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Counterfeit products trafficking

Regulatory framework

Counterfeiting of identification documents, CDs, DVDs, software, medicines, weapons, food products, clothing and cigarettes has grown significantly in recent years, largely due to advances in technology and the ease of movement of these goods around the world. The involvement of organized criminal groups in the production and distribution of counterfeit goods is well documented and they operate across national borders in activities that include the manufacture, export, import and distribution of illicit goods. International, regional and national authorities have uncovered intricate links between this crime and other serious offences, such as the ones dealt with in other sections of this Module.

Counterfeiting and other serious offences

In June 2010, Italian police arrested 17 Chinese nationals and seven Italian nationals in an investigation into various criminal activities, including money laundering, tax evasion, human trafficking, and the distribution of counterfeit goods. The counterfeit goods were primarily designer clothes produced by Chinese criminal groups in Tuscany. That investigation led to the seizure of 780,000 counterfeit items (UNODC, 2013).

The making of false legal documents or altering of existing documents is forgery. Forgery is a generic term and it technically encompasses counterfeiting. Nonetheless, these terms are often used interchangeably to describe faked or false documents or products of any kind, and their usage varies internationally. Counterfeiting originally referred specifically to the falsifying of currency, but its usage has expanded to all types of forgeries, which involve manufacturing or trading of a document or product without the permission of the lawful owner of the patent, trademark, copyright, or license.

Corruption and bribery are inherently linked to the illicit trafficking of counterfeit goods, especially when these are shipped internationally. Trafficking in counterfeit goods also offers criminals a complementary source of income and a tool to launder proceeds derived from various crimes. In a similar fashion, proceeds from other crimes have been used by organized criminal groups to finance their counterfeiting businesses (UNICRI / ICC BASCAP, 2013).

The counterfeit business is a global operation spread across numerous countries and organized by cross-border criminal networks. The implementation of the Organized Crime Convention is therefore an important first step to create a solid legal framework against counterfeit product trafficking. Besides urging State parties to set up mechanisms for, inter alia, law enforcement cooperation and mutual legal assistance, within the Convention's framework, States could decide to adopt tougher laws in order to tackle the trafficking of counterfeit products, particularly in the case of public health and safety threats.

Market and trends

Counterfeiting is a very lucrative business that takes advantage of unwitting consumers and people's appetites for cut-price brands or simply exploits their financial position. Although difficult to measure with certainty, the value of counterfeiting was estimated by the OECD to be in the region of $250 billion per year (OECD & EUIPO, 2016).

In recent years, counterfeiting has expanded rapidly into products of all kinds, including DVDs, watches, electronics, software, pharmaceuticals, foodstuffs and tobacco. In addition, as licit online sales increase, so do the opportunities for more digital sales of counterfeit goods. The phenomenon of trafficking online counterfeit products is coupled with added challenge of digital piracy of film, games, music and other digital products.

Challenges and opportunities

The enforcement of laws against counterfeiting has become more difficult as access to technology has become wider, and the transnational sale of products and services easier (Albanese, 2009; Fenoff, and Spink, 2014). Besides the challenges related to identifying and tracking counterfeit products and producers, counterfeiting presents an additional challenge, connected to the fact that it is often perceived as a "lesser crime." Buying a counterfeit handbag, for example, might not be regarded by the consumer as an illegal transaction - simply a cheaper way to wear the latest fashion goods. Nonetheless, often little thought is given to how the money spent on counterfeit goods may ultimately end up in the hands of organized criminal groups or how the industries that rely on legitimate sales suffer.

The harms produced by counterfeiting affect everyone. Firstly, counterfeit products, such as pharmaceuticals, food, toys or automobiles parts can pose a serious threat to the health of consumers. Secondly, counterfeiting undermines employment, as products are copied and produced illegally, and it has a considerable impact on the rights of workers around the globe. The lack of control of working conditions and respect of employment rights places workers who produce counterfeit goods in a very vulnerable position. Often, they are underpaid, have no benefits and are not granted any form of protection. These severe labour abuses often occur in conjunction with threats of violence, exposure to hazardous materials, and deadly working conditions.

Thirdly, counterfeit products represent an enormous drain on the economy. They create an underground trade that deprives governments around the globe of revenue for vital public services thus imposing greater burdens on taxpayers. Finally, counterfeiting has also a significant impact on the environment, since the production of counterfeit goods does not follow regulations. Chemicals disposed of unlawfully and unregulated air pollution are just some of the ways in which counterfeiting contributes to environmental harm (Bate, 2010; Hetzer, 2002; McEwen and Straus, 2009; WHO, 2010).

Criminal justice responses to this crime, although fundamental, cannot occur in a vacuum. There is also a great need to build more awareness of the scale of the problem and its repercussion for society. For instance, international organizations, public health authorities and consumers' organizations could make use of consumer awareness campaigns, in order to inform buyers of the risks associated with counterfeit products, thus empowering them to make better-informed decisions.

Next: Manufacturing of and trafficking in falsified medical products
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