Category: Governments

European Tobacco Products Directive: A Cautionary Note

Posted on August 28, 2019 |

Author: Kathryn Olivier

By Tim Driscoll, Senior Vice President and General Manager, Currency & Tax Stamp, Authentix

To achieve compliance with the World Health Organization’s Framework Convention for Tobacco Control (FCTC), the European Union’s Tobacco Products Directive (EUTPD) became applicable in member states on May 20, 2016. The FCTC, like many overarching regulatory directives, leaves many of the implementation details up to the signatories. Enforceable as of May 20, 2019, EUTPD involves a wide range of stakeholders — security feature providers, secure document printers, tobacco manufacturers, tobacco distributors, data collection and storage companies, traceability solutions providers — and, of course, member state authorities. The EUTPD chose a disaggregated implementation model with multiple stakeholders supporting different parts of the program. Following a disaggregation strategy can help one to select a collection of best practices, which provide an optimal solution for their challenge. Unnecessary disaggregation of the solution, however, can introduce delays and confusion as well as an increased possibility of program fraud. The distributed nature of the EUTPD should be avoided by other countries or economic unions as they consider how to implement their own tobacco track and trace programs.

Centralization: The Key to an Effective Excise Tax Recovery Program

The EUTPD requires that each tobacco product is marked with a unique identifier (ID) to be generated by ID issuers that are financially and legally independent of the tobacco industry. The directive also calls for tamper-proof security features comprised of visible and invisible elements that will allow authorities to determine if the product is genuine or illicit. The tax stamp/security seal must have a combination of overt, semi-covert and covert features and include information such as the unique ID, location and date of manufacture, destination, etc. In the EU model, the three critical responsibilities of ID issuance, stamp design and printing, as well as data collection and storage providers, can be filled by three separate companies.

The International Tax Stamp Association (ITSA) has commented on various short comings of the EUTPD related to the lack of specificity regarding feature selection and the degree of responsibility provided to the tobacco companies.^{1, 2} Authentix concurs with many of the concerns expressed by ITSA and would like to add the following points to consider.

Unnecessary Disaggregation

The EUTPD system contains three separate databases:

Economic Operator and Unique IDs managed by the ID issuer
A primary repository for the management of production data by a third party under contract with the tobacco manufacturer
A second repository that serves as a surveillance data store for member states and their competent authorities to evaluate the program and identify cases of illicit trade.

As a result of how the primary repository was defined, a member state is unable to select a single supplier to manage the data associated with the generation of the unique IDs and their supply chain events.

Designing a program with multiple databases managed by multiple suppliers creates the possibility of conflict between suppliers. Confusion or disagreements may arise when suppliers follow slightly different implementation approaches to the same standard. Also, troubleshooting issues often become more difficult when parties with shared responsibilities are involved. A comprehensive excise tax recovery program is a complex system. For other countries or economic unions considering FCTC compliance, we strongly recommend that the system is not designed to be unnecessarily complicated.

Role of Tobacco Affiliated Companies

It is clear that some program activities, such as the application of authentication and traceability elements onto the packaging, are best fulfilled by tobacco manufacturers. Other responsibilities such as controlling the production data and issuing aggregation codes have also been assigned in the EUTPD to tobacco companies and companies with strong ties to tobacco. And while many of these entities are compliant participants wanting to leverage these programs to protect their revenues from losses due to illicit trade, some are not.

For those starting to consider their approach to the FCTC compliance, this issue can be avoided by centralizing the program and selecting a single trusted partner. Even if one does not believe that there is a significant amount of illicit tobacco trade in their countries, why even introduce the possibility or concern that tobacco affiliated companies may be exploiting the system? Questions of fraud will persist in an implementation model where the manufacturers manage the production data; whereas if a single service provider is managing a central database, concerns of undue influence are eliminated.

Recommended Approach

Getting the implementation of a tobacco track and trace program right is critical as the recovered lost taxes fund government programs intended to empower citizens, create opportunities and change lives. Authentix believes the best way to achieve these goals is to implement a comprehensive excise tax recovery program involving a single third-party partner responsible for registering the members, generating the unique IDs, and collecting and managing the data in a central database with surveillance controlled by the government.

Authentix – A Comprehensive Tax Stamp Solutions Provider

Authentix collaborates with finance ministries, revenue agencies and custom departments to better understand their tax collection challenges and the complexity of supply and distribution chains operating within their country. Leveraging our experience as a provider of comprehensive tax stamp solutions, Authentix works with FCTC signatories to help them comply with the Protocol. In addition, as a stakeholder in the EUTPD, Authentix enables a European Ministry of Finance to serve as the designated ID issuer for two EU Member States. As a result, we have developed effective implementation and execution strategies to meet WHO and individual signatory mandates.

With the recent acquisition of UK-based secure printing company Security Print Solutions Limited (SPS), Authentix has expanded its security document design and printing capabilities while greatly enhancing its existing tax stamp program proficiency. This relationship strengthens our ability to design tax stamps that resonate with each government and enables us to incorporate a combination of highly effective security features at competitive pricing. Serving as a single source provider of registration, ID issuance, tax stamp creation, printing, data collection and analysis, we collaboratively partner with our customers to help them thrive in supply and distribution chain complexity. Authentix’s flexibility also enables us to provide services individually, seamlessly integrating with existing operations and third-party systems.

The Authentix Difference

The Authentix difference is driven by the Authentix Information System (AXIS®), our data collection, analysis and reporting software platform. AXIS consumes data collected through the life cycle of the unique IDs (generation, printing, delivery, application and activation, supply chain distribution, and retirement) and correlates it with additional data sources to highlight various patterns and abnormal events. This increases customer awareness of illicit trade, the efficacy of track-and-trace programs, and anticipates potential threats before they happen.

Authentix has deep experience in implementing new programs driven by government regulations. As an organization that provides authentication and traceability solutions to both commercial and government clients, we work effectively with all parties as we strive for the optimal balance between compliance and production operation realities. This ability allows us to smooth the way for our customers’ success and deliver on our mission to safeguard the integrity of global commerce.

