Interviews

Mr. Mike Ellis, INTERPOL, on illicit trade and counterfeiting

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Today’s CBRA Interview is with Mr. Mike Ellis who is the Assistant Director of Illicit Trade and Anti-counterfeit Sub-crime Directorate at INTERPOL, Lyon, France.

Hi Mike, can you first tell a bit who are you and what you do?

I am the Assistant Director for Police Services at INTERPOL, based in Lyon France.  INTERPOL is the world’s largest international police organization. Our role is to assist law enforcement agencies in our 190 member countries to combat all forms of transnational crime. We work to help police across the world meet the growing challenges of crime in the 21st century by providing a high-tech infrastructure of technical and operational support. Our services include targeted training, expert investigative support, specialized databases and secure police communications channels. I am responsible for the coordination of all activities related to illicit trade, smuggling of illicit goods and counterfeiting for the organization and police forces within our 190 member countries.  I lead a team of expert officers who are engaged in training, capacity building, and operational support who operate along with my analytical support who manage risk awareness and intelligence handling.

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From your perspective, how bad is the current situation with counterfeit and other illicit trade in global supply chains? Can one for example see links between illicit trade and transnational organized crime groups; or, even terrorist organizations?

For many years the clear link has been established between the trafficking of illicit goods and transnational organized crime. Criminal organizations are attracted by the lucrative profits involved in trading counterfeit or fake goods, or in trading legitimate goods through illicit channels. The criminals involved manufacture and trade illicit goods on a regional and increasingly global scale.  It is well documented that they use the profits to fund other criminal activities such as drug trafficking and people smuggling, and for investment into funding subversive political groups.  Selling fake or counterfeit products is one aspect of illicit trade, as is selling genuine goods on the black market to avoid paying taxes. By avoiding regulatory controls, the criminals behind these activities peddle dangerous and illicit goods with a complete disregard for the health and safety of consumers. The phenomenon has grown to an unprecedented level, posing tremendous risks to society and the global economy. Counterfeiting harms businesses which produce and sell legitimate products, governments lose tax revenue from products manufactured or sold on the black market, and consumers are at risk from substandard products.

By the way, we met first time about one year ago in Lyon at an INTERPOL workshop linked to FP7-Project CORE. One of the main objectives of CORE-project is to develop leading edge education and training materials on supply chain security – for the benefit of law enforcement agencies, supply chain practitioners, and academics alike. Can you share your views about law enforcement – academia – industry cooperation in education material development, as well as in the broader field of supply chain security management?

One of our principle functions is capacity building and training.  At INTERPOL we recognize that capacity building brings with it raised identification of the impact of illicit cross-border trade and counterfeiting and all our new operations, or established operations in new regions, are preceded by a capacity building workshop.  The public domain is represented by police, customs, border control officials, and prosecutors, as well as representatives from various regulatory bodies including trading standards.  In addition, INTERPOL TIGC, the Trafficking in Illicit Goods and Counterfeiting program which I am heading, has developed a Mentoring Program which aims to increase cross-border, cross-industry law enforcement operational interventions by: strengthening capacity to deal with all types of cross-border trafficking in illicit and counterfeit products. We have also developed an online International Intellectual Property Crime Investigator’s College and have built already a robust network of over 10.000 law enforcement officers, and partner stakeholders with specialist knowledge and skillset.  This online training course provides specialist knowledge on transnational organized crime.  It is aimed at all law enforcement officials, regulatory authorities and private sector investigators who are committed in the fight against illicit trade and intellectual property crime.   We aim to provide crime professionals with specialist awareness and learning on the subject of transnational organized intellectual property, IP, crime, and illicit trade, by delivery of leading-edge training that meets international standards and allows crime investigators from any discipline to quickly identify other certified investigators.  Through this learning platform we also facilitate cooperation between the public and private sectors in the fight against IP crime, and ensure all public and private sector crime investigators have a common understanding of the problems facing them, while being aware of each other’s competencies and roles.  We seek to promote knowledge on what intervention strategies and tactics work, in order that all stakeholders are better able to work together in partnership in enforcement operations.

