“Cigarettes are the number one illegally trafficked ‘legal’ commodity in the world”

- The Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF)

While digital technology provides numerous security benefits, it has also simplified the process for criminals who are counterfeiting excise tax stamps, especially on cigarettes. Counterfeit currency and untaxed goods are flourishing on the global black market, funding organized crime and terrorism, threatening national security and jeopardizing countries’ economic stability.

Each year, the U.S. loses $5 billion in state tobacco taxes and a further $3.8 billion in federal taxes due to illicit and untaxed cigarette sales, according to the ATF and private sector estimates. The lost tax revenue amounts to $100 billion globally, according to a recent CNBC documentary. But many governments – burdened with growing deficits – fail to recognize that increasing cigarette excise taxes without the systems to enforce collection only creates more incentive for cross-border and illegal trade.

In 2003, the World Health Organization (WHO) established the Framework Convention on Tobacco Control (FCTC), which requires participating countries to adopt a comprehensive range of measures designed to reduce the health and economic impacts of tobacco consumption and exposure to tobacco smoke. It has since become one of the most widely embraced treaties in UN history and, as of today, has 174 parties - nearly 90% of the world.

The FCTC’s Protocol on Illicit Trade in Tobacco Products was developed in response to the need for a more coordinated effort to control the sale of tobacco products and to prevent illicit sales, which lead to tax evasion and the undermining of government regulatory policies. In March 2010, a consensus was reached on the provision calling for international tracking and tracing requirements. One of the key elements of an effective system to reduce illicit tobacco trade and collect federal government excises is effective production monitoring, import and export control, and the tracking and tracing of tobacco products through the supply chain.

Today, SICPA is the leading global provider of proven tobacco control programs and is ready to work with countries to become FCTC compliant.