counterfeiting, piracy & smuggling - growing threat to ... · page 7 counterfeiting, piracy &...

of 20/20
Counterfeiting, Piracy & Smuggling - Growing Threat to National Security

Post on 16-Aug-2020

3 views

Category:

Documents

0 download

Embed Size (px)

TRANSCRIPT

  • Counterfeiting, Piracy & Smuggling -Growing Threat to National Security

  • Counterfeiting, Piracy & Smuggling - Growing threat to national securityPage 2

    Agenda► Menace of Counterfeiting, Piracy & Smuggling

    ► Terrorism’s links with Counterfeiting, Piracy & Smuggling

    ► Framework for Preventing Financing of Terrorism

    ► The Road Ahead

  • Counterfeiting, Piracy & Smuggling - Growing threat to national securityPage 3

    Agenda► Menace of Counterfeiting, Piracy & Smuggling

    ► Terrorism’s links with Counterfeiting, Piracy & Smuggling

    ► Framework for Preventing Financing of Terrorism

    ► The Road Ahead

  • Counterfeiting, Piracy & Smuggling - Growing threat to national securityPage 4

    Source: FICCI CASCADE Report 2013, Havocscope, Pollinger, Harvard University 2008, Union des Fabricants

    MENACE of COUNTERFEITING, PIRACY & SMUGGLING

    0

    50

    100

    150

    200

    250

    Valu

    ein

    $B

    illio

    n

    Pharma. Drugs

    Electronics

    Purses

    Foods

    Auto Parts

    Toys

    Batteries

    Clothing

    Size of counterfeiting invarious goods - worldwide

    IncreasedInternatnl.

    Trade

    Advances inTechnology

    EmergingMarkets

    EmergingProducts

    DemandSide

    Factors drivinggrowth in

    Counterfeiting,Piracy andSmuggling

    Type of losses

    Economic lossto industry

    Economic lossto government

    Indirect loss –Financing ofcrime / terror

    Economic /health loss to

    citizens

  • Counterfeiting, Piracy & Smuggling - Growing threat to national securityPage 5

    Agenda► Menace of Counterfeiting, Piracy & Smuggling

    ► Terrorism’s links with Counterfeiting, Piracy & Smuggling

    ► Framework for Preventing Financing of Terrorism

    ► The Road Ahead

  • Counterfeiting, Piracy & Smuggling - Growing threat to national securityPage 6

    Source: Indian Express, Wall Street Journal, Washington Post, Euromonitor, BSA

    Cigarette smugglingconnected to major

    terror groupsRecent law enforcement

    investigations have directlylinked those involved in illicittobacco trade to infamous

    terrorist organizations such asHezbollah, Hamas and Al

    Qaeda

    Pirated CDs funded 2004Madrid train bombings

    According to Police Commissioner of NewYork, the Madrid train bombing incident wasfunded through the sale of pirated CDs.Chechen rebels have also known to financethrough pirated CDs

    IN THE NEWS

    Fake German brakepads financed HezbollahInterpol seized US$1.2 million worthof counterfeit German brake pads in2004 that were revealed to be usedto support the Lebanese terrororganization Hezbollah

    Strong links betweenterrorists and drug, armsand migrant smuggling

    Colombia, Kenya, Kyrgyzstan, Myanmarand Turkey among others, reported

    direct links between terrorism & illegaldrug trade, arms trafficking & migrant

    smuggling

    Counterfeitingentrenched in AlQaeda recruits

    Al Qaeda training manualsrecovered in 2002 reveal thatthe organization recommendsthe sale of fake goods as ameans of fundraising for cells

  • Counterfeiting, Piracy & Smuggling - Growing threat to national securityPage 7

    PERPETRATORS of COUNTERFEITING, PIRACY & SMUGGLING

    Source: Pollinger, Harvard University 2008, Union des Fabricants

    Perpetrators of Counterfeiting,Piracy and Smuggling

    Ø Small-scale businesses haveadopted it as a primary business,investing heavily in technology andcapital infrastructure

    Ø Organized Gangs involved in drugsand arms smuggling have beenincreasingly involved in counterfeitingand piracy both to make profits and tolaunder money

    Ø Terrorist organizations, due todecentralization post cold war, havebegun to see these activities as anexcellent source of local funding

    Incentives for TerroristOrganizations in Counterfeiting,

    Piracy and Smuggling

    Ø Counterfeiting can be used as bothsource of funding and means ofattack

    Ø Enormous Profit Potential: Can bringin huge returns (~ 900% returns onpirated CDs)

    Ø Low risk of prosecution: E.g., InFrance, convicted counterfeit retailersface 5 times lesser sentencescompared to drug dealers

