Tobacco and Terror

54,000 cartons of contraband cigarettes and cash seized in Queens, New York by New York State Department of Taxation and Finance and Nassau County Police.

Experts have long acknowledged that terrorist organizations such as Hizballah depend on a wide variety of criminal enterprises, ranging from smuggling to fraud to drug trade to diamond trade in regions across the world, including the United States.

Terrorist organizations rely heavily on their global web of illicit enterprises to financially support their recruiting, training, arming, and operational objectives.

As law enforcement agencies continue to combat terrorist and criminal fundraising schemes, these criminal groups will continue to adapt and exploit emerging vulnerabilities.

The ability of these groups to engage in low-risk, cash-based schemes such as cigarette smuggling are critical to the continuation of their operations.

Convicted smuggler Mohamad Hammoud counting illicit tobacco profits.

The more than $50,000 in profits that smuggling rings can generate from one contraband load (1,500 cartons) is enough to fund as many as 10 USS Cole bombing operations.

In just two months of illicit cigarette trade operations, a motivated terrorist cell could generate sufficient funds to carry out another September 11th style attack, in which operational costs were estimated to be $500,000.

Mohamad Hammoud as a youth in Lebanon and meeting with Hizballah leader Hassan Nasrallah.

Law enforcement agencies face a daunting task of keeping up with these ever-changing criminal schemes. Simply put, they need more help from State and Federal governments.

The last few years have seen a boom in cigarette smuggling around the world and here in the United States; and, thanks to its policy of forbearance, New York State is doing more to facilitate this trade than any other State in the union.

On June 3, 2008, New York State taxes on cigarettes are set to increase by another $12.50 per carton. This will only serve to increase the demand for illicitly smuggled cigarettes and inflate the profit margin of these smuggling networks.

A typical advertisement for duty-free cigarettes, New York Post, Saturday, April 12, 2008.

This must be brought to an end. It is more than just a matter of hundreds of millions in lost tax revenue -- it is a matter of national security.

Download the full report from the U.S. House Committee on Homeland Security: Tobacco and Terror: How Cigarette Smuggling is Funding our Enemies Abroad (PDF 3.63 MB)