Svetlana Ilnitskaya of Incopro outlines how IP crime could be used to fund criminal gangs and even terrorism

According to the first EU-wide intellectual property crime threat assessment report published in June this year, most criminal activity involving counterfeiting is carried out by increasingly professionalized organized crime networks.

The report suggests that many of these organized crime groups are also involved in other criminal activities, including drug trafficking, migrant smuggling, trafficking in human beings, and terrorism.

The joint findings by Europol and the EU Intellectual Property Office (EUIPO) found that the large rewards, little risk and often undetectable methods that are used were the main reasons behind the focus on counterfeiting.

But just how large is the problem?

And, more importantly, how do we stop it from happening?

Are there links between counterfeit goods and terrorism?

Counterfeiting is far from a victimless crime. Take the pharmaceutical sector, counterfeit malaria pills have been responsible for an estimated 116,000 deaths a year in sub-Saharan Africa, while the sale of fake pills online have caused deaths in more than half of the states in the US. The dangers around counterfeit goods can be felt a lot closer to home, too. Incopro research showed fake bicycle helmets were being sold during the Tour de France that failed to withstand a fraction of the impact of the genuine product.

But whereas the dangers of counterfeits may be familiar to you, what you might not know is where the money goes after it’s changed hands.

There are several examples that highlight the links between counterfeit goods and terrorism:

French authorities found that the Charlie Hebdo attackers financed their terrorist attack in part by trafficking counterfeit sportswear

The group accused of the Madrid train bombings in 2004 had used proceeds from the sale of pirated goods to fund their activities

International authorities found Al Qaeda training materials that suggested using counterfeit goods to fund its activities

Illegal counterfeit rings are commonly found hiding in plain sight, such as market stalls and second-hand shops, but in the era of e-commerce, the majority of counterfeit sellers are now listing items on well-known online marketplaces.

Copycat and fake websites are being used to scam people into believing what they’re buying is from the genuine brand’s store. Some of these websites are almost indistinguishable from the real thing, but most of the tell-tale signs revolve around products that have been heavily discounted, with no sign of a physical address or a lack of contact information.

Why are counterfeit goods used to fund terrorism?

In terms of the levels of risk involved compared with potential gains, the penalties are fairly low for people caught selling counterfeits.

In France, selling counterfeit products is punishable by a two-year prison term and a €150,000 fine, while selling illegal drugs is punishable by a ten-year prison term and a €7.5 million fine.

In the UK, the maximum sentence for the sale of counterfeit goods is around 10 years in prison, but most cases are much shorter. One man found selling more than £2 million worth of fakes received just 32 months in prison.

Another man found to be selling counterfeit car airbags in the UK received a five-month suspended prison sentence and 135 hours of unpaid work. In tests, it was found that the airbags may not have activated correctly in the event of a crash.

How do we stop counterfeit goods funding terrorism?

Brands need smarter technologies capable of outsmarting terrorists and organized criminal groups.

Artificial intelligence, machine learning, and clustering technologies are capable of scanning through the mass amount of fake goods available on the internet and find behavioral patterns linking sellers back to illegitimate websites, social media profiles, and even physical addresses. But heightened awareness of the issue is also needed, as it’s highly unlikely consumers would purchase fakes if they knew where their cash was going.

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Read the article on IPPro here