Counterfeit money is one of the many frauds businesses struggle to fight every day. This is despite the growing dominance of digital payments.
While regulatory authorities are doing everything to fight financial crime, it’s the collective responsibility of businesses and the general public to remain proactive.
Being proactive helps fight counterfeiting and ensures compliance with broader anti-money laundering (AML) regulations.
More than ever, businesses now must play their part in creating a safer financial system.
Counterfeit money is fake money produced with the intention of deceiving the recipient. It looks like genuine currency and is so precisely mimicked that it’s hard to tell it apart.
Unlike authentic money, counterfeit currency lacks the legal backing of a legitimate authority. It is inauthentic and possesses no value.
Now, before we discuss counterfeiting any further, here’s the clarity you need.
While discussing counterfeits, one may use the term forgery quite often. While both these terms involve some sort of deception and fraud, they aren’t the same. Especially in legal terms, they are quite different.
Counterfeiting is all about creating fake copies of currency, securities, and consumer products to pass off as real. Forgery, on the other hand, alters legal identities, documents, and signatures to deceive people.
Examples of counterfeiting: Producing fake banknotes, imitating designer goods, creating fake passports or IDs, imitating postage stamps, etc.
Examples of forgery: Altering legal documents, i.e., passport or will, fake certifications, forging signatures, etc.
Both counterfeiting and forgery pose a severe threat to the nation’s financial and legal security.
The concept of counterfeiting is as old as the concept of money. Regarded as the second-oldest profession in the world, counterfeiting continues to thrive even today.
The earliest instances of counterfeit coins can be traced back to the time of Lydian coins. Counterfeiters back then mixed metals to produce lookalikes of the legal coins. Soon after paper money was introduced in the 13th century, counterfeiters again attempted to create their dupes.
Mary Butterworth, an alleged counterfeiter, happens to be the first American to exploit U.S. legal tender. While that was just the beginning, counterfeiting became more advanced and sophisticated over time.
Today, counterfeiting is the highest form of forgery across all jurisdictions. It’s one of the most favored ways for counterfeiters to fuel their money-laundering operations.
The world’s most powerful currency, the US dollar, is the most counterfeited currency globally. While there is no precise data about the value of counterfeit notes in circulation, it’s expected to be anywhere from $70 million to $200 million.
That’s just the US. If we were to estimate the value of counterfeit bills globally, it would be more than a trillion dollars. This rough estimate shows the severe risks and implications that counterfeit bills pose to the world economy.
The very goal of counterfeiters is to produce money that resembles the texture, look, and security appeal of a genuine currency note. While the imitation of genuine currency is extremely difficult, the presence of supernotes is proof that counterfeits can fool even the most experienced handlers.
Counterfeiters use a variety of techniques to produce fake banknotes.
Earlier, the authorities captured cheap fakes of real money produced through photocopiers, scanners, and Xerox machines. The notes produced with these methods failed to capture the finishing details of genuine currency and were quite easy to detect.
However, counterfeiting money is a sophisticated process now. Counterfeiters today use advanced technological systems to imitate the holograms, watermarks, and intricate security details of a genuine bill.
They try replicating the banknotes through methods such as offset printing, intaglio printing, and typographic reproduction. Further, counterfeiters bleach the genuine $1 and $2 bills to produce forged notes of higher denominations. While this has helped them imitate the fabric of real currency, the color and ink discrepancies make these currencies easily distinguishable.
Now, technological advancements have made it possible to produce counterfeits that pass the feel and look test. However, it’s nearly impossible to imitate security features like microprinting, color-changing inks, holograms, and embedded strips. Even the perfectly seeming counterfeits can be detected when examined under a loupe.
The consequences of counterfeiting money are quite far-fetched. It impacts businesses, consumers, and the overall economy, undermining trust in the monetary system.
Now, businesses, especially cash-intensive businesses, usually have a first point of contact with the counterfeits. It’s through them that the money circulates and moves through different economies.
When a business unknowingly accepts counterfeits, it faces a severe financial loss. Even if it reports the fake notes, there’s basically no reimbursement from the government to soften the blow. In such cases, businesses have no choice but to take the financial hit for payment fraud.
Imagine this happening to a business dealing in luxurious or extremely pricey goods. Well, the financial ramifications are beyond one’s calculations.
However, financial losses aren’t the only losses businesses grapple with. When a business unknowingly circulates counterfeit to its customers or suppliers, it causes serious harm to its reputation. Customers may lose their trust and confidence in a company and its ability to handle financial transactions.
This would eventually harm the business’s performance and its ability to operate successfully.
Counterfeiting is a felony across all jurisdictions.
Individuals found guilty of possessing, manufacturing, or circulating counterfeits can be charged with a fine and imprisonment under federal and state laws.
