Combatting illicit trade (the track and trace system)
All unit packets of tobacco products placed on the EU market must carry a security feature, composed of visible and invisible elements. The security feature helps both consumers and authorities to determine whether a product for sale is an authentic or illicit tobacco product.
The security feature applied to tobacco products placed on the Finnish market will be composed of five types of authentication elements:
- guilloche pattern;
- colour-changing ink;
- UV dull paper;
- microprint; and
- security fibres.
The security features must be applied either by affixing, printing or a combination of both, in a manner that protects them from being replaced, reused or modified in any way.
When placing a security feature on a unit packet, it must be noted that it is not permitted to compromise the visibility of health warnings. The security feature must not be hidden under other features such as price marks. At the moment, there are no specific regulations in place regarding the placement of the security features on unit packets. The Ministry of Social Affairs and Health decree regulates issues such as the placement and marking of the security feature on packaging and the definition of the technical standards for the security feature and their possible rotation.
In the first phase, all unit packets of cigarettes and roll-your-own tobacco must carry a security feature from 20 May 2019. Tobacco products that were manufactured in the Union or imported into the Union before 20 May 2019 and do not carry a security feature may remain in free circulation until 20 May 2020. In practice this means that as of 20 May 2020, cigarettes and roll-your-own tobacco in unit packets that do not carry a security feature cannot be sold.
In the second phase, from 20 May 2024, all tobacco products must carry a security feature. Tobacco products that were manufactured in the Union or imported into the Union before said date and do not carry a security feature may remain in free circulation until 20 May 2026. After that date, tobacco products that do not carry a security feature are not permitted on the market.
The purpose of the traceability system is to prevent the illicit trade of tobacco products and to enable products to be traced from the manufacturer to the first retail outlet.
The traceability system consists of two parts:
- a unique identifier placed on the unit packets of tobacco products (see Unique identifier below); and
- the obligation of all economic operators engaged in the supply chain of tobacco products to record the products' movements (see Recording tobacco product movements and identifier codes required below).
Unique identifier
From 20 May 2019, unit packets of tobacco products must carry a unique identifier so their movements can be traced. The unique identifier on unit packets is part of an EU-wide traceability system aimed at providing Member States and the Commission with an effective tool to combat the illicit trade of tobacco products.
Manufacturers and importers must label their products with a unique identifier containing predefined information about features such as location and date of manufacture and destination. This will enable them to be identified, tracked and traced throughout the supply chain, and will also enable related information to be transmitted to a data storage facility.
The format of the unique identifiers is set out in detail in the Commission's traceability regulation. The unique identifier must consist of as short a sequence of alphanumeric characters as possible, not exceeding 50 characters. The unique identifier is encoded in one of the permitted data carriers for the purpose of machine readability, e.g. scanning. Data carriers often take the form of an optical barcode or QR code, which is irremovably applied to the product package. A time stamp can be added to the unique identifier separately as a human readable code (YYMMDD).
Manufacturers and importers must apply for their unique identifiers for tobacco products intended for the Finnish market from an ID issuer designated by the Ministry of Social Affairs and Health. A Slovak Allexis s.r.o. have been named to be an ID issuer for the next five years.
The ID issuer must provide an electronic graphical user interface and helpdesk services for the unique identifier application process (in Finnish, Swedish and English).
In the first phase, all unit packets of cigarettes and roll-your-own tobacco must carry a unique identifier from 20 May 2019. Tobacco products that were manufactured in the Union or imported into the Union before said date and do not carry a unique identifier may remain in free circulation until 20 May 2020. In practice this means that as of 20 May 2020, cigarettes and roll-your-own tobacco in unit packets that do not carry a unique identifier cannot be sold.
In the second phase, from 20 May 2024, all tobacco products must carry a unique identifier. This means that all products that contain tobacco plant must be marked with a unique identifier. Tobacco products that were manufactured in the Union or imported into the Union before said date and do not carry a unique identifier may remain in free circulation until 20 May 2026. After that date, tobacco products that do not carry a unique identifier are not permitted on the market.
Aggregated packaging containing tobacco products must also be marked with a unique identifier, a so-called aggregated-level unique identifier. Applications for aggregated-level unique identifiers can be made to the ID issuer or they can be generated by the operators themselves. If the unique identifier for aggregated packaging is generated by an economic operator, it must consist of a unit packet code generated in accordance with ISO/IEC 15459–1:2014 or ISO/IEC 15459–4:2014 or its most recent version. An aggregated-level unique identifier must be electronically linked to each lower-level unique identifier.
