The illicit trade problem is more complex and multifaceted than ever, thanks in part to the proliferation of manufacturing capacity, technology, and infrastructure that has been driven by globalization. This illicit market is extremely fluid and adaptable. Its tentacles are far reaching and hinder economies from reaching their full potential, endangering the health and welfare of societies across the globe.
Any form of illicit trade and counterfeiting diverts money away from legitimate economic actors and places cash directly in the hands of criminals, whose sprawling networks are becoming larger and more robust. The global size of this market is estimated by the OECD to exceed One Trillion US dollars, with counterfeiting alone approaching $500 Billion per year. In fact, the illicit economy has become so large that it threatens the stability of certain governments. Although this is a global issue, the impacts on developing economies has been apparent, with the diversion of monies toward criminal and/or terrorist networks and away from legitimate investments. Furthermore, these illicit funds are often untraceable and can find their way back into the economy through money laundering operations and corruption. The negative impacts to sound economic development, through these unfair and opaque markets, remains significant.
So, what can be done?
To tackle this multifaceted problem requires multifaceted solutions spanning policy choices, technology implementations and the development & training of human resources across diverse stakeholders.
For instance, there are many solutions existing today that can help to authenticate multi-use items such as sensitive documents, financial instruments, and valuable goods, thereby reducing the risk of fraud from counterfeiting. Multiple authentication solutions have often been incorporated within these items to increase defensive barriers, with the high cost of combining high-performance physical security features remaining an acceptable investment over the lifetime of their use. Each specific feature is typically proprietary and requires additional investments across its distribution channels, in both training and equipping stakeholders with the proper knowledge and tools to positively authenticate. However, even the most sophisticated defense-in-depth approaches, that are leveraging a combination of features, can be challenged by the most sophisticated counterfeiters.
The counterfeit trade does not limit itself to these types of high value items. Rather, its biggest impacts can be observed within the FMCG sector, where certain goods have traditionally presented an easy “mark”. As many consumer, packaged goods are single-use consumables, leveraging a basket of physical security features brings a variety of challenges in addition to their prohibitive costs. First, adding such features introduces manufacturing complexities and, if overt, design implications to the brands. These overt designs, once enjoined with the brand’s identity, may initially reinforce authenticity. However, once mimicked or copied, present a real dilemma to any brand owner faced with further confusing the consumer upon the overt feature’s modification or removal. Covert proprietary features, though still adding manufacturing complexity to the product, may prove less costly. However, they also remain difficult to scale and control across complex supply chains, given the multiple of economic actors and enforcement personnel. As these features remain covert, it is also difficult to leverage a loyal consumer base in defense against counterfeiting.
Enter Secure Mass Serialization.
Serialization is defined as the process by which a unique code is applied to an item. Secure Mass Serialization is the process by which large amount of items can each be uniquely coded such that the coding process is secured against all forms of compromise. Inexto, a Swiss based software firm, has developed an industry leading Secure Mass Serialization product named INEXTOR®. Through advanced algorithms and encryption processes, a unique code is securely generated at the instant each discreet product is created in the manufacturing process. Each secure code is generated from detailed information about each respective product, to include that item’s precise date & time of manufacture, machine count, manufacturing origin, destination market, price, and/or a multitude of other attributes pertinent to assuring its uniqueness. As this solution is based on open standards, a simple reading of the code with readily available tools, such as a common smartphone or tablet, will allow the user nearly instantaneous access to relevant information that can reveal if the product is genuine, present at the right place, and/or offered at the right price. The ability to trace a product’s movements with the accuracy, scale, and speed of Inexto’s solution is critical to enforcement authorities, who often cover large territories and who must depend on timely and accurate intelligence in the apprehension and prosecution of sophisticated criminal networks. INEXTOR® is also capable of supporting high speed manufacturing requirements in excess of 1000 items per minute and since the codes are generated at the instant of product manufacture, they are not generated beforehand nor stored in any database that can be hacked, leaked, or otherwise compromised. Today, INEXTOR® is securing over 50 billion products annually, on over 1000 manufacturing lines, and across 1500 locations globally. It’s providing cost effective and regulatory compliant solutions that seamlessly scale, with interoperability derived from Inexto’s commitment to GS1 open standards.
Technologies like INEXTOR® are critical to ensuring that consumers, enforcement authorities, retailers, distributors, wholesalers, and manufacturers are all adequately equipped against the threat of illicit trade. With the seamless interoperability of low cost solutions that can be quickly implemented in established supply chains, we are at the cusp of a new era where legitimate markets and valued brands can stand up to illicit trade with confidence.