Now, businesses, especially financial institutions and banks, are required to keep a check on money entering their businesses. As a part of the AML compliance checklist, they must diligently report to the authorities whenever they find a counterfeit. Failing to do so, they can face severe penalties and civil lawsuits.
If a business unknowingly accepts the counterfeit, there won’t be any legal charges. However, regulatory bodies would still investigate the employees, and costs in such legal scenarios would be extremely high.
Businesses are therefore required to remain vigilant with their counterfeit money checks.
The first step in identifying counterfeit money begins with understanding the security features of any currency.
The advances in currency design and detection technologies have made it increasingly difficult even for the most skilled counterfeiters to avoid detection.
Now, every currency has its own unique features. While we cannot overview all of those, let’s understand the security features of U.S. currency.
In the past few decades, the US dollar has undergone a significant redesign to combat counterfeiting. Today, the advanced security features of the dollar make it hard to replicate and mimic entirely.
Here are a few features that make U.S. currency the most difficult to mimic:
The numbers at the bottom of all genuine notes shift colors from copper to green or green to black when tilted back and forth. This applies to 2004-style Federal Reserve notes of $10, $20, $50, and $100 denominations.
A watermark is embedded in $10 or higher denomination bills produced after 1996. Even the $5 bills produced after 1999 have a watermark embedded on the right side of the portrait.
You can spot a watermark by holding the bill in the light. If a watermark is visible in the absence of light, it’s definitely a counterfeit. Additionally, a watermark should be visible from both sides of a bill.
| Note: If the watermark doesn’t match the face on the bill, it’s a counterfeit. |
A thin security thread runs from the top to the bottom of all US bills, except for the $1 and $2. These threads are embedded in the note and are inscribed with the denominations. Each denomination has a unique thread placement that’s only visible in light.
| Note: The security strips on legal sanction U.S. notes have a consistent fluorescence lifetime. These metallic strips glow when held under UV light. |
The original bills have random little red and blue threads embedded in the fabric of the notes. These are quite difficult to replicate, even with advanced technology.
Another prominent security feature of an authentic banknote is intaglio printing. Due to this, when you run your fingers over the note, you will feel a slightly raised printing. Raised prints can be felt especially around the main image and the number print.
The first letter of the serial number on Federal Reserve notes produced after 1996 must correspond as follows:
If that’s not the case, you are definitely dealing with a counterfeit.
This applies to all the $100 bills produced after 2004. The woven blue ribbon in these notes has bells that move up, down, and sideways when tilted back and forth.
These specific features, with intricate details, are difficult to mimic in counterfeit currency.
Even if you face difficulty spotting a counterfeit on its own, it’s quite easy to spot the inconsistencies when you compare fake notes with genuine currency.
Legislative bodies alone cannot tackle the situation of counterfeit currency. Individuals and businesses must equip themselves with essential tools and knowledge to fight the momentum of counterfeit currency.
Now, most counterfeits are quite easy to detect. They have blurry and smudged prints, irrelevant watermarks, and surface-level security ribbons. Their texture feels different, and they lack the color-tilting precision of genuine notes.
If one checks for these basic features, one can possibly spot a fake currency without any technical equipment. However, such manual checks are impossible for businesses and banks that handle a massive amount of cash every day.
Businesses need fraud detection solutions that can assist their employees in spotting counterfeits. Some of these tools include:
These tools make it easier for businesses to detect fake money coming into their operations. By training your employees to use these tools adequately, you significantly reduce your chances of accepting fake currency.
Well, counterfeit money is just a part of a larger forgery circle. Businesses in this digital world grapple with an equally intense problem of counterfeit identities and documents.
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The threat of counterfeit currencies can be overwhelming. However, a little vigilance and access to the right tools can go a long way in protecting your business from the dangers of counterfeit money.
In this digitized world, it’s possible to verify the identities of clients and customers before building any significant relationship with them. A detailed KYC (know your customer) check ensures that businesses avoid onboarding or transacting with someone engaging in illegal activities.
Advanced AML (anti-money laundering) solutions take this a step further by monitoring transactions in real-time and flagging any suspicious behavior. This proactive approach allows businesses to detect and stop counterfeit money from entering the system before it causes financial harm.
Now, the complexities of fraud detection can be time- and cost-intensive. However, not with Hyperverge.
Identify high-risk users and detect fraud patterns
with Hyperverge’s fraud prevention solutions. Schedule a DemoCounterfeit money is fake money produced without the legal sanction of the government. It’s an imitation of genuine banknotes meant to pass off as real.
Yes, counterfeit means fake. It’s an imitation of real money produced to deceive people.
Counterfeit money is also called fake money or forged currency.