Thank you Mike for this highly interesting interview. It complements well our previous interviews on similar themes – with non-law enforcement experts including Mr. David Hamon and Mr. Tony Barone. CBRA and the whole FP7-CORE consortium, around 70 partners in total, wishes to continue the great cooperation in research and education material development with INTERPOL, throughout the CORE-project, until April 2018 – and beyond!  Juha.

 

Criminalization of global supply chains, by Mr. Hamon

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Hi David, and thanks for joining a CBRA Interview – can you first tell a bit who are you and what you do?

I served in the US Army as a logistician, served with the United Nations Peacekeeping Department as well as work with the UN humanitarian organizations.  I recently retired from a not-for-profit government contractor to pursue more creative work.  Whilst at the latter position I was seconded to the US Defense Department, first in African Affairs, and then as Research and Studies Director for a strategic studies office within a US Defense Agency.  I currently work, mostly independently, on a great many things related to future threats and re-defining of security/stability as it pertains and impacts diplomacy, development, defense, society, and economics/finance.

We met first time in Lausanne, Switzerland, around 2005 – what was that roundtable event again about?

Many years before cyber based terror threats were on the radar, we launched an inquiry into what we termed “Economic/Financial Terrorism” and whether security threats emanating from terrorism in the future would take the form of attacks on the Western system of finance and the economy.  We brought in a host of experts from the US and Europe to debate the changing face of terrorism and likely goals of future terror groups.  We examined everything from evolving ideology, motivation and intent, culture and identity to strategy, tactics, targets, weapons, and groups.  It was an extremely interesting event with industry admitting – at the time – they were not prepared for this phenomenon and governments largely split on the issue.  Additionally, experts and think tanks disagreed on whether economic terrorism was tangible.  It was very forward-looking for its time.  All participants came away with greater awareness on the subject as we went above and beyond what is currently called “financial crimes,” exploring potential kinetic based threats terror groups would use against the economic and financial machinery that included physical attacks on the supply chain, tourist industry, psychological undermining of the Western economic system to disrupt the normal provision of goods and services.

Can you tell more about your views on ´criminalization of global supply chains´?

I take similar views on the subject as Dr. Moisés Naim, in his 2005 book ‘Illicit: How smugglers, traffickers, and copycats are hijacking the global economy.’ He addresses several tenants that remain true today including the role of governments, technology, the Illicit traders mimicking licit trade and logistics actors – while simultaneously collaborating with many of them, and criminal groups seek high-profit opportunities as opposed to any other attribution (see CBRA Blog 21 October 2014).  Terror groups care less about profit but when thinking about logistics networks, what if the two groups collaborated?  Today logistics systems are more complex and move faster than ever in history, have less margin to fail, are far less ‘hands-on’ and offer many ways and places to hide illegal activity.  Detection and interdiction of this activity isn’t exclusively in the realm of governments. Industry has a role to play if it wishes to minimize new regulations, taxes, deter corruption, and other drains on efficiency and profit.  Experts, both public and private, rarely take a systems approach to detecting criminal activity with much throughput going undetected.  Both parties want to specialize on one aspect and miss the big picture.  A good example was the AQ Khan network.  How long has it been since industry has undertaken an assessment of whether there is a new “Khan” network out there?  Do trade organizations war-game with governments on criminality within supply chains?

Interesting! What are your views on ‘multi-commodity trafficking / crime portfolios’?

At the last corporate organization where I worked my team did some analysis on unregulated, illegal fishing as a security threat to Pacific Island nations.  In the course of this analysis, we discovered it was the same actors doing the illegal fishing as doing illegal dumping, illegal smuggling, illegal trafficking, among other illicit activities.  The criminality was only one aspect of the supply chain as the “demand” side as well as the delivery side was entirely legal and within businesses who conduct practically all business legally.  The same boats as platforms – and their crews – were used to conduct all activity legal and illegal and to the local authorities – as well as donor nations attempting to help – it was impossible to project accurately when the activity would switch between licit and illicit.  We couldn’t analyze if this was a regional or global phenomena but I guess it was a widely copied practice.  As Anthony Barone has pointed out, border management and controls are not the panacea of containment but need to be part of a larger practice (see CBRA Interview 18 December 2015). Criminals use technology just as effectively!  His idea of assembling a group of independent experts to rethink new approaches to border management – and I might add, redefining the meaning of borders and how thinking differently about borders per se – is a good start.   Using strategic foresight come up with several alternative futures to present to a dedicated [supply chain] private-public partnership empowered to make changes would be my overarching recommendation

Sounds that the global supply chain community is facing increasingly more threats and risks! Any other suggestions on how to improve the situation, both short term and long term?

