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Insight

Are you accidentally funding terrorism?

Written by David Povey on Monday July 1, 2019

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Hands up if you’ve ever bought a fake pair of sunglasses or fake handbag? Or if you know someone that has? Maybe a friend of a friend has sold you a copy of a film on DVD?

I hate to be the bearer of bad news but if you answered ‘yes’ to any of the above, then there is a high chance that you may have inadvertently funded organised crime with links to drugs, human trafficking and even terrorism.

This article will explore why purchasing counterfeit goods, though often considered innocuous in itself, can be connected to more serious criminal activity.

A danger to you and others

In terms of the actual purchase, there are several issues. If you buy something that is counterfeit, then you have no idea of the quality or safety of it and this has the potential to cause you harm. Some examples can be seen below:

Rolex watch

  • Made from cheap metals
  • Can discolour and break easily
  • Can cause allergic reactions to the skin

Alcohol

  • Can contain ingredients used in cleaning products, antifreeze and nail polish remover
  • Can leave you blind or in a coma and can be life-threatening

Cigarettes

  • Higher health risk than genuine cigarettes
  • Higher levels of toxic ingredients: tar, nicotine, carbon monoxide, lead and arsenic 

The money chain

It might seem like there is no harm in buying fake or illegal goods locally or abroad, either face-to-face or online, and that purchasing, say, fake clothing, toys and cigarettes will simply save you money. But the money chain does not end there.

Your money goes to the person who sources these goods (wherever they may be from) and is then often passed on to organised crime gangs to help fund further illegal activity.

The truth is, though, that this is about more than the money. Consider those making these fake products – counterfeit goods produced by criminal organisations may be being made by workers who have been trafficked or who live and work under very poor conditions.

It is also a global issue, happening on all of our doorsteps throughout the world. In the UK, local markets were raided in Walsall, London and Manchester, in China a factory raid resulted in the seizure of counterfeit Shure, Sennheiser, Yamaha and Harman audio products and in New York 22 people have been charged in a case involving goods being smuggled in through ports in the city.

FATF has specifically targeted this activity by make the counterfeiting and piracy of products a designated category of offence.

A trillion-dollar industry

The United Nations Interregional Crime and Justice Research Institute (UNICRI) reports that counterfeiting is now one of the highest income sources for organised criminal activities.

Trade in counterfeit and pirated goods has risen steadily over the last few years – even as overall trade volumes stagnated – and now stands at 3.3% of global trade, according to a new report by the OECD and the EU’s Intellectual Property Office.

"A report issued by the International Chamber of Commerce has predicted that the global economic value of counterfeiting and piracy could reach $2.3 trillion by 2022."

 

Whilst you may not have been aware that counterfeit goods are being used to fund terrorism, it is likely you will have heard of terrorist acts that have been part-funded by sales of fake products.

Alasdair Gray, Senior Brand Protection Manager (Online) at Tommy Hilfiger, gave a TED talk titled ‘How fake handbags fund terrorism and organised crime’, explaining how sales of fake sports shoes were used to help fund the 2015 Charlie Hebdo attacks in Paris:

In June 2014, the French security services stopped monitoring the communications of Said and Cherif Kouachi, the two brothers who had been on a terror watch list for three years.

But that summer, they were only picking up that Cherif was buying fake trainers from China, so it signaled a shift away from extremism into what was considered a low-level petty crime.

The threat had gone away. Seven months later, the two brothers walked into the offices of Charlie Hebdo magazine and killed 12 people, [and] wounded 11 more, with guns from the proceeds of those fakes.

How you can help

It is about a change in mindset. If you see a pair of sunglasses being offered online or in a market for £10 which normally retail at over £200 then there is a high chance they are fake. If it looks too good to be true, it probably is.

So, if you are ever tempted to buy a counterfeit product, have a think back to this article and remember – it’s not a victimless crime. Playing your part to help prevent criminal activity can be as simple as this: if no one buys fake goods, then no one will make or profit from them.


Learn more by taking the ICA Certificate in Financial Crime Prevention


This article forms part of the #BigCompConvo - Join us as we explore and debate the latest challenges and issues facing you and regulatory and financial crime compliance professionals all over the world. If you’d like to contribute an article as part of the Big Compliance Conversation get in touch with us at contributions@int-comp.org

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