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The Illicit Cigarette Trade

Ratio of smuggled cigarettes detected by law enforcement
1 in 10 Ratio of smuggled cigarettes detected by law enforcement
Estimated street value of illicit sticks entering Sri Lanka annually
LKR 22.5 Bn Estimated street value of illicit sticks entering Sri Lanka annually
Maximum penalty for smuggling illicit cigarettes
LKR 1 Mn Maximum penalty for smuggling illicit cigarettes
Estimated average revenue loss to Sri Lanka
LKR 17 Bn Estimated average revenue loss to Sri Lanka
Estimated illicit cigarette sticks entering Sri Lanka annually
450 Mn Estimated illicit cigarette sticks entering Sri Lanka annually
Rise in beedi and illicit cigarettes since Q4 2016
960 Mn Rise in beedi and illicit cigarettes since Q4 2016

The Illicit Cigarette Trade refers to any practice or conduct which relates to the production, shipment, receipt, possession, distribution, sale or purchase of cigarettes for which duty has not been paid.

The Illicit Trade undermines tobacco control policies implemented by the Sri Lankan government and results in a massive loss in government revenue, while funding of transnational criminal activities. Illicit cigarette earnings have been linked to funding narcotics, weapons, terrorist organizations, human & sex trafficking.

Illicit cigarettes pose a serious health hazard, often containing large amounts of carcinogens and other banned substances.

Download our anti-illicit handbook:

TURNING UP THE HEAT: Combatting Sri Lanka’s Growing Illicit Cigarette Trade (3.7 mb) 

A snapshot of the Illicit Cigarette Trade

  • The Illicit Cigarette Trade is the 3rd largest cigarette supplier in the world.
  • Sri Lanka currently has the 2nd highest cigarette prices in the world in relation to purchasing power parity.
  • 99% of illicit cigarettes are smuggled to Sri Lanka via the free port of Dubai, from Turkey, China and Vietnam.
  • Greater than 10-fold increase in illicit cigarettes from 2016 – 2017, post price hike.

Cigarette Smuggling: Low Risk - High Reward

Given that the maximum penalty for smuggling illicit cigarettes in Sri Lanka is Rs. 1 million, the low risk - high reward scenario is a major incentive for many crime syndicates to divert resources to smuggling cigarettes. The global illicit cigarette trade is now more lucrative than narcotics.

Sample Scenario
Cost of illegally importing ten, 40 foot containers of illicit cigarettes
Cost of illegally importing ten, 40 foot containers of illicit cigarettes LKR 200 Mn
Picture2-200px.png
Street Value of each container LKR 400 Mn
Total profit if undetected
Total profit if undetected LKR. 3.8 Billion

Fighting Illicit Trade

  • Abolishing illicit trade requires strong cooperation between the government, law enforcement and CTC.
  • CTC carries out awareness and educational campaigns throughout Sri Lanka on the topic and often serves as an expert witness for government prosecutions.
  • CTC is often alerted to the presence of smuggled / illicit cigarettes by area distribution representatives or tips via the Hotline.
  • Once a tip is received, CTC may inform the Area Police, Divisional Vice Squad, Range Vice Squad, Anti Vice Strike Force or the Special Task Force, depending on the severity of the situation.
  • The products seized by customs are handed over to CTC who then destroys the cigarettes under the supervision of representatives of the Department of Customs.

The Way Forward

  • State to actively carry out obligations of WHO Protocol to Eliminate Illicit Tobacco Trade. 
  • Robust deterrence through increased penalties, making the illicit trade unviable.
  • Dedicated Customs & Police Units to tackle illicit cigarettes.
  • State engagement with foreign governments to stop products at origin.
  • Cross industry collaboration & knowledge sharing
 

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