In the short term, as I mentioned, conduct a public-private-partnership exercise to rethink the concept supply chain surveillance for illicit activity and anticipating new and emerging illicit activity.  In the long run, we don’t give enough thought to knowledge as a part of the supply chain.  Using the supply chain for illicit activity begins with motivation and intent getting out in front of those who may do harm.  To address alternative futures will take some innovation and creativity, but the stakes are high.  The next AQ Khan Network may bring very bad things into Europe (and beyond!) compliments of ISIS.  We don’t know what knowledge the current refugee population possesses that may be part of some future attack on the financial and economic system of the EU or if some refugees worked on chemical or biological programs in their countries of origin.

Thanks David for this interview – and let´s start working towards a joint project on these topics of common professional and research interest!

Web-links:

https://www.cross-border.org/2014/10/21/dr-naim-on-illicit-trade/

https://www.cross-border.org/interviews/new-approaches-to-border-management/

Updates on Customs brokers, by Ms. Carol West

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int-300116-1Hi Carol, and thanks for joining a CBRA Interview – can you first tell a bit who are you and what you do?

I am the President of the Canadian Society of Customs Brokers and the Secretary of the International Federation of Customs Brokers Associations, IFCBA. My office is in Ottawa, Canada. I have spent my professional life in the world of Customs, border management and trade facilitation. I am an advocate for the value and importance of customs brokers and I am passionate about the possibilities of Customs-business partnership, in Canada and worldwide. I believe strongly that building knowledge, investing in technology and managing relationships are critical to effective border management.

IFCBA and CBRA produced jointly the first survey study on future roles of customs brokers around 2004-2005. Looking now, in 2016, at the study outcomes: do you see that anything has changed or evolved in the “world of customs brokers” the way we anticipated a decade ago?

It is difficult to generalize as the role of a customs broker still differs so much between countries. The regulatory framework for licensing customs brokers and their scope of practice may be different, and the level of automation of a country’s Customs administration may influence the role of customs brokers in effective border management. Having said that, I believe that in the last decade the role of a customs broker as a trade facilitator has been even more effective than we had anticipated. Both importers and Customs recognize that knowledgeable, regulated customs brokers not only provide expedited navigation through and compliance with complex Customs requirements, they are widely used by businesses looking to reach new markets, with a minimum of cost and delay.

With Customs administrations automating their systems for risk management and implementing coordinated border management processes, there is also more focus on gathering information on the goods being imported prior to arrival, for admissibility and security purposes. In this context, the automation of carrier and cargo information is more important than it was ten years ago. With that in mind, the role of a customs broker is even more crucial today as the broker acts as a hub for all the data relating to a client’s transaction, ensuring its accuracy and compliance with Customs requirements.

Ten years ago, we thought that, by now, we would have made more progress with consistency of data requirements globally. There has been great work done by the World Customs Organization with its data model, but we still find that data requirements are not as harmonized or standardized as they could or should be.

From a business process standpoint, where licensed customs brokers exist they are used by the majority of importers – large multinational companies as well as small to medium enterprises. In a competitive marketplace, customs brokers are seeing more emphasis on performance measurement and key performance indications during the procurement process as well as in standard operations. Today, there is greater uncertainty in the business environment and increased complexity of the global supply chain. We think this also reflects the maturation of the brokerage industry where business managers focus on continuing improvements to their processes to reach maximum efficiencies in delivering value to clients.

By the way, are you aware of any recent research focusing on customs brokers, either on global or on national level?

The World Customs Organization, WCO conducted a survey of its members in 2015 on the subject of customs broker regulation and had an outstanding response rate. With many models of customs broker regulatory regimes among the WCO members, from no regulation to the mandatory use of a licensed customs broker, the results of the survey point to some opportunities for cooperation between Customs administrations and customs brokers, and, based on existing best practices, suggests considerations for a model for establishing a broker licensing system, particularly valuable where none exists today. It also offers ideas on engagement with customs brokers and other private sector players to enhance compliance and trade facilitation. We see this as a positive indicator of interest in issues that are of critical importance to the international customs broker community, and a sign that there is value in doing some additional work in this area.

