s cigarettes are smuggled by the billion directly through Poland, or routed more circuitously through Lithuania, Latvia, Belarus, and Russia. Officials at Baltic Tobacco recommend sea routes to their clients, as they can deliver containers direct and tax-free to Kaliningrad s port. They also 19

20 offer shipments from their Lvov factory in Ukraine, through the Black Sea port of Odessa. Overland to Germany, and from Baltic or Black Sea ports, the cigarettes are passed to criminal networks in at least 12 countries Germany, the United Kingdom, Poland, Latvia, Romania, Greece, Turkey, Italy, Bulgaria, the Netherlands, Belgium, and France. None of the packs contains the correct large mandatory health warning notices now compulsory in all EU states, making their illegality clear. Some Jin Ling packs found in Europe, however, sport duty free stickers, or meaningless Russian tax paid stamps, apparently as a marketing tactic to confer prestige and credibility on the product. BTF is believed to print the duty free labels themselves, to make their black market handiwork appear as leakage to the gray market as if the cigarettes are simply an unauthorized diversion of otherwise legitimate goods. So, Jin Ling cigarettes are being legally manufactured in Russian factories but are intended for the European illegal market. The scale and striking growth of Jin Ling smuggling has marked it as a major new development in organized crime, prompting European customs agencies to respond by launching an international task force to the Jin Ling problem. To investigate the Baltic Tobacco Factory, ICIJ reporters went undercover and visited its Kaliningrad posing as smugglers setting up a new route to the EU. BTF officials proved eager to help their prospective new clients. At the company s main factory, the team was offered Jin Ling by the container each one filled with over 10 million cigarettes. With payment in advance a container could be ready and waiting in two weeks. Their price per container: $102,500 ( 73,000) about one cent per cigarette. If the contents of one container reached Sweden or Germany and were sold at full legal price, they would be worth $3.2 million ( 2.3 million). In Britain or Norway, where cigarette taxes are high, the same shipment would be worth nearly $6 million ( 4 million). Even at half the price which black market cigarettes usually sell for the profits would be immense. Since 2005, European customs agencies monitoring trade across the EU s eastern borders have seized rapidly increasing quantities of Jin Ling concealed within shipments of nearly every sort: fruit and vegetables, fish, building supplies, peat moss, timber, scrap cardboard, bakery products, paper rolls, and horse food. Lithuanian police have found Jin Ling built into fitted furniture. German customs officers say they are familiar with the traffic of Jin Ling cigarettes entering and transiting Europe on the Warsaw Alley to Berlin and the Ruhr, and then on to the channel ports of Antwerp and Rotterdam. Their anti-smuggling teams have extensively used mobile phone wiretaps in attempts 20

21 to block shipments. Jin Ling consignments, they hear the smugglers say, are called little goats, referring to the mountain goat on the cigarette pack design. When a consignment goes through, the smugglers are said to message each other to say the kids have been delivered. Cologne, Munich, and Berlin are the German cities most targeted by the Jin Ling smugglers. Berlin is served by a network of 300 black market sales points, most of which offer Jin Ling. According to Germany statistics one in three residents of the former East Germany smokes smuggled cigarettes. In Russia, the Baltic Tobacco Factory has been a business success story. The company was officially incorporated as BaltiskayaTabachnayaFabrika BTF in August Since 2006, BTF has doubled production capacity at its Kaliningrad facility from 6.3 billion to 13 billion cigarettes a year. A second factory, in the Caucasus city of Armavir in southern Russia, was acquired in 2003 and upgraded to produce up to 1.8 billion cigarettes annually. By April 2007, BTF had installed two new cigarette manufacturing machines in a third factory, at Lvov in Ukraine with capacity to nearly 10 billion cigarettes a year. Data reported by Business Analytica, a Russian marketing research service, suggest that BTF s actual Russian retail sales are only 0.1 percent of the Russian domestic market, or about 400 million cigarettes a year. Checks of cigarette vendors in Russian cities found no evidence of Jin Ling cigarettes being sold, even in Kaliningrad. The cigarettes are rarely seen among the heavysmoking Russians. Other Jin Ling producing factories worth to be mentioned are from Moldova and Ukraine. The Moldovan Company is Tutun-CTC which is 90 percent owned by the Moldovan government and has no links by direct ownership to the Kaliningrad group. In March 2006, a lawyer acting for a Chişinău resident registered trademark rights for the identical brand name and packaging as the Russian brand Jin Ling in Macedonia, Bosnia, Serbia, Montenegro, Croatia, Greece, and Egypt. The Moldovan Jin Ling cigarettes were made only for exporting purposes, in countries different to the Russian manufacturer s exports. Like Baltic Tobacco s products, the Moldovan brand of Jin Ling has been found only in illegal western markets, not in the legal markets claimed by the company. The advertised retail price for Jin Ling in Moldova is 20 cents per pack. Another Jin Ling factory is located in Donetsk, in the eastern Ukraine (closed at this moment due to the situation in the area). Operated by Subsidiary Enterprise Tobacco Company Khamaday, its products have also been found smuggled into Poland and the EU. 21