For more information, please visit authentix.com/governments/taxstamp.

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1 ”Tracking and Tracing of Tobacco Products: Defining Roles and Responsibilities in Compliance with the FCTC Protocol” 2 ”How to Make Unique Identifiers for Tobacco Track and Trace Secure and Independent from the Tobacco Industry: A Standards-Based Approach”

Complying With WHO’s Framework Convention for Tobacco Control

Posted on August 23, 2019 |

Author: Kathryn Olivier

By Tim Driscoll, Senior Vice President and General Manager, Currency & Tax Stamp, Authentix

World Health Organization’s Framework Convention on Tobacco Control

“The WHO Framework Convention on Tobacco Control (WHO FCTC) is the first treaty negotiated under the auspices of the World Health Organization. The WHO FCTC represents a paradigm shift in developing a regulatory strategy to address addictive substances; in contrast to previous drug control treaties, the WHO FCTC asserts the importance of demand reduction strategies as well as supply issues.

The WHO FCTC was developed in response to the globalization of the tobacco epidemic. The spread of the tobacco epidemic is facilitated through a variety of complex factors with cross-border effects, including trade liberalization and direct foreign investment. Other factors such as global marketing, transnational tobacco advertising, promotion and sponsorship, and the international movement of contraband and counterfeit cigarettes have also contributed to the explosive increase in tobacco use.”WHO Framework Convention on Tobacco Control

The WHO FCTC treaty was enacted in 2005 and passed its last milestone on May 20, 2019, which focuses on compliance directives and guidelines. To date, the treaty has 168 signatories and is legally-binding in 181 ratifying countries.

Following the treaty’s ratification, the WHO realized the issue of illicit trade in tobacco and tobacco-related products (e.g., smuggling) required its own treaty. The WHO’s second international treaty, The Protocol to Eliminate Illicit Trade in Tobacco Products (the Protocol), builds upon and complements Article 15 (see call out below) of the FCTC which addresses means of countering illicit trade in tobacco products and the measures member states must take to take to eliminate it.

Article 15 concerns the commitment of Parties to eliminate all forms of illicit trade in tobacco products. The Protocol to Eliminate Illicit Trade in Tobacco Products builds on this article. It includes obligations concerning the marking of tobacco packaging to enable tracking and tracing, the monitoring of cross border trade, legislation to be enacted, and conﬁscation of proceeds derived from the illicit trade in tobacco products. Parties are also required (in accordance with national law), to cooperate with each other and with international organizations in combating illicit trade

The Protocol was adopted in 2012 and open for signature January 2013–2014. It went into effect September 25, 2018 after the mandatory 40 member states had acceded to, ratified, accepted or approved it.

The Protocol: Track and Trace Programs

The Protocol focuses on the global tobacco epidemic from both a demand reduction and supply regulation position. It requires that signatories not only monitor and regulate manufacturers and distributors, but also apply other measures that address how the public interacts with tobacco and tobacco-related products (e.g., education, cessation programs, transitioning farmers from tobacco to other crops).

A key component in the Protocol (Part 3, Article 8) is the supply chain track-and-trace program which requires all tobacco and tobacco-related products to have a unique ID placed on the packaging. This ID enables products to be tracked throughout the supply and distribution chain (track), from manufacturer to first retail sale. Those movements are recorded and the data is stored with independent data storage providers. This data must be made available to government entities to help them determine where the item has been in the supply chain (trace) and support enforcement purposes.

Benefiting the Public

By eliminating the illicit trade in tobacco products, the track-and-trace program can help revenue authorities recover lost taxes needed to fund public programs. Fundamental is its efforts to protect the health and welfare of the public, particularly young people, by curbing tobacco use and protecting them from the even more harmful aspects of contraband cigarettes. It addresses issues from secondhand smoke exposure to lobbying standards to social economic programs to seizing contraband. Compliance with the FCTC promotes these efforts, helps protect public health and welfare, and enables a safer market for legal tobacco products − and that’s good news for everyone.

Choosing the Right Authentication Partner

To comply with the FCTC, signatories must use an independent party to register entrants and generate and issue ID codes for tobacco products. However, choosing the right authentication partner that understands your country’s challenges, supply chain, tax revenue laws and the types of illicit trade impacting your citizens, can seem daunting. Authentix collaborates with finance ministries, revenue agencies and custom departments to better understand their tax collection challenges and the complexity of supply and distribution chains operating within their country. Leveraging our experience as a provider of comprehensive tax stamp solutions, Authentix works with FCTC signatories to help them comply with the Protocol. In addition, as a stakeholder in the EU’s Tobacco Products Directive (EUTPD). Authentix enables a European Ministry of Finance to serve as the designated ID issuer for two EU Member States. As a result, we have developed effective implementation strategies to meet WHO and individual signatory mandates.

Our experience combined with AXIS®, our data collection, analysis and reporting software platform, enables us to provide actionable insights to our customers, delivering a deeper understanding of the collected data to help refine tax stamp programs and improve compliance, increase tax revenue and prevent fraudulent activities.

Authentix has been implementing excise tax recovery programs for more than 25 years. As an independent provider, our position allows us to effectively work with all involved parties, including both tobacco manufacturers and government agencies. This ability enables us to reduce the friction inherent in any compliance program and smooth the way for our customers’ success.

With the recent acquisition of Security Print Solutions Limited, the United Kingdom’s leading tax stamp printer, Authentix is further expanding its capabilities and technologies for an even stronger partnership with Finance Ministry and Revenue Agency customers.

Authentix. The Authority in Authentication.

Authentix provides advanced authentication solutions for governments, central banks and commercial products, ensuring local economies grow, banknote security remains intact and commercial products have robust market opportunities. Authentix offers both comprehensive tax stamp programs as well as customized point solutions to assist in tax collection.

