TRADE LAW: Organised crime and the supply chain

Looking at serious and organised crime in Australia and its impact on the supply chain

THERE has been significant media coverage of the existence of serious and organised crime affecting Australia and the consequences of that offending. Some of that offending has occurred in the private supply chain with illicit commodities including drugs and tobacco either being imported or being the subject of attempted imports. This has led to close review by the Australian federal and state governments, police and border agencies as well as those involved in the private supply chain. The consequences of the illicit activity have also had a significant adverse impact on revenue that would have been collected by the federal government if the products had been legitimately imported and prevailing customs and excise duties had been paid.

Report by the Australian Institute of Criminology

In a report published by the Australian Institute of Criminology (AIC) on 6 November 2025, the AIC concluded that:

Serious and organised crime was estimated to cost Australia between $35.5b and $82.3b in 2023–24. This estimate captures the direct and consequential costs of serious and organised crime in Australia (up to $58.9b), as well as the indirect costs of preventing and responding to serious and organised crime incurred by government entities, businesses and individuals (up to $23.4b). Of the total direct costs attributable to serious and organised crime ($47.9b), illicit drugs were the most costly crime type, accounting for 39.5 percent of these direct costs ($19.0b), followed by organised financial crime ($13.2b) and other illicit commodities ($8.6b), which accounted for 27.6 percent and 18.0 percent of direct costs, respectively. The most costly illicit commodity after drugs was illicit tobacco, which cost Australia $4.0b in 2023–24, a significant increase on previous years.

The Report was the fifth undertaken by the AIC attempting to quantify the costs of serious and organised crime and displayed a significant increase in illicit tobacco. Those in the supply chain have taken regulatory and procedural steps to eliminate or reduce the adverse consequences, the combined effect of these steps has not had the intended outcomes as illicit activity continues to grow around tobacco imports and imports of other illicit goods.

"The problem is relatively clear but minimising the movement of illicit goods in the private supply chain is an incredibly complicated task in practice"

More recent economic information from the Australian Taxation Office (ATO) and other sources suggest that the trade in illicit tobacco has otherwise affected national statistics with a significant drop in legitimate domestic purchases of alcohol and tobacco being attributed to purchases of illicit tobacco. This leads to inaccurate reporting of consumer spending and to a massive loss of revenue normally recovered from legitimate tobacco sales. Having accurate information as to levels of consumer spending are a vital part of recording economic activity and economic planning which could compromise future planning. The ATO has now announced that it will be investigating new measures to enable better estimates of illicit imports and the revenue foregone.

The problem is relatively clear but minimising the movement of illicit goods in the private supply chain is an incredibly complicated task in practice. Further, there should not be any expectation that the movement of illicit goods can be totally eliminated. The rewards of importing these illicit goods clearly outweighs the risk of being caught.

Recent Government responses to the import of illicit tobacco

In addition to the previous steps to reduce illicit tobacco imports, the federal government more recently took additional action in the movement of goods through the supply chain as follows:

• Amending legislation and procedures applicable to those in the supply chain who are licensed by the Australian Border Force(ABF) to deal with the reporting of imports of goods or holding imported goods pending release into the domestic economy. This affected the regime for licensed customs brokers(LCB) reporting the import of goods as well as those holding imported goods before release in the domestic economy being operators of bonds and warehouses. The amendments included requiring the provision of better evidence supporting the identification of those working in those businesses and more comprehensive assessment that everyone is “fit and proper”.
• Increased monitoring of the reporting of imports by LCBs including where a perceived lack of due diligence by the LCBs is claimed to have allowed the “piggybacking” of the identities of legitimate importers by those involved with illicit commodities. This has led to increased action by the ABF against LCBs and operators of licensed premises, even those who are members of the ABF’s Trusted Trader Program(ATTP).
• The establishment of the Illicit Tobacco National Disruption Group announced by media release on 19 October 2025 to be led by the ABF which is to work alongside the Illicit Tobacco Taskforce which, itself, was established in 2018. According to the media release, the “Disruption Group” will target mid-level criminals and enablers operating within small business, intermediaries and sole traders who import, distribute or sell illicit tobacco.

There seems to be little prospect that the various levels of government and its agencies will relent in their efforts to reduce or eliminate the trade in illicit tobacco. This will continue to place pressure on those in the private supply chain.

Responses proposed by the members of the private supply chain

Those operating in the private supply chain have faced increased levels of monitoring and intervention by the ABF and other relevant agencies.

However, the federal government and its agencies are not the sole source of ideas on how to combat illicit imports, including those arriving by piggybacked transactions. Those ideas include the following.

• Introducing a new option into the Integrated Cargo System(ICS) by which importers can nominate service providers (such as LCBs or freight forwarders) who are the only parties allowed to report the movement of goods in their names. If another party endeavoured to report the movement of goods for those importers, then the movement of the goods would be “red lined” and stopped allowing intervention by border agencies. At the moment this only applies to importers who are part of the ATTP but many are of the view that it should apply to all importers.
• Requiring that payments of customs duty, GST and other charges be by direct debit from the accounts of importers nominated on Import Declarations, rather than being paid by the LCB and separately recovered from the importer. The importer would then receive notification of a proposed debit and would be able to report on what appears to be an attempt to import illicit goods.
• Changing the import reporting supply chain so that more information needs to be provided to the ABF before the goods leave the place of export, requiring ABF clearance to export the goods. This would operate on a basis similar to the procedures applying in the US and enable review of the imports well in advance against ABF profiles including checks with importers.
• Imposing a limited regulatory regime on freight forwarders which would require freight forwarders to be registered with the ABF and other border agencies together. That regime could also extend to review on whether those in management and control are “fit and proper”. After all, it seems unreasonable that LCBs and those operating licensed premises are subject to a significant level of control of the ABF while freight forwarders are subject to none of those types of controls.
• Reviewing the ongoing merit in providing for “de minimis” transactions as an option for imports where the customs value of the consignment is below $1000. There are concerns that such transactions are subject to lesser reporting and review (compared to full import declarations) and are the process by which many imports of illicit goods and goods in breach of intellectual property rights are imported. They have also been found to be the subject of deliberate understatement of value to evade payments of customs duty and reduce GST liability. The US has already largely eliminated the use of such “de minimis” imports. The EU has announced that such import processes are to be eliminated and the UK has started the process to review and probably eliminate the option.
• Developing and adopting verified “digital identities” for legitimate traders in the private supply chain and “digital identifiers” for goods in the supply chain so that service providers in the private supply chain can have certainty as to who they are dealing with and which goods are being moved.

These recommended changes are in no way novel. Industry has been proposing these changes for many years but without a substantive and positive response. I cannot claim to be the “owner” of all these ideas, but I have been advocating for them for many years. The relevant agencies have raised objections over time, but I cannot understand why they have not already been implemented or are not the subject of clear implementation plans. Maybe a present for Christmas?