Brussels, 6 June 2006
Anti-Contraband and Anti-Counterfeit Agreement between PMI and the European Community and Member States: twenty-four Member States are now Parties
Since July 2004 fourteen Member States have joined the Community and the initial ten Member States in their fight against cigarette smuggling and have signed the Anti-Contraband and Anti-Counterfeit Agreement with Philip Morris International, Inc, bringing the total number to twenty-four. This landmark agreement, which calls for substantially enhanced cooperation on many fronts in the fight against the shared problem of illegal trade in cigarettes, has proved to be highly effective in practice.
Vice-President Siim Kallas, responsible for the fight against fraud, declared: “This cooperation to date has exceeded all expectations and sets an example of what industry and law enforcement can do when they work together in pursuit of a common goal”.
The Agreement includes an efficient system to fight against future cigarette smuggling and counterfeiting, and permits Philip Morris International to work with the European Commission, its anti-fraud office OLAF, and national law enforcement authorities to help in the fight against contraband, including the rapidly growing problem of counterfeit cigarettes.
The Agreement builds on the efforts of all parties and introduces new and innovative procedures to combat the diversion of cigarettes into contraband channels in Europe and around the world. Specifically, the Agreement calls for the implementation and/or enhancement of several components of Philip Morris’ business practices, including strong measures to: ensure complete understanding of the identity of tobacco customers and of their business (“know your customer”); further protect legitimate trade from the dangers of money laundering (“fiscal compliance”); and ensure continued appropriate information collection and sharing (record-keeping components).
Other main components of the Agreement are the “Tracking and Tracing” protocols, which have allowed OLAF and the Member States rapidly to re-create the route taken by genuine smuggled cigarettes from the factory into the hands of the smugglers.
One area of particular benefit to OLAF and the Member States is the Notification of Seizures to Philip Morris. In 2005, OLAF and the Member States notified Philip Morris of almost 300 individual seizures totalling over 400 million cigarettes. While 85-90% of the cigarettes turned out to be counterfeit, the seizures have allowed for the identification of areas of concern in the continued fight against counterfeit and smuggled cigarettes.
The Agreement is proving in practice to be a highly effective means of combating cigarette smuggling. The Commission hopes that it should therefore serve as a model for other cigarette companies.
On July 9, 2004, the European Community and ten Member States (Belgium, Finland, France, Germany, Greece, Italy, Luxembourg, The Netherlands, Portugal and Spain) had entered into a landmark 12-year cooperation agreement with Philip Morris International (the “Agreement”) to fight the illegal trade in cigarettes. Since that date, fourteen additional Member States have signed the Agreement (Austria, Cyprus, Czech Republic, Denmark, Estonia, Hungary, Ireland, Latvia, Lithuania, Malta, Poland, Slovakia, Slovenia and Sweden).
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