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Top 5 Reasons for Nations to Implement a Fuel Integrity Program

Posted on July 29, 2019 |

Author: Kathryn Olivier

The oil and gas industry is one of the largest and most profitable, and governments throughout the world rely on fuel excise taxes to help fund public projects and social services to its citizens. The impact of diverted, diluted and illegally trafficked fuel within a country’s borders results in lost tax revenue, poor quality product, environmental issues and ultimately reduced services and benefits for citizens. In 25 years of experience implementing fuel integrity programs across the globe, Authentix has found in many cases more than 30 percent of fuel volume is manipulated or adulterated for the purpose of tax avoidance and illegal profits, reducing tax collections as well as public trust.

However, many governments have taken action and implemented an effective national fuel integrity program which curbs fuel fraud, shores up lost funding, restores confidence in the nation’s fuel supply and increases public funds available for infrastructure and social services.

Authentix helps governments design, implement and enforce fuel integrity programs by providing a covert, yet fully traceable solution. In a successful fuel integrity program today, legitimate gasoline and diesel fuel is uniquely identifiable by dosing the fuel with a proprietary, invisible and environmentally approved chemical marker at very low concentrations, often at parts per billion (ppb). Once marked, the fuel can be qualitatively or quantitatively analyzed at various points in the supply chain for either instant field confirmation or alternatively, a forensic molecular finding in a regional laboratory. Depending on the analysis method, Authentix provides clients with customized analyzers tuned uniquely for the program.

The various analysis methods deployed by Authentix detect a baseline level of markers in the subject fuels. In the case of a field test, if the fuel sample reveals an absence of or the presence of a certain marker, field inspectors can make some immediate determinations as to whether illicit fuel has been introduced to the supply chain and in many cases, where this has occurred. For enforcement purposes, these same fuel samples can be re-tested in the regional laboratory to confirm the original findings, enabling the ability to enforce compliance using forensic evidence.

Fuel integrity programs have proven time and again to be very beneficial for governments and citizens alike. Below are five primary benefits to enacting a national fuel integrity program:

1. Protect and recover lost tax revenue

Illicit trading has long been problematic in the fuel industry. Fuel products present a lucrative opportunity for those who wish to deliberately manipulate fuel supplies for illicit gain. Price arbitrage presents an easy money making opportunity at very large scales.

An effective fuel marking program can help governments curb illicit activity and recover lost tax revenue while enabling a significant return on investment.

In the Republic of Serbia, for example, fuel stations and vehicle registrations were increasing, while taxable sale of fuels were decreasing — pointing to fuel fraud. In 2013, they discovered that 1,434,000 tons of diesel fuel were consumed versus 902,000 tons sold wholesale by oil companies. That’s 37 percent of fuel volume unaccounted for.

In just five months after implementing a fuel integrity program that marked more than 930 million liters of fuel, the Serbian government saw significant evidence the program was working — diesel and gas sales volume increased 18 and 14 percent, respectively, and excise revenues increased by more than € 34 million when compared to the same period the year before. And, from 2013 to 2018, excise and VAT revenues have increased by € 720 million.

2. Prevent subsidy abuse

Subsidy fraud is also rampant in the oil industry. Criminals divert fuels such as kerosene, which in some countries is subsidized and reserved for the poor, and then use them as adulterants in higher taxed fuels. They may also outright smuggle these subsidized fuels to higher priced
markets and pocket the money.

Since 2014, Authentix has been providing an advanced fuel integrity program to a national fuel supply company in the Middle East. The government backed company, one of the largest in the world, manages the distribution of petroleum products to major and remote bulk plants through pipeline networks, trucks and marine shipments. Through its own internal monitoring process, the company suspected that subsidized, low or non-taxed products were being smuggled into the country, illegally blended with the legitimate supply and sold to unauthorized entities during the delivery process.

The Authentix fuel integrity program has been highly effective and confirmed the scope of the smuggling problem within a very short time after deployment. As a result of the program, fourteen smuggling-implicated plants were closed, which led to a sharp decrease in smuggling at the country’s border. Also, export permits were revoked for the companies involved in illicit activity. The demand for this illicit fuel decreased, and the nation continues to save hundreds of millions of dollars in subsidies every year as the program continues to expand.

3. Protect fuel quality and the environment

Illicit or smuggled fuels can wreak havoc on engines, leading to major repair costs to vehicles over time. Most detrimental of all, these fuels can cause environmental damage from increased levels of emissions, elevated carbon monoxide and other regulated airborne particles, all of which can be harmful to the environment and public health.

When dangerous pollutants accumulate in the air in concentrations above legal limits, they can cause irreparable harm to the public − especially to children, the elderly and the ill. These elevated pollutants can also damage crops, vegetation and other property. Even if only short term, pollutants can cause eye and throat irritation, breathing difficulties or other adverse respiratory symptoms. In the event of long-term exposure, the results are far more damaging including cancer, heart and lung disease and compromise to immune, neurological and even reproductive systems.

4. Deter illegal traders and system abusers

While the lure of easy money will always entice illicit activity, it’s proven that a successful fuel integrity program enables national governments and state owned enterprises to identify, enforce and curb criminal behavior. Once an Authentix fuel integrity program is deployed and word of inspections, enforcement and prosecution spreads, the volume of adulterated fuels will decrease and lead to a surge in the sale of legitimately taxed fuels. This, in turn, increases public revenues and benefits all.

In the Serbia example mentioned above, government officials announced on national television how the fuel integrity program led to a €139 million increase in fuel excise revenue for the first full year after deployment versus the previous year when no program was in place. There was also a reported 700% drop in the sale of base oils, a well-known, low quality, low cost adulterant often added to the supply of diesel fuel for illegal profits.

5. Promote trust in government officials

Implementing an effective fuel integrity program is a great way to give citizens what they deserve — a stable economy, a healthy environment and a trustworthy government maximizing resources for the benefit of its people.