  • Counterfeiting, Piracy & Smuggling - Growing threat to national securityPage 8

    LINKS OF TERRORISMWITH COUNTERFEITING, PIRACY & SMUGGLING

    LOGISTICALTerrorist

    organizations useestablished

    networks setup bycriminal groups

    OPERATIONALNatural

    relationshipbetween terror and

    criminal groups,but likely to be

    limited due to lackof trust

    FINANCIALLocal Arms ofterror groups

    receive financialassistance bybeing part of

    criminal activities

    IDEOLOGICALPolitically like-

    minded criminalgroups merge with

    terror groups

    Smugglingpipelines arethe 2nd most

    preferredmethod usedby terrorists toenter the US

    IRA floodedIreland withcounterfeitcigarettesfunding

    US$100mover 5 years

    Afghanterrorists

    finance fromcredit cardsduplicates &counterfeitdesignergoods

    Foreignterrorists

    worked withsympathetic

    Indiansmugglers for1993 Mumbai

    blasts

    Foreignterrorists

    worked withsympathetic

    Indiansmugglers for1993 Mumbai

    blasts

    Dubai basedsmugglers

    operating inIndia provided

    logistics for2008 Mumbai

    attacks

    S. Amer.traffickers aidHezbollah inlaundering

    money citingUS and Israelas a common

    enemy

    Source: UNODC, Interpol, RAND Corp. India Today, Union des Fabricants

  • Counterfeiting, Piracy & Smuggling - Growing threat to national securityPage 9

    Direct involvement

    OriginalGoods

    Set upproductionunit to fake

    originalgoods

    CounterfeitGoods

    Sellcounterfeit

    goods

    Proceeds ofcounterfeiting

    throughvariousmodes

    Terroristorganization

    s

    Criminalorganization

    s

    SleeperCells

    Direct involvement for self financing

    Indirect funding

    Dire

    ctfu

    ndin

    g

    HOW COUNTERFEITING SUPPORTS TERRORISM

  • Counterfeiting, Piracy & Smuggling - Growing threat to national securityPage 10

    Agenda► Menace of Counterfeiting, Piracy & Smuggling

    ► Terrorism’s links with Counterfeiting, Piracy & Smuggling

    ► Framework for Preventing Financing of Terrorism

    ► The Road Ahead

  • Counterfeiting, Piracy & Smuggling - Growing threat to national securityPage 11

    DIMENSIONS OF REFORMS IN COUNTERING THE TERRORFINANCING THROUGH COUNTERFEITING, PIRACY ANDSMUGGLING

    Governance Laws andRegulations

    Technology CapacityBuilding

    Whether adequate governance system inplace. What is the extent of coordinationbetween enforcement agencies and degree ofinternational collaboration ?

    1

    Outreach and span of laws to counter the saidactivities. Extent of enforcement and coverageof institutions ?

    2

    Are the technology solutions in place toidentify instances of counterfeiting andsmuggling? Are there integrated IT systems toprevent these acts ?

    3

    Is the govt and industry taking adequatecapacity building measures to contour thecurse of these activities involved in financingterrorism ?

    4

  • Counterfeiting, Piracy & Smuggling - Growing threat to national securityPage 12

    2

    GOVERNANCE

    Governance

    1

    3

    1

    FIU develops financial intelligenceand provides assistance to EAs

    Financial Institutions generateperiodic reports for FIU

    Governance structure of regulatory andenforcement agencies

    Overall evaluationNeedsimprovement

    Progress being made On Track

    FIU was setup in 2004 to monitorand analyze suspect transactionsFIU has linkages with other bodies -

    regulators, banks, Enforcement Agenciesetc to generate and share financial

    intelligence

    India is member of1.Eurasian Group on Combating Money Laundering2.Terrorist Financing and the Asia/Pacific Group

    India adheres to the Egmont principlesof free exchange of information

    Collaboration with foreign FIUs onexchange of information

  • Counterfeiting, Piracy & Smuggling - Growing threat to national securityPage 13

    1

    2

    LAWS AND REGULATIONS

    Laws & Regulations

    Laws to combat financing ofterrorism

    2

    Enforcement and compliance reporting forthese acts needs improvement

    Several acts are enacted coveringvarious sectors for preventing

    counterfeiting, piracy and smuggling

    Overall evaluation

    Needsimprovement

    Progress being made On Track

    Laws to combat counterfeiting,piracy & smuggling

    Prevention of Money LaunderingAct, amended in 2009 to enhance

    countering of terror financing

    Unlawful Activities Prevention Act(UAPA), amended in 2004, criminalised

    financing of terrorism

    Outreach of these acts to non-financial institutions needs

    enhancement

  • Counterfeiting, Piracy & Smuggling - Growing threat to national securityPage 14

    1

    TECHNOLOGY

    Technology

    3

    Lack of coordination and collaborationamong industry players on R&D

    of such technologiesAuthentication Packaging and

    Track and Trace packaging. e.g.(RFID),holograms, etc

    Lack of incentive by Government to investin development of such technologies

    2Adoption of technology byGovernment

    Adoption of technology byIndustry

    3Technology to prevent proceedsgoing to terror financing

    Overall evaluation

    Needsimprovement

    Progress being made On Track

    Mandate by Govt necessary forTechnology to be effective

    Amendment to Drugs andCosmetics Act, mandating Unique

    2D Identifier Code on drugs

    IT systems by Directorate of RevenueIntelligence (DRI) of CBEC to

    analyse relevant data

    FINnet by FIU

    IT solutions being implemented inFinancial Institutions to identify

    suspicious transactions

    Proposed initiativesby NATGRID and NIA

  • Counterfeiting, Piracy & Smuggling - Growing threat to national securityPage 15

