Editor’s Note: The Congressional Research Service (CRS) report “Terrorism and Transnational Crime: Foreign Policy Issues for Congress” is attached here.
The October 2012 CRS study discusses how a range of terrorist organizations use counterfeit and other contraband tobacco as an important source of financing. The report also discusses the various criminal activities related to such financing including money laundering.
This forum has repeatedly highlighted the links between terrorist groups and contraband tobacco as well as the many links between illict tobacco trafficking and organized crime, as well as drug trafficking, arms smuggling and human trafficking. The Center for Regulatory Effectiveness (CRE) documented that cigarette smuggling is often intertwined with the smuggling of arms, drugs and other contraband in the white paper, “An Inquiry into the Causes, Nature and Impact of Contraband Cigarettes.”
The CRS report states:
Illicit tobacco trade: The production, smuggling, and sale of tobacco products, including genuine and counterfeit cigarettes, is a lucrative form of financing for organized crime as well as terrorist groups, such as Hezbollah, Hamas, the Kurdistan Worker’s Party (PKK), and the Real Irish Republican Army (RIRA).
Cigarette smuggling schemes as a means for financing terrorists have been discovered in a range of countries and regions, including the United States, Europe, Turkey, the Middle East and North Africa, and Iraq. Criminals and terrorists may be drawn to the illicit tobacco trade to take advantage of price differentials across jurisdictions, bootlegging small consignments from a low-tax or duty-free outlet and re-selling the products elsewhere at a higher price. If sufficiently resourced, some groups may conduct larger-scale operations that divert and smuggle commercial-sized volumes, those in excess of 1 million cigarettes per consignment, for subsequent distribution and sale.
