AI is helping gangs grow illicit tobacco networks, EU auditor warns
The EU and capitals face many challenges clamping down on illicit tobacco trade which cause €13 billion annually in lost revenue, ECA said.
EU auditors have cautioned that criminal gangs are leveraging artificial intelligence (AI) to identify and establish illicit cigarette factories in rural areas across Europe, thereby reducing the risk of law enforcement interception. Prior to the advent of AI, these gangs primarily operated in Eastern Europe, where hiding was relatively easier.
However, with AI at their disposal, these gangs are now able to pinpoint locations closer to their target markets, typically in rural settings. This strategic shift not only diminishes detection risks but also compromises EU and member countries' efforts to curb illicit tobacco networks that generate at least €13 billion in lost revenue annually.
In 2023, approximately one in ten cigarettes circulating in Europe were either produced or smuggled illegally, as highlighted in a recent EU auditor report. This revelation unfolded amid ongoing struggles to forge consensus on raising minimum tobacco and vape taxation levels within the EU. Notably, Sweden, a key negotiator, rejected a proposed levy on nicotine pouches following its upcoming general election.
The primary objective of such legislation is to harmonize prices across the bloc, thereby fortifying the single market while discouraging smoking.
The report's timing is significant as it coincides with the difficulties EU states face in reaching agreement on enhanced taxation measures. The auditor report underscores the challenges posed by a lack of coordination and intelligence sharing between EU agencies and member countries, which hampers their capacity to respond effectively to emerging cigarette factories.
As a result, the true scope, structure, and economic implications of illicit tobacco activities remain largely unknown, according to Petri Sarvamaa, the lead auditor.
To combat this illicit activity, "it all starts with the Commission," Sarvamaa emphasized, urging a greater role for the European Commission in coordinating a strategic response. This entails fostering better intelligence sharing among relevant actors, including the European Anti-Fraud Office (OLAF), Europol, Eurojust, and the European Public Prosecutor's Office (EPPO).
While the Commission has largely endorsed the auditor's recommendations, it has reservations regarding the definition of strategies for various EU authorities, asserting that bodies like OLAF are responsible for setting their own strategic priorities. Furthermore, the Commission contends that a uniform approach to assessing the size and economic impact of illicit trade is unfeasible due to the absence of a standardized method.
Sarvamaa cautioned that the EU cannot afford to lose this battle, highlighting the paramount importance of safeguarding public health, preserving the integrity of the single market, and thwarting organized crime. Nonetheless, he refrained from proposing specific actions for Europe's legislative overhaul of tobacco products and excise duties, designating this as a responsibility for policymakers and lawmakers.
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