And part of having increased public funding and economic stimulus often means more people working and increased economic gain. When implementing a national fuel integrity program, Authentix becomes a partner of the national government and supports the local workforce by hiring and training a local “in country” workforce to administer and help run the programs on a day-to-day basis.

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Authentix. The Authority in Authentication.

Working with governments, central banks and commercial companies, Authentix provides custom authentication solutions tailored to meet specific business challenges. Our core capabilities in developing and manufacturing proprietary chemical markers, designing analytical instruments and devices, and applying interdisciplinary chemometric models are enhanced by data integration, analytics and program management.

With over 25 years of experience in government and commercial fuel authentication, Authentix helps ensure local economies grow, banknote security remains intact and commercial products have robust market opportunities. Contact us to speak with an expert.

Authentix Named One Of CIOReview’s Top 20 Most Promising Oil And Gas Solutions Providers

Posted on July 29, 2019 |

Author: Kathryn Olivier

ADDISON, Texas, July 29, 2019 /PRNewswire/ — Authentix, Inc., a U.S.-based technology solutions provider specializing in supply chain security and authentication programs, was selected as one of the top 20 most promising solutions providers in the oil and gas industry by leading enterprise technology publication, CIOReview.

Every year, CIOReview analyzes the growing marketplace of service providers and awards the best-in-class with this prestigious award. This is done as a service to chief information officers with the difficult task of choosing the right partners to leverage the significant technological innovations to boost prosperity in their long-term growth and digital transformations. The exclusive list of vendors was selected by a distinguished panel of CEOs, CIOs and VCs, industry analysts and the editorial board of CIOReview after exhibiting excellence in offering efficient solutions and expertise in the oil and gas industry.

“Authentix secures the integrity of global commerce by verifying the authenticity of physical products through advanced technology solutions and connecting the output of that information to a robust, digital information platform. This provides our clients with insightful analytics to ensure the integrity of their fuels, minimize fraud, and increase market share or tax collections. We are honored to have CIOReview recognize Authentix for our proactive innovation in these complex environments, our proven sector expertise and the ability to help our clients gain a distinct competitive advantage,” states Kevin McKenna, CEO of Authentix.

Authentix operates fuel marking programs on five continents helping governments protect fuel tax revenues and leading branded fuel owners protect the integrity of their products. These programs consist of proprietary markers in refined fuels that can detect and prevent grade swapping, adulteration, and tax avoidance from the introduction of illicit fuels. Also, the company offers an information and data management platform to aggregate operational data, provide field test results and reporting tools for insights into potential issues within the supply chain and what types of actions need to be taken and when. Additionally, Authentix supplies marking programs for crude oil pipelines, fuel quality inspection services, and remote sensor monitoring of measurement devices in the fuel supply chain.

About Authentix
As the authority in authentication solutions, Authentix helps customers thrive in supply and distribution chain complexity. Authentix provides advanced authentication solutions for governments, central banks and commercial products, ensuring local economies grow, banknote security remains intact and commercial products have robust market opportunities. The Authentix partnership approach and proven sector expertise inspires proactive innovation, helping customers mitigate risks to promote revenue growth and gain competitive advantage.

Headquartered in Addison, Texas USA, Authentix, Inc. has offices in North America, Europe, Middle East, and Africa serving clients worldwide. Authentix® is a registered trademark of Authentix, Inc. For more information, visit https://www.authentix.com.

Contact: info@authentix.com

Digital Advancements Improve Fuel & Data Integrity — And Answer Tough Supply Chain Questions

Posted on June 4, 2019 |

Author: Kathryn Olivier

Fuel integrity failures lead to significant revenue losses, brand damage, environmental pollution, poor vehicle performance and increased consumer complaints. To avoid these industry challenges, many branded fuel companies and government agencies are implementing fuel authentication programs throughout the supply chain. As more of these programs are implemented worldwide, stakeholders are finding significant return on investments as fuel quality is greatly improved, revenue and tax collections increase, and the overall integrity of the downstream supply chain is confirmed.

Digital Transformation in the Fuel Supply Chain — Right Data, Right Time

“Digital transformation in fuel authentication programs such as Wi-Fi-enabled mobile devices that communicate directly with our data analysis and reporting platform, AXIS®, can reduce data collection and reporting time in the field by 50 percent or more. The automated data uploads increase the speed and accuracy of data entry, eliminating errors resulting from manual processes used in the past.”Jeff Conroy, Chief Technology Officer, Authentix

The responsibility of managing the complex fuel supply and distribution chain falls on multiple stakeholders within a commercial brand or governmental agency. The value added through a reliable flow of accurate and timely data provides actionable insight for these stakeholders to measure and reconcile information quickly and enforce, react and remediate fuel fraud. In national fuel integrity programs for example, the agencies responsible for the collection of fuel excise taxes use data analytics to quickly detect the introduction of illicit fuel in the supply chain and, through fast enforcement action, increase tax collections and provide tremendous societal benefits.

Additionally, reliable digital data flow enables branded fuel owners to answer critical business questions about their downstream retail operations. Using a fuel marking program, coupled with digital data analytics, can ensure that premium additized fuel products are being distributed correctly under the right brand retail operations.

“Only one in four (25%) professionals believe they have the data needed to assure their brand’s fuel integrity.”Downstream Fuel Manipulation: The threats that could cost you, Oil & Gas IQ, 2018

Authentix has been a pioneer in combining physical fuel marking programs and the collection and automated analysis of supply chain data, and it has led the way on this digital transformation.
Advancements in digital technologies have made fuel authentication programs and the resulting data analytics easier to collect, secure and provide both enterprise and mobile reporting capabilities for its customers, driving improved supply chain security and integrity. Instead of gathering, entering and storing data manually, as in the past, Authentix field inspectors use portable, handheld analyzers digitally connected to the cloud. These advanced mobile
devices record supply chain data and communicate directly with our cloud-based data analysis and reporting platform, AXIS® (Authentix Information System).

