Illicit trade funding terrorism and wars

We report on how criminal and organised crime groups are using illicit trade to fund their activities and how the EU is trying to stop them
Source: Alamy
Dods Impact

By Dods Impact

Dods Impact is the award-winning content, research, and event studio at Dods Group

25 May 2022

In 2019, the United Nations Security Council expressed concern that terrorists and organised crime organisations are benefitting from illicit trade as a source of financing through the trafficking of arms, persons, drugs, artefacts, and cultural property. Although terrorists have been financed by illicit trade for decades, the scale and extent of this dynamic is reaching levels never seen before.

MEP Tomislav Sokol told The Parliament Magazine that in Europe “the most common forms of illicit trade include human trafficking, smuggling of weapons and natural resources such as oil but also cultural goods,” adding, “The financing of terrorist activities through illicit online trafficking of illegal content is of particular concern.”

While governments are facing a global recession and consumers and legal companies are struggling to maintain their businesses, the illegal economy is flourishing. From footwear and luxury items to conflict diamonds, weapons, and illegal wildlife, global illicit trade is costing the EU around €10 billion each year in lost budget revenue. This lost revenue is instead being used to finance much larger criminal and terrorist activities.

CULTURAL RACKETEERING

Another illicit trade avenue terrorist groups are exploiting is cultural racketeering – the illegal trade of culturally valuable artifacts. According to the JSTOR Terrorism Research Initiative: “Antiquities looting shows that terrorist participation in illicit trade is not only about revenue generation, it serves many functions: destruction of history, demoralisation of communities, the weakening of social solidarity, and harming individuals’ health and well-being.”

In 2017, Belgian weekly magazine Paris Match reported how the network responsible for the deadly Brussels attacks in 2016 had funded themselves by selling illicit antiquities smuggled into Europe from Daesh-occupied areas. That same year, Belgian customs agents seized illicit Syrian antiquities en route to prominent Geneva-based gallery ‘Phoenix Ancient Art’. And more recently, on 9 March 2022, Interpol revealed that they had dismantled a global operation trafficking illicit cultural goods. The raid had led to 52 arrests across 28 countries and the seizure of archaeological objects, furniture, ancient coins, paintings, musical instruments, and statues.

“The financing of terrorist activities through illicit online trafficking of illegal content is of particular concern”

MEP Tomislav Sokol

TOBACCO SMUGGLING & CONFLICT DIAMONDS

Unfortunately, no sector is immune to illicit trade, with terrorist and organised crime groups seeing it as a relatively stable business model. For example, the 2015 Charlie Hebdo attack in Paris and the 2013 terror attack in Agadez, Niger, were reportedly funded by cigarette smuggling and the selling of counterfeit Nike shoes from China.

Jacky Marteau, Head of OLAF’s Illicit Trade, Health, and Environment Unit, told The Parliament Magazine that part of its mandate is to crack down on the illicit trade in tobacco. As part of the EU’s action against contraband and counterfeit cigarettes, the official said the bloc has legally binding and enforceable agreements with three of the world’s largest tobacco manufacturers — JTI, British American Tobacco and Philip Morris International. Globally, the World Bank estimates lost revenue from illicit tobacco at US$40 to 50 billion per year. That equates to one in every ten cigarettes sold are illegal. That is why prevention requires public/private partnerships working together to fight the underlying causes as well as the consequences and symptoms.

In 2019, the UN issued a resolution urging members to address the links between international terrorism and organised crime through policy measures. At EU level, the Commission acknowledges that the illicit trade of cigarettes remains a challenge. The tobacco industry argues that excessive and sharp increases in taxation can drive the expansion of illegal supply chains, as consumers seek cheaper alternatives illegally – a trend that is difficult to reverse. Through its Anti-Illicit Trade (AIT) team, JTI is taking measures to fight illicit trade, providing authorities with industry expertise and quality information on criminal operations, locations, and methods. JTI is a trusted partner in supplying OLAF with information, supplying them with 80% of their tobacco intelligence, as confirmed by Jack Marteau, Head of OLAF’s Illicit Trade, Health and Environment Unit

However, perhaps the most recognisable forms of illicit trade are conflict diamonds. According to Global Witness, conflict diamonds have funded wars in Angola, the Central African Republic, the Democratic Republic of Congo, Liberia, and Sierra Leone. Since 2003, the Kimberley Process (KP) has helped tackle organised crime group’s exploitation of conflict diamonds. With more than 56 countries involved, including one EU representation, the KP defines conflict diamonds as “rough diamonds used by rebel movements or their allies to finance conflict aimed at undermining legitimate governments”. A recent overview by the Commission states that since the KP was introduced, the trade in conflict diamonds has declined from 15% in 2003 to less than 1% in 2021.

“Organised crime is a major threat to the internal security of the EU and the safety of our citizens. It is a cross-border issue, and we need to cooperate more effectively, both within the EU and with international partners as well”

MEP Tomás Zdechovsky

GLOBAL ACTION

The European Commission has recently launched a number of initiatives to address illicit trade, including the EU Counter-Terrorism Agenda, the EU Strategy to tackle Organised Crime, the Anti-Money Laundering Package and EMPACT (the European Multidisciplinary Platform Against Criminal Threats). And last June, the European Anti-Fraud Office’s Director-General, Ville Itälä, signed a new cooperation agreement with the Secretary General of the World Customs Organization (WCO), Kunio Mikuriya. The new agreement builds upon a previous partnership from 2003, easing operational cooperation in the field and information sharing. While the 2003 arrangement between the WCO and OLAF covered only the exchange of information on tobacco seizures, the new one will see the exchange of information expanded to cover a wider range of fraudulent activity.

MEP Tomáš Zdechovský welcomes the global approach being taken by the EU, telling The Parliament Magazine, “Organised crime is a major threat to the internal security of the EU and the safety of our citizens. It is a cross-border issue, and we need to cooperate more effectively, both within the EU and with international partners as well. We fully support the new 2021-2025 EU Strategy to Tackle Organised Crime presented by the Commission.”


This content was commissioned by Japan Tobacco International (JTI) and produced by Dods

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