Foreword

Illicit trade is a universal threat that grows in scope and magnitude undermining good governance, the rule of law and citizens’ trust in government. Illicit trade not only has a corrosive impact on the sales and profits of affected firms and on the economy in general, but also poses critical threats to social welfare, and public safety. In addition, in some high-risk sectors, such as that of illicit pharmaceuticals, food or alcohol, illicit trade poses particularly severe health and safety threats for citizens.

The pandemic has been fuelling these problems as for criminals and other bad actors that drive illicit trade networks, it has been an excellent opportunity to free ride on new possibilities. The key COVID-19-related elements that shape the dynamics of illicit trade in these high-risk sectors include the closure of borders, reshape of suppliers’ structure, destruction of existing relations in supply chains, as well as the change in enforcement priorities. Corruption and insecurity continue to fuel illicit trade across markets and economies. Besides, these changes have been occurring very rapidly, leaving minimal scope for a reaction.

In recent years, the OECD has been gathering evidence on various aspects of this trade and the factors that enable it. The results have been published in a set of factual reports, including Governance Frameworks to Counter Illicit Trade (2017), Trade in Counterfeit Pharmaceutical Products (2020) and Dangerous Fakes - Trade in Counterfeit Goods that Pose Health, Safety and Environmental Risks (2022). In addition, during the pandemics the OECD organized a series of online webinar to scope the main areas of impact that the sanitary crisis has on illicit trade. The findings point at severe health and safety threats of illicit trade in some high-risk sectors, additionally augmented during the pandemic.

This report provides evidence on the illicit alcohol trade, as part of the work of the OECD Task Force on Countering Illicit Trade on sectors that are at high risk for illicit trade. The results are a cause for concern. Trade in illicit alcohol products is an attractive target for organised crime, as both the market and potential profits are large, in some cases requiring little investment. Importantly, illicit alcohol supplied by criminals is often substandard and poses very high health risks.

This study was carried out under the auspices of the OECD’s Task Force on Countering Illicit Trade, which focuses on evidence-based research and advanced analytics to assist policy makers in mapping and understanding the vulnerabilities exploited by illicit trade.