Recording tobacco product movements and identifier codes required
The movements of all unit packets of tobacco products must be recorded throughout the supply chain. This obligation applies to the entire chain from the manufacturer to the first retail outlet. The details to be recorded include events related to a product’s movements (e.g. dispatch of tobacco products from a facility) and transactional information (e.g. invoice issuing and receipt of payment). The industry must provide all those involved in the trade of tobacco products with the equipment required for recording product movements.
In practice, this means that all those involved in the tobacco product supply chain, from the manufacturer to the first retail outlet, must apply for identifier code(s) with which the party in the supply chain can be identified. These codes enable all purchasers, as well as the actual shipment route from the manufacturer to the first retail outlet, to be easily identified.
There are three types of identifier codes: the economic operator identifier code, the facility identifier code and the machine identifier code.
An economic operator identifier code must be applied for by anyone involved in the trade of tobacco products (incl. export). This obligation concerns manufacturers, logistics companies as well as wholesale or retail outlets.
A facility means any location, building or vending machine where tobacco products are manufactured, stored or placed on the market. This means that facilities such as wholesale and retail outlets that sell tobacco products and buildings where tobacco products are stored must apply for a facility identifier code.
A machine identifier code is applied for for equipment used in the manufacture of tobacco products.
For example, wholesale and retail outlets of tobacco products must apply for both the economic operator identifier code and the facility identifier code. If an operator sells tobacco products in several different outlets, an application for a facility identifier code must be made for each outlet separately.
In terms of the Finnish market, applications for identifier codes are made to an ID issuer designated by the Ministry of Social Affairs and Health. A Slovak Allexis s.r.o. have been named to be an ID issuer for the next five years.
The ID issuer must provide an electronic graphical user interface and helpdesk services (in Finnish, Swedish and English) to economic operators and retailers of tobacco products for the identifier code application process.
An operator of retail outlet of tobacco products is permitted to request another economic operator (a so-called third party) to apply for an economic operator identifier code and facility identifier code(s) on its behalf. Such third party must be registered in the traceability system and must have obtained its own identifier codes. Registration by a third party must have the full consent of the operator of the retail outlet. The third party is required to communicate all details of the registration, including all codes which have been assigned, to the operator.
Any modification to the information submitted in the initial identifier code application form must be notified by the economic operator to the ID issuer without delay.
The ID issuer is not permitted to charge fees for generating identifier codes. Therefore, it is free to apply for and to obtain identifier codes for economic operators, facilities and machines.
Wholesale outlets of tobacco products are only be permitted to sell cigarettes and roll-your-own tobacco to operators who have the necessary economic operator and facility identifier codes (see The retail licence system and the traceability system).
For more information on the subject, see the Commission’s website on fighting the illicit trade of tobacco products and the Commission's guide: Systems of traceability and security features for tobacco products in the EU. Stakeholder manual.
Retail sales of tobacco products have been licensed in Finland since 2008. This means that a retailer is not permitted to buy tobacco products from a wholesaler without a valid retail license. Wholesalers may check the validity of a retail license from a register maintained by Valvira.
Following the entry into force of the traceability system, retailers of tobacco products must, in addition to the retail license, have the identifier codes required by the traceability system (see Recording tobacco product movements and identifier codes required above). Identifier codes must be in place to ensure that other economic operators, such as wholesalers, are permitted to deliver products to retail outlets while fulfilling their own traceability obligations.
Taking into account the transitional provisions, retailers of cigarettes and roll-your-own tobacco must be in possession of their identifier codes from 20 May 2019 and all retailers of tobacco products from 20 May 2024. A wholesaler will not be permitted to sell cigarettes or roll-your-own tobacco to a retailer after 19 July 2019 if the retailer does not have the identifier codes required by the traceability system. Section “Recording tobacco product movements and identifier codes required” above describes the identifier code application process in more detail.
A holder of a retail licence must notify the municipality that issued the licence of the economic operator and facility identifier codes corresponding to the retail licence. The municipality must submit the details to the register of retail licences maintained by Valvira. It can thus be checked that a wholesaler is permitted to sell products to a retail licence holder. If there are no identifier codes in the register of retail licences, the wholesaler is not permitted to sell tobacco products to the retailer even if the retailer's licence is valid.
If a holder of a retail licence ceases to sell tobacco products, the holder must inform the local authority that issued the licence and the ID issuer of the termination of sales. The termination notice may be sent to the local authority by email to the address provided by the municipality and to the ID issuer through the user interface provided by the ID issuer.