22 Nevertheless, production from the Armavir, Donetsk, Chişinău, and other plants is believed to be modest compared to that of Baltic Tobacco s extensive Kaliningrad facility. 3. Key findings in cigarettes smuggling and modi operandi From the aforementioned descriptions, the following key findings in cigarettes smuggling common for all the participant countries could be determined: - The territory of all the 5 countries is largely a transit area, mostly the cigarettes having as final destinations UK or Germany; - Considering the profit from the retail price, destinations for majority of cigarettes are for the markets in Western Europe; - China, Singapore, United Arab Emirates and Asian countries are the main suppliers, and ports connected to cargo international transportation are being used as entry gates; - Ports in the region are used also as transit zones for cigarettes intended to be smuggled to further destinations by sea; - Means of transportation with smaller capacity are more frequently used in order to lower the risk and the eventual damages in case of seizure; - Big number of organised crime groups are involved in cigarettes smuggling comparing with those performing other transborder crimes, encouraged by relatively low penalties and big profit; When analyzing the modi operandi it was observed that the means and methods used by groups specializing in the transport and sale of smuggled cigarettes are permanently varied, personalized and adapted, depending on both the measures taken by authorities and the actual conditions of carrying out operations. The main action methods used by cigarettes smuggler consist of: - crossing the green border area through the places where it is poorly maintained or where it features poorly accessible relief for border police vehicles specific for the Ukraine border; - hiding cigarettes in old, modified cars or ones having hidden chambers, to limit loss in case of seizing specific for the Moldova, Russia and Belorussia border; - using services of international freight companies (to introduce and transport smuggled/counterfeited cigarettes over the participant countries territory) specific for the Bulgaria and Moldova borders; Smugglers use freight companies who make regular external routes both in the former Soviet space (product provenience), and in Western states (the main sale market for unstamped cigarettes), as they especially prefer trucks bringing in or 22

23 crossing the 5 countries it with vegetables, fruit, fuels, paper tissues, breadstuffs. A few actual methods of evading border control can be mentioned: - the lid" method, consisting of hiding cigarette packages among other categories of merchandise especially those with a low taxation legally transited through the border crossing points; - the cable method, involving the crossing of cigarette cartons by means of a cable fixed on the two banks of a river, and the curve method, when one chooses an area when a river separating Romania or Lithuania from the neighboring country makes a bend and one releases a waterproof carton which, due to currents, will reach the opposite bank; methods used in the Ukraine Russia, Belorussia and Moldova border areas. - the diver method used by owners of diving suits, crossing the river border, especially during the cold seasons, with significant quantities of cigarettes (4-5 cartons per transport), inserted in waterproofed cardboard boxes, bound in plastic foil and scotch tape; - soundproofing cars with cigarettes, hiding packets in their various components (tires, struts, doors, etc.) or using double walls, used both for inserting and for taking out cigarettes to EU members states. - hiding cigarettes in clothing or on the body, in the packaging of other food products or in double-bottom bags; - camouflaging cigarettes in potentially dangerous transports (fuels), or those having special physical and chemical properties, not allowing for an effective control by means of RAPISCAN-type equipment or by an optical probe; - crossing the mountain border area by horse-drawn carts, taking advantage of the rough mountain relief, making it difficult to check routes; - using drivers and vehicles coming from/ registered in other EU states, in order to not draw attention of control organs at the border with the Republic of Moldova, Ukraine, Serbia, Russia and Belorussia border; - using diplomatic coverage (Diplomatic passport), allowing the crossing of state frontiers without any customs control. Cheap / illegal whites as newly emerged threat to the European Union As smuggling is covered up as a legitimate business transaction, it follows the business logic and usual trade routes. In the last years smugglers goal was to penetrate the external EU borders and reach markets where profit will be higher (as a rule Germany and the UK). Typically the mechanics of the illegal trafficking include: purchasing of goods from a supplier, transport of the goods, delivery to a consignee and customs clearance, and distribution on the local market. 23