The slow collection and reporting velocity of manually supplied data greatly increases the risk of fuel manipulation. Today, with advances in mobile or electronic telemetry data collection technology, AXIS® can enable users to quickly correlate fuel supply chain data with other correlated data from field devices and lab-based results for rapid response capability. For over 20 years, Authentix has been executing data reporting for our customers in real-time, analyzing supply chain results and creating actionable insights for improved program management and decreased opportunities for fuel manipulation or adulteration.

How Does AXIS® Work?

AXIS® is an integrated set of software applications designed to aggregate, store, analyze and present data from multiple and disparate sources to solve for potential supply chain integrity problems. Accessible through a remote web application, the system also presents dashboards and user-configurable reports to enable data-driven decisions and confident actions. Collected data could include geolocation, date and time of collection, retail or terminal IDs, and other identifiers and contextual data.

These identifiers ensure data integrity by establishing a chain of custody and providing contextual informa- tion to ingest and analyze. The correlation and analysis processes generate alerts and insights to ensure any needed revisions and optimization. For example, contextual data (e.g., truck tracking, bills of lading, retail pricing, etc.) provides insights beyond simply providing fuel integrity confirmation. It can also help determine how, when and where fuel supply chain fraud has occurred.

The insights and analytics provided by a robust information system like AXIS® can help prevent supply chain interruptions, program stoppage and lost revenue, while employing strict cybersecurity controls to ensure IT environment security. By generating answers and recommended actions through data analytics, AXIS® helps commercial brand owners and governments better understand and secure their fuel supply chains for the long-term.

Understanding Your Fuel Supply Chain

What has happened? Historical data is gathered — including store and terminal IDs, and date and time stamps — and correlated with similar data. Through data analysis, patterns and anomalous behavior become evident, potentially indicating manipulation or fraud. These descriptive insights are used to flag those incidents.
Why did it happen? Diagnostic insights from sales and supply chain data can help determine how a retail location received illegal or illicit fuel and point to specific transactions and individuals involved. Using that data, AXIS® can help users ascertain if all the non-compliant retail stations in a designated region received their fuel from the same terminal, implying that the exceptions noted could be quality control problems and not fraud. Data such as temperature and voltage records also help field inspectors monitor portable device performance, flagging potential servicing requirements that may be needed.
What will happen? Authentix is accelerating digital transformation for customers with a focus on advancing predictive analytics capabilities. For example, AXIS® can correlate and analyze program data and other external data sources to spot patterns and anomalous behaviors. This provides unique insight into new threats and accelerates detection and learning to provide a significant competitive advantage.
Can it be repeated? Prescriptive insights can help define possible actions needed to prevent fraud, enabling branded fuel companies and governments to create processes and improve supply chain management.

Leveraging Data Analytics to Drive Actionable Insights

Organizations often discover illicit fuel in certain markets, such as tax-evaded fuel sold as premium or transit fuel outside of an intended designated region. Comprehensive, end-to-end fuel authentication programs — from marker injection at the terminal down to field or lab testing results, and data analytics and resulting actionable insights — empower organizations to discover the origin of illicit fuels and prevent these events from happening in the future. By providing contextual information, Authentix fuel authentication programs help pinpoint trouble spots in the fuel supply chain that would not be discovered through normal security audit processes. With the technology to collect, upload and aggregate data using portable web-based devices, the workflow becomes truly automated, assuring greater fuel and data integrity through increased insights and accuracy.

“There is still a global underestimation of the vulnerability of paperwork, and many of the world’s largest companies are failing to recognize the risk of fraudulent or inaccurate documentation — not just their products.”

— Downstream Fuel Manipulation: The threats that could cost you, Oil & Gas IQ, 2018

Authentix: Accelerating Digital Transformation for Competitive Advantage

Authentix’s 25 years of industry experience and advanced technology provides customers with a distinct competitive advantage. Our secure marking technology, flexible implementation, proactive program support and actionable insights through the AXIS® platform, help customers thrive in a global economy. For more information, visit authentix.com.

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Authentix® Receives Export Achievement Award From the U.S. Department of Commerce International Trade Administration

Posted on May 31, 2019 |

Author: Kathryn Olivier

ADDISON, Texas, May 20, 2019 – Authentix, Inc., a U.S.-based technology solutions provider specializing in supply chain security and authentication programs, was presented the 2019 Export Achievement Certificate (EAC) on May 16, 2019, by the United States Department of Commerce for the company’s continued success and expansion in international markets.

The EAC award was originally created in 2001 by the International Trade Administration’s U.S. Commercial Service division. The award recognizes U.S. based enterprises that successfully entered a new foreign market. Today, the EAC may be given to both first time and experienced exporters that have completed a noteworthy export transaction or that successfully introduced a new product line in a foreign market.

Authentix has worked with U.S. Commercial Service for 13 years as it continues to grow and deliver advanced authentication solutions to commercial companies, national governments, and leading central banks across the globe. With over 25 years serving the international marketplace, Authentix is proud to deliver supply chain security on five of the seven continents.

“The U.S. Commercial Service has supported Authentix’s presence in global markets with local knowledge and experience that connects the right stakeholders and decision makers to our mission to safeguard the integrity of global commerce. With their help, we have been able to grow our footprint internationally and deliver advanced authentication solutions to help our customers thrive in a global economy,” states Kevin McKenna, CEO of Authentix.

The U.S. Commercial Service visited Authentix headquarters in Addison, Texas on May 16, 2019, where Ana Guevara, Deputy Assistant Secretary of U.S. Operations, delivered the award to Authentix. “Exporting businesses like Authentix are the engine of the U.S. economy. I am pleased to have presented an award for effective export activities to Authentix, and gratified that the U.S. Commercial Service had an opportunity to help facilitate their global success,” said Ms. Guevara.

About Authentix:

As the authority in authentication solutions, Authentix helps customers thrive in supply and distribution chain complexity. Authentix provides advanced authentication solutions for governments, central banks and commercial products, ensuring local economies grow, banknote security remains intact and commercial products have robust market opportunities. The Authentix partnership approach and proven sector expertise inspires proactive innovation, helping customers mitigate risks to promote revenue growth and gain competitive advantage.