From a customs broker’s perspective, which areas of global trade facilitation and supply chain security do you see as most important in 2016? What about the most difficult or challenging ones?

A very important development that might impact global trade is the Trans-Pacific Partnership, TTP. I say might because coming into force depends on the US Congress ratification of the agreement, and currently the rhetoric coming from Washington shows little support for it. I guess we’ll have to wait and see what happens. But assuming the TPP is ratified by the 12 signatories, even though it means elimination of tariffs and tariff barriers, it also means a more complex environment to navigate the multiple free trade agreements for the multi-national importers. Customs brokers as experts in rules of origin and compliance, in general will continue playing a very important role in the trade chain.

Looking a bit further out, one of the most challenging issues of the next 5 years will be the immense growth in e-commerce globally, and the pressure put on governments world-wide by online retailers to increase the de-minimis thresholds. It is projected that the online sales will reach US $3.5 trillion by 2020. That represents a lot of import duties that may not be collected and remitted if the de-minimis thresholds are increased or standardized. We expect that the impact of this will be seen differently depending on positions taken by national administrations given their own economic situations and pressures for competitiveness. Customs brokers will no doubt integrate any such changes into their compliance models and service offerings, keeping their clients’ interests and obligations foremost.

We can’t speak of challenges without mentioning the global trade slowdown we’ve experienced since the 2008 global financial crisis. Many factors seem to be contributing to the continued sluggishness which some consider cyclical others structural in nature. Regardless, governments have to remember that trade can be a powerful tool in their policy toolkit and customs brokers are natural allies in promoting its growth.

Any other greetings you would like to send to the CBRA Interview and Blog readers?

IFCBA will be holding its next World Conference in Shanghai 17-21 May, 2016, and the theme is “Facilitating Trade Through the Customs-Business Connection”. Hundreds of delegates from all regions of the world will be in attendance representing national customs brokers associations, international customs organizations such as the WCO, freight forwarding firms, shipping companies, cross-border e-commerce associations, world logistics enterprises, and many more. Our conferences are held only every two years, and we are very excited about sharing ideas and strategies for success with business and government colleagues from around the world.

Thanks a lot Carol for this concluding note – we just added the IFCBA World Conference to CBRA´s Events calendar – and thanks for the whole interview; maybe we can explore bit later this year on joint research, training or other project opportunities…!

 

Web-resources:

http://ifcba.org/

http://www.wcoomd.org/en/topics/facilitation/resources/~/~/media/234D5143B2344B918496C93F24B48586.ashx

https://www.internetretailer.com/2015/07/29/global-e-commerce-set-grow-25-2015

http://bruegel.org/2015/08/the-global-trade-slowdown-puzzle/

https://www.wto.org/english/news_e/pres15_e/pr752_e.htm

https://globalconnections.hsbc.com/global/en/tools-data/trade-forecasts/global

https://www.imf.org/external/pubs/ft/weo/2016/update/01/pdf/0116.pdf 

Related CBRA studies:  

Gutierrez, X., Hintsa, J., Wieser, P. and Hameri, A.P. (2005), “New roles for customs brokers in international supply chain”, Proceedings of First International Conference on Transportation Logistics (T-LOG), July 27-29, 2005, Singapore.

Hintsa, J., Mohanty, S., Tsikolenko, V., Ivens, B., Leischnig, A., Kähäri, P., Hameri, A.P., and Cadot, O. (2014), The import VAT and duty de-minimis in the European Union – Where should they be and what will be the impact? Final Report, Brussels, Belgium.

Dr. Federico Magalini on waste logistics crime

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Hi Federico, and thanks for agreeing to join a CBRA Interview, as the first expert in year 2016 – can you first tell a bit who are you and what you do?

Thank you for the opportunity of sharing some of the past experiences and projects done, including those with CBRA and looking ahead into the next years. I’m a mechanical engineer as background, with a PhD in Management, Economical and Industrial Engineers and I am working as Associate Programme Officer at United Nations University – Vice-Rectorate in Europe. I’m in particular working for SCYCLE, SCYCLE operating unit of the UN University Institute for the Advanced Study of Sustainability.

