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Aug 25, 20214 min read

Executive Summary: TERRORIST INVOLVEMENT IN COUNTERFEIT MARKETS

Kejsi Mellani, Martyna Dobrowolska, Ella Mulligan, Moon Jung Kim, Crime Team

Week of Monday, August 9, 2021


Counterfeit Markets[1]


Adjunct to the advancement of modern technology, counterfeit markets have been on the rise, and illegal products can be found across today’s most popular online stores, including Amazon and eBay. The online circulation speed of these products often ensures anonymity for sellers, hindering law enforcement’s ability to identify and apprehend them. This phenomenon has become a globally concerning issue and it is very likely to expand further, considering the proliferation of terrorist financing among involved criminal groups and the public’s unawareness of this growing issue. Counterfeit markets undermine law and order and can have lethal consequences for unknowing consumers. To ensure public safety, states must treat counterfeiting as a priority and educate citizens about its strong connections to terrorism.


Discussion

Counterfeit markets’ expansion can directly impair legitimate companies’ growth, which in turn may likely negatively affect all business sectors within an economy. Despite seeming identical to the authentic brand, counterfeit products are often low-quality, which can cause several issues for consumers — the worst being serious injury and death. Many counterfeit goods are a threat to public safety: unknown chemicals in counterfeit cosmetics can cause skin reactions, counterfeit airbags made of inexpensive parts can cause malfunctions, and counterfeit prescribed drugs missing needed active ingredients can lead to accidental overdoses.[2] The past year’s global urgency to address the COVID-19 pandemic has increased the popularity of fake testing kits, fake masks, and fake vaccines on the counterfeit market. Given these products’ direct application to the body, they often carry fatal health risks, and could likely decrease the public’s trust in the integrity of legitimate companies when proven faulty. Such consequences could very likely reduce the number of customers of legitimate companies, resulting in a severe loss of revenue for the copied brands.[3] By educating the public about the difference between original and counterfeit products, legitimate companies could likely reduce the risk of losing citizens’ trust. Citizens, in turn, would likely avoid serious health consequences.


The public is generally uninformed about the counterfeit trade, almost certainly leading it to believe that it is a victimless crime committed by low-level criminals. However, this trade is run by parties ranging from organized enterprise fraud rings to transnational criminal organizations (TCOs).[4] By producing and selling counterfeit products, these groups — often linked to terrorist financing by the Federal Bureau of Investigation (FBI) — are able to fund their operations and have a financial base for member recruitment. Terrorist networks find counterfeiting to be a more lucrative, easier, and faster method of expanding their funding than other illegal activities.[5] This is likely due to the fact that the level of scrutiny for imported and exported counterfeit products seems to be different from the one used to track specific illegal activities, such as drug smuggling and trafficking. There likely is less focus on counterfeit markets because they are not perceived as imminent security threats.


The income received from counterfeit products allows terrorist groups to purchase high-grade weapons and gain access to new technologies in order to adapt and benefit from the changing economy.[6] This becomes a security threat because these new weapons could almost certainly be used for future terrorist attacks worldwide. In addition, this growth and flexibility almost certainly complicate law enforcement’s efforts to identify members of these organizations, allowing them to continue operating without facing legal punishment. The profits from the sale of legal products could go to the states instead, allowing governments to provide adequate public services — such as good education and healthcare — to their citizens. All this could very likely increase popular trust in state infrastructures, and create a higher feeling of safety and security.


Many counterfeit product consumers are unaware of the connection between the sale of counterfeit goods and the funding of terrorist organizations. Educating the public about the consequences of purchasing from counterfeit markets would likely lead consumers to choose to purchase from legitimate companies, decreasing this source of terrorist funding. This could likely hinder terrorist operations, leading to an increase in public safety and a decline in criminal activity worldwide. It is crucial for governments, law enforcement, peer educators, and legitimate companies to raise awareness of this developing phenomenon as education will likely encourage citizens to select authentic goods over counterfeit products that may be linked to terrorism. Counterfeit markets are almost certainly able to operate because of international inattention to this issue, as many states treat other crimes as priorities. The rapidly evolving nature of these markets means there is a strong need for states to treat counterfeiting as a top concern, starting by ensuring that counterfeiting receives enough coverage through media and general education.


The Counterterrorism Group (CTG) will continue to monitor official reports, news sources, and social media that discuss the connection between counterfeiting and terrorism. The Crime Team will produce more reports on this topic, and provide new recommendations to states, organizations, industries, and consumers on how to spot counterfeit products and what organizations to contact when these goods are identified.


________________________________________________________________________ The Counterterrorism Group (CTG)

[1] “Counterfeit Goods” by Mick Baker licensed under Creative Commons

[2] “Countering Counterfeit- The Real Threat of Fake Products,” IM, 2019, https://www.nam.org/wp-content/uploads/2020/07/CounteringCounterfeits.vF_.pdf

[4] Ibid.

[5] Ibid.

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