Sovereign Matters Committee call on Govts to prevent Illicit Border Trade through continued co-operation and increased penalties

Illicit trade has been a consideration for law enforcement officials on the island of Ireland since customs controls were first introduced in 1922.

This Committee also considered how the UK’s decision to leave the EU was likely to affect cross-border police co-operation and illicit trade.

The Rapporteurs established a sub-committee to hold a series of meetings in Belfast, Crossmaglen, Dundalk and Dublin with the Police Service of Northern Ireland (PSNI), HM Revenue and Customs (HMRC), An Garda Síochána, the Revenue Commissioners and Retailers Against Smuggling.

Smuggling of legal goods is usually concentrated on products where there are different excise duties and VAT regimes in Northern Ireland and Ireland, creating a clear cross-border price differential for goods.

Typically, organised crime groups focus on the cross-border movement of tobacco, fuel and alcohol. There had been an increase in the number of criminal groups with cross-border operations over the last five years, rising from approximately one in five groups in 2014 to one in three in 2019.

Several witnesses warned that illicit trade would continue for as long as there continued to be significant profits to be made due to excise fraud and price divergences between jurisdictions.

Launching the report, Committee Member Declan Breathnach TD commented:

“The report outlines that cross-border cooperation between law enforcement agencies was highly effective. The Garda Commissioner, Drew Harris, and the PSNI Temporary Deputy Chief Constable, Stephen Martin, both emphasised the depth of cooperation between the two police forces.

“The strength of the relationship was also apparent at a local level, despite challenges for policing border communities. We heard directly from senior officers in the PSNI at Crossmaglen and An Garda Síochána in Dundalk about their highly effective working relationship.”

Tax rates on products, as well as price differentials between the two jurisdictions, create a strong incentive for criminal groups to supply illicit tobacco, particularly those on lower incomes and young people, to purchase them.

The Committee heard that these high levels of illicit trade in tobacco were a concern for legitimate retailers. Retailers Against Smuggling, an Irish umbrella organisation representing retailers concerned about illicit trade, warned that tobacco smuggling was a threat to the financial viability of businesses that wanted to operate on the right side of the law.

The Committee also heard concerns from the PSNI regarding the potential societal impact in Northern Ireland were the UK and EU unable to agree a formal withdrawal agreement.

The PSNI warned of potential unrest if higher levels of unemployment, particularly in the agricultural sector, were to lead to increased dissatisfaction with current constitutional arrangements in Northern Ireland.

Recommendations:

• The Committee are concerned by reports that criminal groups are resorting to dangerous methods as they seek to fuel launder bypassing a new fuel marker. There must be stronger penalties for those who engage in this crime.
• The most effective way to reduce the risk of any criminality arising from Brexit will be for the UK to leave the EU with a deal. The Committee therefore reiterates its desire to see a formal withdrawal agreement agreed between the UK and the European Union.
• The Committee emphasises the importance of avoiding any new infrastructure at the border on the island of Ireland.
• The Committee calls on the UK and Irish Governments to ensure that, if and when significant divergences in prices emerge following Brexit, appropriate resources are given to law enforcement agencies to adequately address any commensurate increase in illicit trade.
• The UK and Irish Governments should review whether existing criminal sanctions offer a sufficient deterrent to organised criminal illicit trade on the island of Ireland. Minimum and/or mandatory sentencing laws for illicit trade should be considered as part of this review.
• The UK and Irish Governments ensure that existing levels of cross-border co-operation in criminal justice matters are maintained, or replicated, under all circumstances.