Can you explain more on what is the United Nations University, UNU?

UNU is, despite the name, not a classical university as many might think. The United Nations University (UNU) is a global think tank and postgraduate teaching organization headquartered in Japan. The mission of the UN University is to contribute, through collaborative research and education, to efforts to resolve the pressing global problems of human survival, development and welfare that are the concern of the United Nations, its Peoples and Member States. We work a lot with leading universities and research institutes in various countries, functioning as a bridge between the international academic community and the United Nations system. Our operating unit SYCLE is particularly devoted to research in the field of electronic waste.

UNU, INTERPOL, CBRA and other partners finished few months ago a 2-year research project on electronic waste crime and non-compliance, the FP7-CWIT –project. From your perspective, what were the most important outcomes of that project?

The CWIT project contributed in my opinion to increase the general understanding of volumes of electronic waste annually arising in different EU Member States and the fate of the disposed equipment. Knowing the baseline of products annually discarded by EU citizens is a first, fundamental step to allow policymakers and stakeholders at large to develop a strategy to ensure proper collection and treatment. In addition to that the project described the main drivers behind the flows diverted from the actual take back and recycling systems across the EU.

A second important outcome of the project is the analysis and identification of the main crime patterns that are typical of such an Industry: in the illegal trade of WEEE, there is a varying degree of compliance and criminality that spans across a continuum ranging from minor unintentional violations or non-compliance by individuals to deliberate illegal activities following a criminal business model. The organisational structure differs by country and region, from individual traders to structured criminal groups.

The combination of those two elements – knowledge of the market and understanding of criminal behaviours – allowed drawing a roadmap for future improvement in compliance and enforcement.

Do you believe that some of the CWIT outcomes will have practical positive impacts to reduce future crime and non-compliance, in the broader context of e-waste handling and management?

I sincerely hope so. And I am sure this will happen. To which extent is hard to predict but in the second part of the project we really focused on how to derive practical recommendations for the various actors involved along the entire value chain. And we broadly discussed the ideas, in many cases deriving from real cases and best practices, with various stakeholders; I hope this will increase the likelihood of having some of the recommendations actually implemented.

We committed ourselves to disseminate the recommendations beyond the project duration and we have seen already some results, with the project findings being discussed in various fora, conferences and public events, including some internal meeting with EC officials. And we have seen official request from some Members of the EU Parliament, who quizzed the EC on the consequences of the CWIT project, challenging here to take concrete actions.

Now we are launching a new project called DOT.COM WASTE – with several CWIT partners, and few new partners. You are the project manager for this “CWIT follow-up” –project, congratulations on that. Can you please explain what this new project aims to achieve?

I am really happy of the DOT.COM waste project as combines some of the results of the CWIT project, particularly the recommendation on the need of better training of enforcement and prosecutors in one of the main areas of my personal interest and work at UNU: capacity building. The DOT.COM WASTE project seeks to increase the capabilities of law enforcement agencies, customs and port authorities, environmental agencies and prosecutors to fight cross-border waste crime more cost-effectively. To achieve this objective, the project aims to increase the stakeholders’ understanding of current waste crime trends and to identify and share good practices for detecting, investigating and prosecuting waste crime activities.

Which aspect of the DOT.COM WASTE project you see as the most challenging one?

I see two main challenges ahead for the DOT.COM WASTE project. The first one is related to the scope of the project itself: there are many waste streams and the challenges of different streams are different. As a consequence also the tools to tackle illegal activities might vary: we will have to identify the priorities in order to be effective.

The second one is related to the duration of the project; the project will translate the knowledge gained into training material and tools and will promote training sessions to help key stakeholders integrate good practices into their day-to-day operations. The project’s underlying objective is to intensify international collaboration through development and implementation of new mechanisms for information exchange, technology transfer and operational coordination. But I really hope that all those efforts will produce effects that will last longer than the two years of the project itself.

I sincerely hope that we will be able to make the difference here!

Thanks a lot Federico for this interview – and talk to you soon at the DOT.COM WASTE kick-off meeting.