Illicit trade is not just an economic crime—it destabilises governments, fuels corruption, weakens borders and puts lives at risk. It thrives where institutions falter, regulations fall short and enforcement struggles to keep pace with ever-evolving criminal networks. From counterfeit medicines endangering public health to smuggling operations funding organised crime, its effects permeate economies and societies. Combating it requires more than isolated crackdowns; it demands a strategic, coordinated response that targets its root causes and disrupts the systems that allow it to flourish.
To assess how countries are responding to this challenge, Economist Enterprise developed the Global Illicit Trade Environment Index. This tool serves as a resource for governments, businesses and NGOs looking to strengthen enforcement, improve regulation and build resilience against illicit trade. Rather than measuring the scale of illegal activity, the Index evaluates countries on governance, transparency, customs and enforcement, and economic and social conditions—factors that determine their capacity to disrupt illicit markets.
Illicit trade in focus
Explore country rankings, scores, and global trends in illicit trade
Illicit trade index: rankings and insights
The Illicit Trade Environment Index, developed by Economist Enterprise, assesses the ability of 87 countries to combat illicit trade. Rather than measuring the scale of illegal activity, the index evaluates countries across four key categories: governance and cooperation, surveillance and enforcement, customs and border management, and economic management and the regulatory environment—factors that shape their capacity to disrupt illicit markets. Explore global rankings, trends, and insights to see where nations are strengthening defences—or where gaps remain. These insights help governments, businesses, and policymakers target interventions more effectively in the fight against illicit trade.
Key findings
This briefing paper draws on the Index’s findings, along with research, expert interviews and case studies, to highlight key trends, emerging challenges and policy responses. This paper’s key findings include:
When governance fails, illicit trade prevails
Illicit trade thrives where institutions are weak, enforcement is inconsistent and corruption runs deep. Criminal networks exploit regulatory loopholes and bribery to bypass restrictions and operate with impunity. Where governance is weak, even strong regulations fail to translate into strict enforcement allowing smuggling, counterfeiting and trafficking to flourish. Without stronger oversight and accountability, illicit trade will continue to destabilise economies and societies.
Corruption erodes capacity—enforcement must be credible
Corruption undermines even the strongest anti-illicit trade frameworks. Bribery and institutional favouritism allow traffickers to bypass inspections, stall prosecutions and distort regulatory enforcement. Strong commitments to international cooperation and governance can be hollowed out by systemic graft. Where corruption persists, state capacity can become performative. Building credible enforcement requires more than laws—it demands accountability, transparency and political will.
Border security gaps leave the door open for illicit trade
Despite advances in surveillance and screening technologies, many customs agencies remain ill-equipped to detect illicit goods. Corruption, underfunding and inadequate training create vulnerabilities that criminals exploit. Tackling these requires not just investment in technology, but also better training for customs officers, stronger oversight to limit corruption, improved coordination between agencies and greater transparency in cargo monitoring.
Free Trade Zones: open for business—and exploitation
Designed to boost trade, FTZs often become hubs for illicit commerce due to weak oversight. Criminals take advantage of relaxed customs inspections by mislabelling goods, evading taxes and laundering money. Establishing an FTZ leads to an average 5.9% rise in counterfeit exports. Greater transparency, mandatory customs checks and stronger international coordination are needed to prevent these zones from becoming safe havens for illicit trade.
Illicit trade moves freely—global enforcement must catch up
Illicit trade operates across borders, yet enforcement efforts remain largely national and fragmented. Criminal networks exploit weak links in global supply chains, blending counterfeit and smuggled goods with legitimate commerce. While many governments have signed international treaties, practical cooperation—such as intelligence-sharing, cross-border tracking and mutual legal assistance—remains inconsistent. The challenge is not only stopping illicit trade at borders but also tracing its movement across complex distribution networks. Without better use of data and stronger global coordination, enforcement will struggle to keep pace with increasingly sophisticated illicit markets.
Illicit trade is going digital—policymakers need to keep pace
E-commerce, cryptocurrencies and encrypted messaging apps have transformed illicit trade, allowing criminals to operate anonymously across borders. Counterfeit goods flood online marketplaces, digital payments obscure transactions and weak cybersecurity enables money laundering. Regulatory gaps further expose supply chains to manipulation. While some authorities are responding—Europe’s Digital Services Act, for instance, mandates platform monitoring—enforcement remains inconsistent. Without stronger digital oversight, better cybersecurity and coordinated global regulation, illicit trade will continue to thrive online.
Bad policy fuels black markets—smarter regulation is required
Well-intended policies can sometimes have unintended consequences creating incentives for illicit trade rather than curbing it. High "sin" taxes, for example, often push consumers toward black markets instead of reducing consumption. Similarly, poorly designed de minimis trade thresholds allow traders to manipulate the system, splitting shipments to avoid customs duties. To prevent regulation from driving businesses and consumers toward illicit markets, policymakers must strike the right balance between enforcement, taxation and market incentives.
Cutting demand takes more than awareness—it needs action
Fighting illicit trade requires cutting both supply and demand. Awareness campaigns help, but consumer choices are often driven by price and convenience, not ethics. In lower-income markets, counterfeit medicines, pirated goods and untaxed cigarettes remain attractive options despite awareness efforts. A lasting solution requires more than education—it demands stronger enforcement, anti-corruption reforms, better regulation and smarter economic policies to reduce incentives for illicit trade.
Read the full report for in-depth analysis and insights
Download the full report to see how countries are tackling illicit trade and strengthening global efforts to combat it. Explore rankings, key trends, and policy recommendations backed by expert analysis and data from Economist Enterprise’s Illicit Trade Environment Index.