24 During the workshops, the participants understood that the cheap whites represent a huge threat to the EU member states and a lot of questions were asked on the topic of cheap whites cigarettes, which is the reason why more details will be provided in the content of the manual. Growth to 33% of total illicit consumption in just few years Source: KPMG - Project Sun Report, 2014 At this moment there is no standard agreement among various authorities on how to define illicit whites. A few definitions can be mentioned: - Nielsen - brands for which only non-domestic packs were collected and that do not belong to any international Company (PMI, JTI, BAT, IMPERIAL); - Project star - cigarette brands manufactured outside the EU and / or in Free Trade Zones, and distributed in such a way that a large share of their volumes is sold at a very low price and consumed in EU countries, although these brands are in general not registered there and not destined to be sold at legitimate retail in such markets - European Commissions - brands manufactured legitimately in one market, either taxed for local consumption or untaxed for export, and sold knowingly to traders who transport them to another country where the products are sold illegally without domestic duty paid. - International tax and investment center - cigarettes that are marketed on price and typically produced legally, but intended for smuggling into countries where there is no prior legal market for them. To sum up the aforementioned definitions, the cheap whites are the tobacco industry s term for cigarettes produced entirely independently of the traditional tobacco manufacturers. They are cheap cigarette brands, often of reasonable and consistent quality, and provide a good alternative to counterfeits, whose quality can vary significantly. The most popular cheap white brand is currently Jin Deleted: 24

25 Ling, which is manufactured in Kaliningrad (Russia), Ukraine and Moldova (see the above mentioned description). The reasons behind this trend are mainly an easier supply and the evasion of any risk. As already mentioned, one of the most prominent producers of cheap whites in the region is currently the Russian company Baltyskaya Tabachnaya Fabrika or BTF, established in Its brand Jin Ling, although not legally sold, holds almost 20% of the market in Germany alone. The major supplier of cheap white brands globally is also UAE. Several factories, usually situated in free trade zones, equipped with modern machinery, are able to produce upon order different types of cigarettes, apart from their own brands. We need to mention again that these factories function legally. Examples of these including their major brands are: - Kaanee American International Tobacco, UAE Gold Mount, Sir, Kaany; - Walford Tobacco Company, UAE Viva, Fency, MN, Lion, Ramses, Hill; - Oriental Group, UAE Capital, Gold Seal, Fisher, Denver, Oris, Empire, D&J; - Gulbahar Tobacco, UAE Mond, Mond International, Legal, Cherry, Genuine; - Jubilee Group, UAE Richman, Range, Dunston, Maverick; - Al Maaras, UAE Marble, Safari Star; - SEBA, Turkey Baron, Business Club, London bridge, House of Seba, Valentin, Contesse Slims; - ZMC Import-Export, Turkey Vigor, Winner; - Explosal, Cyprus Raquel, Raquel Slims, Gold Classic; - Mastermind Tobacco, South Africa Yes, Supermatch, Legend; - Georgiades, Cigarettes Industry, Greece MG, Smoker; - Union Tobacco, Jordan Miami, Mikado, Vegas; - Ray Tobacco, China Ray, Walton, Jackman, Esti ; As seen from the list above, the producers of cheap whites are originating from different areas of the world and their number is growing, indicating high profitability of their business. A decade ago these small producers were engaged in the typical King Size - 85 mm format of the most common cigarettes at the market, due to the easy access to such machinery. Now, mirroring big producers, they are able to make different formats 100 mm, Slims even Super Slims and Nano format, all requiring special production lines and additional investment. This fact is also proving the growing demand of such goods and related profit. Additionally, due to the better control both from the EU governments and legitimate business, diversion of legally produced cigarettes is 25

26 reduced, which also contributes to the increased demand for cheap whites brands. Examples of cheap whites brands produced in Canary Islands In the period of OLAF and all three global cigarette companies Philip Morris International, British American Tobacco, and Japan Tobacco concluded agreements on the level of control that should prevent smuggling of genuine cigarettes, envisaging significant penalties when such cases are detected. This step proved to be an effective one, reducing this source of smuggling. The transport of the cigarettes is another important factor in smuggling schemes. Even in the time of the global economic crisis the volumes of the transport business are such that present abundant opportunities for cheap and undetected movement of any kind of cargo. In some schemes though, collaboration of a captain of a vessel or even an entire crew are key success elements. Smugglers depend on the support of the crew due to the fact that unloading of cigarettes could be carried out in the open sea, out of the territorial waters of the littoral states, or at the shallow waters of the isolated shore. When detected, law enforcement agencies are able to trace the suspicious ship. That is why often the name or ownership of the vessel is changed. 26