Headquartered in Addison, Texas USA, Authentix, Inc. has offices in North America, Europe, Middle East, and Africa serving clients worldwide. For more information, visit https://www.authentix.com. Authentix® is a registered trademark of Authentix, Inc.

Media Contact:
Sonyett Bailey
Senior Director, Corporate Marketing
sonyett.bailey@authentix.com

Assuring Fuel Integrity from Pipeline to Pump

Posted on March 12, 2019 |

Author: Kathryn Olivier

By Kevin McKenna, Chief Executive Officer, Authentix

Leveraging Data to Drive Actionable Insights

In a recent survey conducted by Oil & Gas IQ, over 200 downstream industry leaders were asked about the importance of supply chain fuel integrity in delivering on their brand promise. Not surprisingly, 76 percent of respondents said it was very important and 19 percent responded it was somewhat important. Despite the importance of this matter, only 26 percent of the respondents said that they had access to the required data to assure supply chain fuel integrity.

This lack of supply chain data and subsequent corrective and preventative actions exposes brand owners to the ubiquitous risk of fuel manipulation. Fuel manipulation can occur through negligence, system failures, or deliberate illicit acts. Regardless of the cause, when it occurs it can have damaging and lasting effects on consumer confidence and the integrity of branded products – resulting in lost revenue and competitive advantage.

View the full Fuel Quality Industry Report

The Looming Risks of Fuel Manipulation

Many think fuel manipulation isn’t happening in their country or market, or that it is happening at a scale that can be considered part of the cost of doing business, perhaps in the range of five percent of the volume of product sold. Our experience at Authentix is that the volume is typically much higher – in many cases more than 30 percent of the volume of product sold. Petroleum products present a lucrative opportunity for those who wish to deliberately manipulate fuel supplies for their illicit gain. Perpetuating the crime is a simple exercise of price arbitrage – obtain a product at a low price and sell it at a higher price. Lower prices can be obtained from outright theft, subsidized products, smuggling, lower grade products, or adulteration of products with solvents, waste oils, or any low-cost liquid criminals can obtain. This is big business that often goes undetected as represented in a 2017 Ernst & Young report that estimated the illicit fuel market to be $133 billion a year.

Minimize Risks with a Comprehensive Fuel Integrity Program

When a comprehensive fuel integrity program is deployed with sampling, testing, analysis and enforcement, our customers have been able to effectively stop fuel manipulation and achieve returns on investment in many cases of over 10 times. A key tool Authentix uses to combat fuel manipulation and facilitate the tracking and authentication of fuel products is the application of unique chemical markers coupled with proprietary analyzers to detect and measure the markers in the fuel. This lock and key combination of markers and analyzers facilitates the rapid and definitive authentication of products throughout the supply chain – enabling you to detect manipulation from multiple sources. To date, we have marked and protected over two trillion liters of petroleum products across the globe to identify and ameliorate issues such as grade swapping, product adulteration, or quality issues (e.g., incorrect additive dosing, water contamination, etc.).

Over the last few years, we have transformed our solutions to merge the physical authentication results from fuel sampling and testing with ubiquitous data sources (e.g., volume flows, pricing information, truck tracking, etc.) to aggregate and analyze data via the Authentix Information System (AXIS®). AXIS enables our customers to proactively operate their supply and distribution chains for competitive advantage. This transformation has been enabled and accelerated by four ongoing industry trends:

Increase in data collection, enabled by better connectivity and the Internet of Things (IoT)
Cheap computing power and cloud infrastructures available
Improved analysis algorithms and inexpensive machine learning software available
Excellent open-source software options for data science programming and analysis

Today we are leveraging cloud architecture, simplifying data collection solutions while accelerating adoption of additional IoT sensors, and investing in proprietary data solutions to increase our ability to provide actionable insights to our customers. AXIS delivers insightful data analytics to isolate anomalies, reveal opportunities for fraud, and identify trends in unauthorized product placement, so you can act to maintain the integrity of the supply chain. By extracting the full value of customer, market, and supply chain data, and combining that with the integrity and responsiveness of our people, our customers gain a significant competitive advantage.

Enabling our customers to thrive in today’s complex supply chains requires more than a chemical marker and a device for measurement. It requires nuanced sector expertise and the means to collect, aggregate, and analyze supply chain data from multiple sources. It requires collaborative partnerships to leverage the growing ecosystem of IoT applications and data sources to deploy solutions quickly, and then learn, adapt, and drive toward predictive analytic solutions built on the AXIS platform. All of this contributes to our vision of creating a world of confident commerce – consumers can be confident they are getting what they pay for, and brand owners are confident they are competing on a level playing field to deliver on their brand promise.

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What Defines a Successful Fuel Authentication Solution

Posted on November 30, 2018 |

Author: Kathryn Olivier

By Kristi Browne, Senior Vice President, Services, Oil & Gas, Authentix

Certain operational functions and services are essential for an end-to-end fuel authentication solution that helps you mitigate risks to maximize revenue and gain a competitive advantage.

Protecting your brand is critical to thriving in today’s complex supply and distribution chain. When your branded fuel leaves the terminal, you expect it to be of the highest quality and purity. You also expect the same of the fuel that is provided to your customers at the pump. But in the downstream fuel supply chain, there are many variables that can negatively impact fuel integrity – putting both your revenue and brand’s reputation at risk. Without the right tools and technology to detect manipulation, you can never really be sure if what you’re delivering to your consumers are what they are expecting.

Unfortunately, fuel manipulation is not uncommon as the oil and gas industry operates with increasingly complex supply chains. And it’s easy to lose control of complex systems. When fuel enters your supply chain, it moves through fuel terminals to wholesalers and retailers that may include franchisees, oil marketing companies, sub-distributors, carriers, open dealers, and independent store owners. Fuel manipulation can occur at any stage of that journey.

