Interdependence Between Illegal Trade in Tobacco and Corruption, Money Laundering and Organized Crime

Abstract

Scientific research results indicate that the links between cigarette smuggling and organised crime are largely confirmed in terms of cigarette smuggling financial management and marketing, and sometimes – in terms of cigarette smuggling networks and channels. When analysing the links between cigarette smuggling and corruption, it was found that corruption promotes tobacco smuggling by creating favourable conditions for the development of distribution channels and providing smuggling beneficiaries an opportunity to buy political protection, but the impact of declining tobacco tax tariffs on corruption was not found. A substantial number of previous studies confirmed existence of the links between cigarette smuggling and money laundering, but no links between criminal liability for smuggling and money laundering in criminal cases were identified. It was also found that illicit trade in tobacco products can be funded not only through money laundering schemes, but also through unjustified public authority contracts with large tobacco corporations for compensation of unpaid taxes in case of seizure of smuggled tobacco products. This suggests that the link between cigarette smuggling and money laundering is plausible, but not fully established, thus the project was aimed at to assess the impact of illegal turnover in tobacco products on corruption, money laundering and organised crime in Ukraine, Armenia, Serbia, Georgia, Moldavia and Albania.