1. Session 5 Comments: Illicit trade of tobacco products Panama City, Panama 10-12 July 2012 John W. Colledge III Consultant Supervisory Criminal Investigator (Retired) U.S. Customs Service Department of Homeland Security

2. Interdiction  Seize contraband.  Arrest violators.  Protect revenue.  Media exposure.  Performance measurement.  Agency budget.  Politics.

3. Criminal investigations  Revenue protection.  Seize contraband and arrest violators.  Identify, investigate criminal organizations and refer for prosecution.  Revenue recovery – proceeds of crimes confiscation.  Deter and disrupt criminal activity.

4. Legislation and enforcement  Criminal offenses defining illicit trade meeting UNTOC definition of transnational organized crime.  Money laundering and proceeds of crimes legislation -- including asset forfeiture fund.  Technical surveillance, undercover, inspections and audit legal authorities.  Lead agency with police powers, training, staffing and financial resources.  Prosecutors, trained and dedicated to organized crime offenses.  Tracking and tracing system.  Trade data analysis.  Criminal forensic support -- crime laboratory.

5. Tracking and tracing Tracking = Crime Detection Tracing = Crime Response

6. Tax Stamp © De La Rue Limited 2012

7. Codes

8. Tax stamp or code? Tax stamp  Paper or other material  Encrypted  Public recognition  Anti-counterfeit features  Applied at manufacturer  Manufacturing, imported and exported products Code  Ink jet applied  Encrypted  Applied at manufacturer  Manufactured and exported products

9. Unique Identification Markings Data Requirements  Date and location of manufacture.  Manufacturing facility.  Machine used to manufacture tobacco products.  Production shift or time of manufacture.  First customer data.  The intended market of retail sale.  Product description.  Any warehousing and shipping.  The identity of any known subsequent purchaser.  The intended shipment route, destination, point of departure and consignee.

10. More than a stamp or code  Revenue collection tool.  Monitoring collections.  Inspections.  Manufacturing.  Sales.  Imports.  Exports.  Revenue protection tool.  Inspections.  Audits.  Criminal Investigations.  Trade data analysis.  Revenue analysis tool.  Taxes and duties projected.  Taxes and duties collected.  Portal to other government data systems.

11. Global Information Sharing Focal Point  Not defined in the Protocol draft.  Must be at the WHO in Geneva.  Originally envisioned as staffed facility or clearing house.  Should not be a database.  Should not be under tobacco industry control.

12. NLETS – A Possible Solution for the Global Information Sharing Focal Point  National Law Enforcement Telecommunications System. (nlets.org)  Not a database.  Switching interface for law enforcement agencies in the United States and Canada.  Linked to arrest warrants, missing persons, stolen property, vehicle registration, driver’s license data, automated criminal histories and more.  Linked to INTERPOL notices.

13. Illegal Manufacturing  Counterfeit – trademark infringement.  Unlicensed manufacturing.  Over-production.

14. “Key Inputs” and Trade Data Analysis  Harmonized schedule.  Paper-wrapped cigarettes.  Cigarette paper.  Acetate filter tow.  Tobacco.  Trade anomalies.  Trade-based money laundering.

15. Summary  Criminal investigative needs differ from revenue collection needs.  Tracking and tracing, is only one component of a viable enforcement program.  Tracking is a proactive law enforcement tool.  Tracing is a post-contraband discovery tool.  There is a large volume of misinformation and false information related to illicit trade.

16. John W. Colledge III jwcolledgeiii@johnwcolledge.com +1.406.552.8053 www.johnwcolledge.com