Fuel marking is a very effective way to protect your brand from manipulation. A successful fuel authentication solution identifies both intended manipulation and inadvertent quality problems at distribution terminals with the use of advanced fuel markers and analyzers. But taking a proactive approach and determining the right authentication solution to fit your specific organization’s needs can seem daunting. Where do you begin? Developing an in-house solution is likely not feasible due to the lack of necessary tools and expertise. So how do you find the right partner to help you defend your supply chain from fuel manipulation? The key is choosing a partner that intimately understands your industry and your challenges and can provide comprehensive services and support – from strategy to implementation and beyond.

Get advice from a pro

Because the downstream supply chain is so complex, a fuel authentication solution is not going to come “off the shelf.” That means you’re going to want to partner with an organization that listens to and understands your specific needs and can draw from experience in solving all fuel manipulation problems, even the most complex. This knowledge will allow them to define your problem, then establish goals for the best solution to solve it.

Choose some design wizards

When designing your fuel authentication solution, the partner you choose should have a large “toolkit” so that they can pick and choose which tools and technologies should be included in your solution. When they have a breadth of advanced options in both overt and covert marking and analyzer systems, a range of technology (without being “married” to any specific one), and the flexibility to make changes as circumstances change, odds are they will develop and implement a solution that works for you. Of course, needs differ from company to company. You may have an urgent need for a legally-defensible, lab-authentication-based fuel marker. Or you may need instantaneous field authentication. You might even need both. A good fuel authentication partner will provide you all the options that lead to a successful outcome.

Follow great planning with great implementation

It’s not unheard of for fuel authentication programs to look good on paper but fall well short in the real world so it’s vitally important that your authentication partner has a great track record in implementation. This includes executing the solution as designed, deploying the right technology and tools, training your field personnel as needed, and managing the implementation process from beginning to end.

Choose a partner that stays with you for the long haul

A great authentication partner is never going to put your solution in place, brush their hands off, and walk away. They’re going to stay by your side to provide operational support, measure results, perform periodic auditing, and assign a dedicated resource to oversee the program. They should be unequivocally invested in your success.

Expect data that you can act on

Your authentication partner should provide a robust information system that uses sophisticated data analytics and intelligent reporting capabilities to enable you to make informed decisions and take the proper corrective action to best address the fuel manipulation problem over time. Advanced technology and a sound strategy are essential to shutting out fuel manipulation. With the right fuel authentication partner, you can confidently protect your brand and product from the terminal to the pump.

Kristi Browne is Senior Vice President, Services, Oil & Gas, at Authentix, the authority in authentication solutions. Authentix helps you thrive in supply and distribution chain complexity by providing advanced authentication solutions for governments, central banks and commercial products. These solutions ensure that local economies grow, banknote security remains intact, and commercial products have robust market opportunities. Our partnership approach and proven sector expertise inspires proactive innovation, helping you mitigate risks to promote revenue growth and gain competitive advantage.

Downstream Fuel Manipulation: Protecting Your Brand

Posted on November 16, 2018 |

Author: Kathryn Olivier

By Chad Crouch, Vice President, Authentix.

Fuel manipulation can have a major impact on your revenue and brand reputation (and you might not even know it’s occurring).

Fuel integrity is a key component of brand protection for oil and gas companies distributing fuel to its consumers. Unfortunately, fuel manipulation is a widespread problem that can severely undermine your brand. How big is the fuel manipulation problem? Ernst and Young estimates that stolen, adulterated and defrauded fuel contributes to $133 billion of losses each year.

Fuel manipulation can be notoriously difficult to detect in the supply chain, but when discovered, the magnitude of the problem can be enormous. In a U.S. court case, for example, a petroleum wholesaler was found guilty of diluting medium and premium grades of gasoline with regular unleaded fuel. The company also represented and sold non-branded, low-grade fuels as branded fuels. Executives at the wholesaler were found criminally guilty and the firm was fined 30 million USD.

Sometimes fuel manipulation is a criminal act, sometimes it’s accidental. Improper dosing or blending of additives into fuels at terminal and retail sites can be caused by equipment failure, human error, or negligence. When that happens, oil companies lose revenue and suffer brand erosion.

Do you feel confident that your branded fuel that leaves the terminal is the same quality as what reaches the retail site and is ultimately sold to consumers? Without the right tools and technology to detect manipulation, you can’t really be sure.

Brand degradation occurs when customers unknowingly purchase adulterated fuels that result in poor engine performance or mechanical problems with their vehicles or other equipment. This will often trigger complaints (directly or on social media) and can result in negative coverage in the news media. Any type of fuel manipulation, irrespective of whether it occurred knowingly or unknowingly, is an exposure that can result in consumer mistrust of your products and cause irreparable damage to your brand.

Environmental damage can be caused by fuels that have been under-additized, leading to greater vehicle emissions, and consequently, more air pollution due to the mixing of waste products or non-petroleum products with your branded fuel.

Damage fuel claims can be devastating for oil and gas companies. If the damage claim stems from a single station operator, damage to the brand can be quickly localized. However, if the source of the problem is broader in scope (i.e., a large retail chain, a route operator, or fuel distribution terminal), the effects of complaints and damage claims can quickly gain momentum, harming the brand’s reputation and running up significant operating costs.

You must defend your downstream supply chain.
The supply chain for an oil and gas company is becoming increasingly complex. The more complex, decentralized and variable the supply chain, the greater the risk of manipulation. When fuel enters your supply chain, it moves through fuel terminals to wholesalers and retailers that may include franchisees, oil marketing companies, sub-distributors, carriers, open dealers, and independent store owners. Fuel integrity can be compromised at any “link” in this complex supply and distribution chain.

The disparity in price between a differentiated or branded fuel and a lower-grade or non-branded fuel creates an enticing arbitrage opportunity that can result in fraud and illicit gain. For example, unethical operators can illegally dilute a high-price and high-value product with low-cost and lower-grade fuel and pocket the difference. Diluting premium fuels with regular fuels of the same brand can place an additional 10% of income in a perpetrator’s wallet, more if the diluent is an unbranded fuel. If the diluent is not fuel but is instead water or a waste product (i.e., used motor oil), the return could be as much as 100 percent.

