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Anti-Illicit trade

 
 

Anti-Illicit trade

Illicit trade in smuggled or counterfeit products harms our business. We must play our part to stop it.

 

No involvement in, or support for, illicit trade in our products

We must ensure that:
  • we do not knowingly engage in unlawful trade in the Group’s products
  • our business practices only support legitimate trade in Group products
  • we collaborate with authorities in any investigation of illicit trade

The illicit tobacco trade has a negative impact on society. It deprives governments of revenue, encourages crime, misleads consumers into buying poor quality products, undermines the regulation of legitimate trade, and makes it more difficult to prevent underage sales.

It also harms our business and devalues our brands and our investment in local operations and distribution.

High excise taxes, differential tax rates, weak border controls and poor enforcement all contribute to illicit trade. We fully support governments and regulators in seeking to eliminate it in all its forms (while ensuring this is done in a lawful manner and in line with our zero tolerance for any form of bribery and corruption, given the heightened bribery and corruption risks in dealings with Public Officials).

 

Maintaining controls to prevent and deter illicit trade in our products

We must maintain controls designed to deter our products being sold unlawfully by our customers or diverted into illicit trade channels.

These controls should include:

  • implementing the Supply Chain Compliance Procedure, ‘know your customer’ and ‘know your supplier’, including the Third Party AFC Procedure and any other relevant measures, to ensure supply to markets is commensurate with legitimate demand
  • procedures for investigating, suspending and terminating dealings with customers or suppliers suspected of involvement in illicit trade

‘Know your customer’ and ‘know your supplier’, including the Third Party AFC Procedure and the Supply Chain Compliance Procedure, are important procedures. They are necessary for ensuring that Group products are only sold to reputable customers, made using reputable suppliers and in quantities reflecting legitimate demand.

We must make our position on illicit trade clear to our customers and suppliers. Wherever possible, we should seek contractual rights to investigate, suspend and cease our dealings with them if we believe they are involved, knowingly or recklessly, in illicit trade.

If you suspect Group products have entered illicit trade channels, notify your local LEX Counsel immediately

 

Monitoring and assessing illicit trade in our markets

Group companies should have the ability to regularly monitor illicit trade in their domestic markets and assess the extent to which Group products are sold unlawfully or diverted to other markets.

Our procedures require specific steps to be taken to assess the level and nature of illicit trade in a given market and to develop plans to address it.

 

Illicit trade has a negative impact on society. It deprives governments of revenue, encourages crime, misleads consumers into buying poor quality products, undermines the regulation of legitimate trade, and makes it more difficult to prevent underage sales.

 

Who to talk to

  • Your line manager
  • Higher management
  • Your local LEX Counsel
  • Head of Compliance: sobc@bat.com