Five rubbish bags stuffed with $2 million in cash ceased by Customs

More arrests expected after record seizure of 1.8 million smuggled cigarettes

Customs expect to make more arrests after a joint Customs and Police investigation uncovered the country's biggest ever cigarette smuggling operation.

Customs Investigations Manager Bruce Berry has told a press conference this afternoon that further arrests and charges are likely in relation to evasion of customs duty, conspiracy to evade customs duty and sale of goods not checked by Customs.

Customs announced this morning that an Auckland businessman was arrested at Auckland Airport last week and was charged with defrauding Customs revenue.

Customs investigators seized 1.8 million smuggled cigarettes and five rubbish bags stuffed with $2 million in cash.

Police have also restrained multiple properties, luxury cars and bank accounts.

The tax evaded by smuggling the 1.8m cigarettes is almost $1.8m.

The investigation – named Operation Whitethorn – was a six-month operation that began after Customs identified a company suspected of smuggling cigarettes inside sea containers. A recent container inspection located 340,000 cigarettes hidden inside 12 metal cabinets.

Last week, Customs investigators carried out search warrants at multiple Auckland addresses, locating around 1.5m cigarettes and five rubbish bags filled with cash.

The Police asset recovery unit restrained two properties worth several million dollars, two luxury cars and several bank accounts.

It is the first time Customs has partnered with the unit to target those involved in revenue fraud.

"Customs has seen an increase in the commercial quantities of smuggled or misdeclared Chinese-branded cigarettes in recent years," Berry said.

"This investigation has uncovered the largest scale tobacco fraud to date, with the tax evasion already estimated to be at least $1.8m.

"While it's okay to import cigarettes, smuggling or misdeclaring them to evade taxes is illegal. Customs will not hesitate to identify and take action against those who seek to financially benefit from such illegal activity, including restraining the assets of the worst offenders."

He told media that the maximum penalties for evading customs duty were increased this year to five years in jail or a $20,000 fine.

He said the group involved in the smuggling operation was "a commercial importation syndicate that has all the hallmarks of organised crime and was clearly designed for profit".

He said there had been a steady increase of about 5 per cent a year in the volume of illegally imported cigarettes being intercepted, but the vast majority of interceptions were of small quantities for private use.

"In terms of commercial syndicates, we have seven prosecutions before the courts," he said.

"We are seeing the same level of sophistication that we previously associated with drug smuggling."

Berry said more than 80 per cent of the seizures involved cigarettes from China.

"We will go through the court process first and then it's likely they will end up in a landfill." (via Sunday Star Times)