27 Very often though, the transport is carried out via regular container ship routes, which has an advantage of not expanding the circle of people involved and brings opportunity to conceal the goods as legitimate cargo. Additionally, such transports go through several free zone/transport hubs as Mersin in Turkey, Jebel Ali in UAE, Port Said and Alexandria in Egypt, Bar in Montenegro which are used to change documentation, or direction, thus hampering customs efforts to track the cargo in its risk analysis capacity. The next element is the process of customs clearance and physical entry of the smuggled goods on the territory of the end market or EU MS used as a transit country. Often in such cases international criminal networks look for the support of the local organized crime groups that can facilitate or assist in a problem-free entry of the goods. In most cases, criminals rely on the sheer volume of cargo that makes detailed control impossible and gaps in the risk analysis process of the entry market. Even in the case of successful hit realized by the border agencies based on intelligence, effective risk profiling or random check, the profit of the next successfully passed container will recuperate the loss. When cheap whites are legally imported, they are kept under customs control and re-exported to a non-eu country. While en route, the cigarettes are unloaded either somewhere in the Greek Islands and transported further to Central and Western Europe or returned back to the country illegally. The used vessels are usually small up to 2,000 Net Register Tons, seafaring under Ukrainian, Russian, and Turkish flags. Places for unloading are carefully chosen to allow such ships to approach the closest point to the beach. Smuggled cigarettes may be concealed by legal merchandise such as timber, oranges, bottles of olive and sunflower oil, frozen food, soda water, marmalade, doors, bricks, electrical appliances, furniture, clothes, raw leather, pulped paper, boilers, toys and other products subjected to low taxation. It is important for risk analysis purposes to track the weight of containers used for transportation of cigarettes, bearing in mind that the weight of one master case is kg and the full load of one 40 container will be tonnes. Sometimes criminals omit this detail which is an important risk indicator (in case there are discrepancies in weight in a customs declaration). As a general description of the common characteristic of all cheap whites / illicit whites, they are legally produced in the source countries and legally exported and sold to the first purchaser, but they are not available in the legal turnover in the country of production and in the country of destination. Over recent years, seizures of illicit/smuggled cigarettes bearing brand names that had been more or less unknown increased significantly. Nevertheless, the 27

28 overall cigarette consumption at national level does not correspond to the volume of production. Subsequent purchasers of these cigarettes smuggle the products into the country of destination, often using elaborate routings to disguise the true source and country of departure of the shipment. A large number of Cheap Whites cigarettes are not legally available in the destination countries and generally do not comply with regulatory standards (they could be dangerous for the health as they contain high levels of tar, nicotine and carbon monoxide). It must be noted that information concerning the location of production sites of many brands is somewhat obscure; the production sites are not necessarily in the same location as the business location of the registered manufacturer or there are several production sites in different countries. The most common brand of Cheap Whites is Jin Ling : it is produced in Russia (BTF, Kaliningrad) and in Ukraine and Moldova. Other popular cheap whites brands are Gold Classic, Palace (which seem to be produced in various countries) and Raquel, (whose manufacturer is based in Cyprus, while there seem to be additional production sites in several other countries). Jin Ling cigarettes are produced, among others, in Moldova by Tutun CTC, but they are produced exclusively for export and are not available in legal market in Moldova. According to available information, there were no cases of seizures of Jin Ling by the Moldovan Customs on the territory of Moldova. According to WCO Report, the most common brands of illicit white in 2012 worldwide were Jin Ling, Palace, Raquel, and Gold Classic. In Europe, significant seizures of illicit whites were made in Ireland (38 million cigarettes at Dublin Port, brand of cigarettes: Golden Eagles), Greece (53 million cigarettes branded Cleopatra, at Kissamos Port; 23 million cigarettes branded Raquel at Thessaloniki Port). The smuggled cigarettes were transported via Rotterdam Port (shipment to Ireland), Montenegro and Libya (shipment to Greece), and Egypt (shipment to Thessaloniki Port). Often cheap whites or smuggled cigarettes shipments depart from the ports Mersin, Famagusta, Port Said, Alexandria, and are destined to Durres, Bar, Odessa, Varna, Burgas, Constanta. Very often the shipper is the logistical company based in UAE - Al Sabah Shipping LLC, although its affiliation to the smuggling is unknown. In 2012, in CIS countries over 30 million of cheap whites were seized, while in Central and Eastern Europe the quantity of seized cigarettes amounted to 170 million pieces and in Western Europe to 300 million pieces. While the quantity remained at similar level in CIS and Central and Eastern Europe in comparison to 2011, the most significant increase was observed in case of Western Europe the quantity doubled in Concerning the countries of departure of the smuggled cheap whites, the WCO report enumerates the following countries in 28

