Key facts
- Criminal gangs are leveraging artificial intelligence to establish illicit cigarette factories in Europe.
- The use of AI allows gangs to operate closer to their target markets, reducing supply chain risks.
- The illicit tobacco trade results in an annual loss of at least €13 billion in revenue for the EU.
- Approximately 10% of cigarettes in Europe were illegally produced or smuggled in 2023.
- A lack of coordination and intelligence sharing among EU agencies and member states impedes efforts to combat the illicit trade.
Criminal organizations are increasingly employing artificial intelligence to identify optimal locations for establishing illicit cigarette factories across Europe, according to a warning from an EU auditor. This strategic shift, moving away from traditional strongholds in Eastern Europe, allows gangs to operate closer to their consumer markets, thereby minimizing risks within their supply chains.
Petri Sarvamaa, who led the European Court of Auditors' (ECA) report on illicit tobacco, highlighted at a press briefing that AI facilitates the selection of rural and village locations for these operations. Esther Torrente Heras, a senior auditor, added that this approach reduces the overall risk for criminals involved in the trade.
This development is one of several challenges faced by the European Union and its member states in their efforts to curb the illicit tobacco trade, which results in an estimated annual revenue loss of at least €13 billion for the bloc. In 2023 alone, nearly one in every ten cigarettes consumed in Europe was either illegally produced or smuggled.
The report also comes at a time when progress on harmonizing minimum tobacco and vape taxation levels across the EU has slowed, partly due to opposition from Sweden regarding a proposed levy on nicotine pouches. The broader objective of such legislation is to equalize prices within the single market and encourage smoking cessation.
Sarvamaa emphasized that a significant impediment to combating new cigarette factories is the "lack of coordination and intelligence sharing" between EU agencies and national authorities, leaving the true scale, structure, and economic impact of the illicit trade largely unknown. He stressed that "better intelligence sharing between all relevant actors is essential" and called for the European Commission to play a greater role in coordinating a strategic response involving entities such as the European Anti-Fraud Office (OLAF), Europol, Eurojust, and the European Public Prosecutor's Office (EPPO).
The European Commission has largely accepted the ECA's recommendations, with the exception of areas it deemed outside its purview, such as defining specific strategies for individual EU authorities. The Commission also noted that providing a definitive assessment of the size and economic impact of illicit trade is not feasible with current methodologies.
Sarvamaa concluded with a strong warning, stating, "The union cannot afford to lose this fight," as public health, the integrity of the single market, and the prevention of organized crime are all at stake. However, he deferred recommendations on the overhaul of tobacco products and excise legislation to policymakers and lawmakers.