Hong Kong anti-tobacco smuggling Operation Tempest gets off to a storming start with HK$62 million in contraband cigarettes seized

Hong Kong customs officials have rounded up 538 people and seized HK$62 million (US$7.9 million) worth of black market cigarettes in just 10 days as part of a massive crackdown on tobacco smuggling. Superintendent Auyeung Man-ching of the customs service rail and ferry command said on Friday 498 of the suspects were detained at air, land and sea entry points between February 19 and 28 as part of Operation Tempest. They were found to be in possession of tobacco products in excess of the quantity allowed under duty-free concession. Customs found HK$310,000 worth of tobacco products on which tax had not been paid. Arriving passengers aged 18 or above are allowed to bring 19 cigarettes, one cigar or 25 grams of manufactured tobacco into Hong Kong tax-free for personal use. Auyeung attributed the high number of people caught at checkpoints to increased inspections and the larger number of cross-border travellers since the border opened up after coronavirus travel restrictions were axed. He said that 481 of those caught were fined HK$2,000 and imposed five times the duty payable on the contraband cigarettes because their offences were compoundable under the Dutiable Commodities Ordinance. The total penalties amounted to HK$2 million. Auyeung added the other 17 were charged under the legislation. Possession of contraband cigarettes in Hong Kong is punishable by up to two years in prison and an HK$1 million fine. “Customs will assess the specific details of each case, taking into account factors such as the amount of taxes involved and whether individuals have previously violated regulations, to determine whether to compound offences or prosecute,” he explained. Auyeung warned that the highest penalty imposed by a court last year for possession of contraband cigarettes was a HK$20,000 fine and three months in jail. More than 200 staff from customs’ revenue crime investigation bureau have also been mobilised to carry out enforcement action across the city. Customs officials on February 22 seized HK$15 million worth of illicit cigarettes hidden in a shipment of plastic boxes and mouse pads from the United Arab Emirates. Officials arrested a 26-year-old man the same day after they found HK$32 million worth of untaxed cigarettes hidden in a truck and a shipping container at a Tuen Mun car park. Hong Kong customs seizes HK$2.25 billion worth of smuggled cigarettes in 2023 Customs Superintendent Jeff Lau Leung-chi said the investigation showed that the truck and the container were used by an illicit cigarette syndicate as a mobile storage centre. Customs also raided a subdivided flat in Sham Shui Po the day before, seized HK$860,000 worth of illegal cigarettes and arrested a 56-year-old woman. “Intelligence revealed illicit cigarette syndicates have increasingly been using subdivided flats in urban areas as storage and distribution centres for illegal tobacco products in an attempt to take advantage of densely populated locations as cover and to evade detection,” Lau said. But he said syndicates had started to use different strategies because of a crackdown on their illegal activity. “They now tend to store a large quantity of illicit cigarettes in multiple subdivided flats used as mini-storage facilities,” he added. “The tactic is to minimise risk and reduce financial losses in case one of the storage centres is discovered.” The crackdown also covered street-level peddling of untaxed cigarettes, with 10 sellers and 25 buyers of illegal tobacco products detected. As Financial Secretary Paul Chan Mo-po announced an immediate 80 HK cents a stick increase in tobacco tax as part of Wednesday’s budget, customs officers seized HK$13 million worth of untaxed cigarettes in two operations, one in Yuen Long and the other in Kwai Chung. The increase in tobacco tax raised the average cost of a pack of 20 cigarettes by HK$16 to more than HK$90. A pack costs HK$19 to HK$38 on the black market. Hong Kong customs arrests 8 and seizes HK$82 million worth of contraband cigarettes Lau said customs would keep a close eye on developments in the wake of the increase in tobacco tax. “Customs is closely monitoring the situation at various control points and in the underground market,” he added. “At the same time, we will also adjust internal resources in a timely and flexible manner to carry out various types of special operations to crack down on the illegal trade of black market cigarettes.” Lau said the HK$62 million in seized cigarettes would have generated about HK$43 million in tax if the tobacco had been legally imported. He added Operation Tempest was continuing and more seizures and arrests were possible. Lau said it was a constant battle of wits between the authorities and criminals. “We believe illicit cigarette syndicates will continue to constantly change their tactics to avoid customs detection,” he added. But Lau said good intelligence-gathering and risk assessment meant customs officials could monitor illegal activity and take action to combat the illicit cigarette trade at a variety of levels. Customs officers confiscated 652 million black market cigarettes worth HK$2.25 billion last year, the highest annual cash value for more than 20 years.