29 the order of importance (number of seizures): Ukraine, Belarus, the Russian Federation, Greece, Lithuania, and Poland. The EU Strategy 2014 emphasizes the necessity to counteract the illicit trade of other brands the expression other brands is used to describe the brand other than main brands of the four main global producers: Philip Morris International, Japan Tobacco International, British American Tobacco and Imperial Tobacco Ltd. The Strategy emphasizes the fact that in the last years, the share of smuggling of main brands has decreased, and on the other hand other brands are on the rise. Additionally, the Strategy mentions that according to available data, the main countries of provenance of smuggled tobacco products are, in the order of importance: China, the UAE, Vietnam, Malaysia, the Russian Federation, Singapore, Belarus and Ukraine. According to the KMPG Project Sun Report 2014, the consumption of illicit whites in the EU totalled 19,6 billion cigarettes in In that report, the expression illicit whites covers also the brands: Minsk, NZ, Premier which are produced by the Belarussian Tobacco Factory Neman (both NZ and Fest were exported to Transnistria in the biggest quantities by comparison to other brands). The KMPG Report estimated the consumption of illicit whites in the EU as follows: Fest (2.1 billion), Jin Ling (1.7 billion cigarettes), American Legend (1.5 billion), Ducal (1 billion), Minsk (0.8 billion), NZ (0.9 billion), etc. In 2013, according to the study conducted by the KMPG project, Poland had the highest consumption of illicit whites in Europe, and also Italy, Greece, France, UK, Romania, Spain, Bulgaria, Lithuania, and Germany are mentioned among the top consumers of illicit whites. According to WCO RILO analysis, in Poland cigarettes Jin ling and Classic were the most frequently seized brands in That analysis identified Poland mainly as a transit country of cheap whites to Western Europe due to higher prices of cigarettes in these countries. A particular sub-category of Cheap Whites are product doubles that feature graphics and colours that are very similar to well-known brands. Examples of such product doubles are Dunston (an imitation of Winston ) and Monte Ceneri (an imitation of Monte Carlo ). The price of these product doubles is on average 50% lower than the original products. Due to the fact that Cheap Whites are usually produced in legal production sites, wherever they might be located, some consumers of illicit cigarettes prefer them to the well-known and established old brand names, as a lot of the cigarettes on the illicit market with the old brand names are counterfeit. However, even popular Cheap Whites tend to get counterfeited after a while. Investigations revealed that 29

30 counterfeit Jin Ling, Raquel and other Cheap Whites brands have been produced. Taking into consideration all the data presented, the following common characteristics for illicit whites cigarettes can be concluded: - Not usually illicit at the point of manufacture, but only when they are smuggled and evade tax; - Products with low or no brand equity; - No real market in their country of manufacture; - Produced in high volumes in low cost markets; - Smuggled across borders for sale in high cost markets; - Unlike international tobacco companies, illicit white manufacturers are not bound by regulatory and contractual restrictions; - Illicit whites are often of no relevance for customs in their market of export and become a high priority only when smuggled into an EU country. 4. EXISTING MEASURES TO FIGHT CIGARETTES SMUGGLING For better tackling of the cigarettes smuggling phenomenon, especially at the Eastern border, the law enforcement agencies and also the prosecutors have to be aware of the instruments at their disposal. These include international operational cooperation, including joint investigations and exchange of intelligence and information, technical and financial assistance to Member States and third countries, engagement with legitimate traders, negotiation of agreements with the neighbouring countries and within a global context, approximation of excise rates and legal provisions concerning penalties. These measures were detailed in the analysis which is part of this Manual, but the main features should be mentioned again Anti-fraud measures OLAF, the Commission's Anti-Fraud Office, coordinates a number of largescale investigations covering several Member States and third countries on the 30