    1

    CAPACITY BUILDING

    Capacity building

    Capacity building tocontrol Counterfeiting,Piracy & Smuggling

    2Capacity building to prevent proceedsof counterfeiting to terror financing

    4

    3

    India - founding member ofthe Global Counterterrorism forum

    outsourced

    INTERPOL and CBI– Joint capacity building exercise

    International Cooperation

    FIU conducts training forBanks, Financial Institutions

    FIU supports professionals,industry associations in

    capacity building

    Overall evaluation

    Needsimprovement

    Progress being made On Track

    Larger industry players are active,need to sensitize MSMEs

    Need to train Police and otherEnforcement Agencies to take

    additional responsibilities

    Very few initiatives on training andawareness of citizens. e.g. “Jaago

    Grahak jaago”

  • Counterfeiting, Piracy & Smuggling - Growing threat to national securityPage 16

    FINANCIAL INTELLIGENCE UNIT - INDIA

    Reporting Entities FIU-IND

    Law EnforcementAgencies

    IntelligenceAgencies

    Regulators

    Foreign FIUs

    CTR / STR Intelligence

    Financial Intelligence Unit – India (FIU-IND) was set up in 2004 to “coordinate andstrengthen collection and sharing of financial intelligence through an effective national,regional and global network to combat money laundering, financing of terrorism andrelated crimes”

    Collection of cashtransaction and

    suspicious transaction reports

    Analysis of Suspiciouscases related toterrorist financing

    Exchange of informationwith

    LEAs / IA / Foreign FIUs

    ► Collect information frombanks, financial institutions,intermediaries

    ► Analyze suspicioustransactions and comparewith watch lists containingnames of terrorists

    ► Detect relationships withexisting names / groups

    ► Create cases of financing ofterrorism

    ► Disseminate cases to LEAs/ Intelligence agencies andForeign FIUs to takeappropriate action

    With adoption of advanced technology system as Project FINnet,FIU-IND can efficiently detect the cases of financing of terrorism

  • Counterfeiting, Piracy & Smuggling - Growing threat to national securityPage 17

    Agenda► Menace of Counterfeiting, Piracy & Smuggling

    ► Terrorism’s links with Counterfeiting, Piracy & Smuggling

    ► Framework for Preventing Financing of Terrorism

    ► The Road Ahead

  • Counterfeiting, Piracy & Smuggling - Growing threat to national securityPage 18

    FRAMEWORK TO EVALUATE THE CURRENT MATURITYLEVEL

    Basic Intermediate Good Advanced

    ► No or very limitedagencies to deal withcounterfeiting, piracyand smuggling

    ► No or limited laws► Small penalties► Limited confiscation

    according to the law

    ► Very limitedtechnology adoptionby industry and govt

    ► No means of goodsauthentication

    ► Citizens notsensitized

    ► Lack of awareness &training in industryand govt

    ► No separateagencies

    ► Uncoordinatedagencies placing lowpriority

    ► Laws in place butwith limited control

    ► Risk of convictionlower

    ► Limited or nogovernment support

    ► Low penetration andadoption oftechnology

    ► High level trainingto enforcementagencies

    ► Capacity notdiffused

    ► Prioritized actions► Time-bound

    investigations► Engagement with

    international bodies

    ► Confiscation ofassets

    ► Nationaljurisdictions

    ► Zero Piracy policy

    ► Industriesemploying advancedtechnical solutions

    ► Mature govt ITsystems

    ► Industry and govtwide efforts todevelop capacity

    ► Active engagementof citizens

    ► Collaborationbetween industryand government

    ► Formation ofNational agencies

    ► Laws to empowerseizure of assetsfrom other countries

    ► Non-conviction-based confiscation

    ► Harmonious effortby industry & govt

    ► Significantgovernmentcontribution to R&D

    ► Adoption ofinternational bestpractices

    ► Tie-ups - foreign anddomestic institutes

    Gov

    erna

    nce

    Law

    and

    Reg

    ulat

    ion

    Tech

    nolo

    gyC

    apac

    itybu

    ildin

    gMaturity Levels

  • Counterfeiting, Piracy & Smuggling - Growing threat to national securityPage 19

    Strengthen governance mechanism to prevent counterfeiting, piracyand smuggling and prevent its proceeds from financing terrorism

    1

    Strengthen technological collaboration between industry &Government on anti-counterfeiting and anti-piracy measures

    2

    Establish inter-agency coordination mechanism to coordinate effortsfor preventing counterfeiting, piracy and smuggling

    3

    Institute robust capacity-building mechanism to increase awarenessamong industry, consumers and enforcement agencies

    4

    PLAN FOR THE ROAD AHEAD…

  • THANK YOU