You can be sure of fuel integrity with an advanced fuel authentication solution.
An effective fuel authentication solution illuminates the supply chain to identify the opportunistic, fraudulent or accidental manipulation of differentiated and branded fuels. This can be accomplished by incorporating covert chemical markers into refined petroleum products and utilizing analyzers to validate the authenticity.

Fuel marking is an extremely effective solution to enable your organization to defend against manipulation and achieve revenue targets for your branded and differentiated fuels. By understanding where you have been compromised in the supply chain, your organization can then take corrective action to prevent future manipulation and ensure your fuel’s authenticity in the long term.

Another benefit of a well-designed fuel authentication solution is its powerful deterrent effect. When fuel retailers know their stations are being randomly audited, and they know the range of penalties that other operators have incurred for diluting fuel, they tend to be much more resistant to temptation and the level of contract compliance increases dramatically. After all, no one wants to be the next case study for the effectiveness of the fuel authentication solution.

You can be your company’s brand protector.
If your company was a football/soccer team, you’d be the goalkeeper. Your team depends on you to protect what matters most. Every day you are protecting your downstream supply chain from unpredictable threats that range from terminal issues to intentional acts of fuel manipulation. If even one ball gets past you into the net, it can have devastating consequences—lost revenue, harm to the environment, and damage to your brand reputation.

Your customers trust you to deliver a quality product, and it is your job to deliver on that promise. With the right fuel authentication solution, you can confidently assure the integrity of your supply chain—from the terminal to the pump.

Chad Crouch is Vice President at Authentix, the authority in authentication solutions. Authentix helps you thrive in supply and distribution chain complexity by providing advanced authentication solutions for governments, central banks and commercial products. These solutions ensure that local economies grow, banknote security remains intact, and commercial products have robust market opportunities. Our partnership approach and proven sector expertise inspires proactive innovation, helping you mitigate risks to promote revenue growth and gain competitive advantage.

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Case Study: Coral Gas Combats Illicit LPG Dilution

Posted on November 8, 2018 |

Author: Kathryn Olivier

Authentix developed a fuel marking system that is the first of its kind to be adopted by an EU-member state.

Liquefied petroleum gas (LPG) is a Greek success story. In recent years, Greek consumers have increasingly switched to LPG, using it both as an automotive fuel and a heating fuel, due to its lower price compared to gasoline or oil. In fact, official Greek sales of LPG reached 215,000 metric tons last year, up from just 4,200 tons in 2009.

Coral Gas has played a major part in that success. Formerly known as Shell Gas S.A., Coral Gas S.A. operates as a subsidiary of Motor Oil Hellas Corinth Refineries SA. Through its four plants in Athens, Thessaloniki, Ioannina and Crete, Coral Gas has helped make LPG a big part of everyday life in Greece.

The Attack

With success came a significant problem. Coral Gas was experiencing product quality problems due to dilution. It appeared that LPG that did not originate from the fuel retailer’s depots was being diluted and sold through its network of retail stations. This illicit activity had a negative effect on the Coral Gas brand, as consumers were no longer able to depend on the integrity of the LPG fuel they were purchasing. Manipulated fuel like this can lead to premature engine wear and tear, leading to costly repairs. Of course, it also leads to erosion of consumer trust in the brand creating significant revenue loss.

Defense

To defeat the LPG dilution problem, Coral Gas has introduced a powerful new weapon—a molecular marker, that is added to its automotive LPG products. This advanced authentication solution was developed by Authentix, the sole global provider of quantitative LPG marking technology.

To deter illicit fuel manipulation and protect Coral Gas’ brand integrity, Authentix’s team of subject matter experts in technology, program design and fuel authentication program management, collaborated with Coral Gas to support their business goals. Authentix developed a proactive, innovative solution that utilizes chemical markers built to withstand adulteration and illicit ﬁltering methods. Authentix also provides in-house services and support (advisory, design, implementation and operations).

In the advisory phase, vulnerabilities in Coral Gas’s supply chain were identiﬁed. Using this information, the Authentix team provided a design template using its covert markers and analyzers to customize the program to Coral Gas’ needs.

The Pilot Program

Launched at one retail location in 2017, the pilot phase included the addition of a proprietary Authentix covert marker to Coral Gas’ automotive LPG. Using patented technology validated in both the field and laboratory, the Authentix team added quantitative fluorescent markers to legitimate fuel and measured for dilution. These markers are detected using special, intrinsically-safe readers.

The marker creates a unique ﬁngerprint to identify legitimate fuel at retail sites, and is only visible with a highly-sensitive ﬁeld detection device. Quantitative measurements of the marked LPG were taken using an Authentix LPX 1000 device reader. The device uses a monochromator principle to detect the presence of the optical marker in the fuel.

The Full Roll-Out

On October 8, 2018, Coral Gas began using LPG markers to protect their branded automotive LPG at approximately 350 retail sites, 100 of which are company owned/operated, and 250 that are dealer owned/operated.

As part of the program, Coral Gas is performing unannounced checks at service stations to ensure the quality and quantity of LPG. In addition, a state-of-the-art electronic system ensures the quality of the gas, accuracy of the mass meter controls, and that the program is being operated correctly by each Coral Gas distributor.

The program is designed to further advance the already-stringent quality controls that Coral Gas has in place. “The application of this molecular tracer system is part of the ongoing commitment to our customers to deliver quality fuels with excellent specifications,” said Coral Gas CEO Panagiotis Charitopoulos. “At Coral Gas, there are no compromises on quality issues and very high standards are maintained throughout our fuel management process.”

This is the first LPG marking system implemented in Europe. Working with Authentix, Coral Gas has implemented an effective solution to ensure that, every day, Coral Gas customers receive the precise, high-quality LPG that their brand promises.

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