ITIC PERSPECTIVE ON THE EFFECTIVE IMPLEMENTATION OF THE FCTC PROTOCOL ELIZABETH ALLEN ITIC – JULY 2014

The Protocol is a legally binding instrument; once in force, it will have significant implications for Customs enforcement operations Customs & other border agencies are encouraged to make the implementation of this Protocol an opportunity to strengthen their statutory powers, which may also then be used to counter other smuggling and fraud 2 THE PROTOCOL TO ELIMINATE ILLICIT TRADE IN TOBACCO PRODUCTS

Opportunity to secure the supply chain of legitimate products: –Licensing –Due diligence –Record keeping –Track & Trace; and –International cooperation in information, administration and enforcement 3 THE PROTOCOL TO ELIMINATE ILLICIT TRADE IN TOBACCO PRODUCTS

KEY ISSUES TO BE ADDRESSED - LICENSING Who should be licensed in the supply chain? Which agency (agencies) should issue licences? What criteria or standards should determine who is ‘fit and proper’ to hold a licence? What administrative guidelines need to be devised to support licensing agencies? How will licence details be kept and updated to enable use in international enquiries and ensure non-compliant operators cannot move operations to start again in other jurisdictions? New offences and penalties may be needed for non compliance or for dealing without a licence.

KEY IMPLEMENTATION ISSUES - DUE DILIGENCE How will this be monitored? What guidelines will be provided to industry on what to look for? How will non-legitimate customers or sales be reported and acted on? New offences and penalties

How do you identify the most appropriate technology to support? How do you ensure that the technology you approve will facilitate mutual assistance across borders? Should customs authorities seek to devise guidelines to ensure that technologies adopted and datasets used meet a set standard so that data can be exchanged quickly and easily across borders or is there an international standard that can be used? AND, track and trace technology will not be applied to counterfeit products! 6 KEY IMPLEMENTATION ISSUES – TRACK AND TRACE

What records are kept today for commercial purposes and for how long? What records are required today for tax purposes and for how long? What changes will be needed in law and in practice? 7 KEY IMPLEMENTATION ISSUES

Which authority shall be designated with responsibility and power to receive requests and either execute or transmit them to their respective competent authorities for speedy and proper execution. How can speedy and accurate responses by ensured to queries from another authority? How can data quality and security be assured for global exchanges of information critical to investigations and prosecutions? How will the comprehensive international approach and close cooperation among Countries emphasized by the Protocol be achieved? 8 KEY IMPLEMENTATION ISSUES – INTERNATIONAL CO-OPERATION

Article 14 provides a list of unlawful conduct How will countries determine which core conduct should be criminalised? What guidelines should there be as to which provisions should be criminal offences and which administrative offences? 9 IMPLEMENTATION ISSUES - SANCTIONS

OTHER IMPLEMENTATION ISSUES What Customs procedures are needed for: –Free zone management of tobacco operations –Under-bond movements –Exports, including movements to point of export What resources and skills will be needed? How much will it cost government and industry? CONSISTENCY OF APPROACH WILL BE KEY TO SUCCESSFUL IMPLEMENTATION WORLDWIDE

CHANGE PLAN STAGE 1 – 9 months to 1 year Set up project team to oversee policy/legislation/IT/processes/training/guidance and publicity. Announce intentions and issue proposals for change inviting input from public and private sector stakeholders to enable understanding of implications. Carry out diagnostic to identify current legislative position, controls in place, and the changes needed to implement policy decisions. Identify data needed to be captured/changed to support robust controls.

CHANGE PLAN STAGE 2 – One year Analyse responses to consultation document and agree on changes. Publicise amended proposals, seek and analyse feedback to ensure all implications are understood. Analyse results of excise diagnostic, cost and agree changes needed to implement the amended proposals. Put in place mechanisms to capture accurate data as identified in Stage 1. Identify changes required to IT systems, processes and guidance (internal and external).

CHANGE PLAN STAGE 3 18 months Develop IT systems changes; Develop changes in processes and guidance; Put in place: – Budget – Legislative changes; – Training plans for staff in all agencies involved (Customs/Revenue/Police); – Measurement methodology to set baseline for illicit trade against which to measure progress; – National cross agency co-operation mechanism ; – International electronic mutual assistance/co-operation process.

CHANGE PLAN STAGE 3 Continued Set in place: Any necessary national electronic registers e.g. of registered excise taxpayers an interface with track and trace database(s) interfaces with other government departments e.g. with Agriculture if growers are registered there, as required; a user-friendly interface to enable officials to validate pre-entries, and to risk assess proposed movements making use of track and trace data as appropriate; training programme and issue of guidance to customs/excise and other enforcement officials; and user-friendly guidance for taxpayers and all involved in supply chain controls and other customer service facilities e.g. helpline, website information as required.

CHANGE PLAN STAGE 4 Review position and determine: Further improvements/changes required in legislation, IT, processes, training and guidance. Timescale and funding needed for all the above.

16 THANK YOU