The allure of counterfeiting is very obvious. History is the endless source of fascination regarding the creative ways people have found to break the law, as well as the creative ways the authorities have dealt with those lawbreakers throughout history. One of the things rarely ever talked about is how counterfeit money is made, how realistic it is and how it affects the economy. For our ISI and Intelligence agency viewers however, rest assured that we would never advocate any of the systems we’ll be describing.
We’ll be talking about US dollars today, and one thing every child in Pakistan who can barely even walk is that “Dollars are very expensive”. So if you could do counterfeit it without getting caught, you would be able to print your own money and buy whatever you want with it. Counterfeiting is a lucrative criminal path many take due to the recent advancements in technology that allows them to something for nothing.
Counterfeit money is a niche crime requires a great deal of skill in organization to do well, and probably not even worth trying for small-time operators. Counterfeiting has been the bane of all money-based economies, and the penalties in former times were surprisingly harsh. Men were usually hanged while the women were burned at the stake in the 17th century Britain for counterfeiting.
The reason was obvious why harsh punishments were given out, fake money threatened to slow down national economies by making people less likely to accept any money at all. Widespread counterfeiting also had the potential to cause rapid inflation, by increasing the total money supply, although it took until the early modern era for this second principle to really sink in.
The technique of replicating the fine lines of bank notes requires a similar attention to detail as the creation of fake works of art.
Even though uniformity in currency made counterfeit bills harder to pass than in the early days of the republic, but some crafty criminals took it up as a challenge. This challenge led to the creation of super notes, which started showing up at the end of the 1980s. However, unlike garden variety fakes, which experts could usually identify without difficulty, a super note was virtually identical to genuine currency.
Real U.S. money is printed on proprietary paper stock, a blend of linen and cotton, with tiny red and blue threads scattered in the mix, and the private Crane Currency company is the exclusive supplier, with the federal government its exclusive buyer. Genuine dollars also require intaglio printing, a multistage process that creates a distinct texture. Whoever was making the super notes had access to equipment that made identical copies and was never caught.
With a new level of technique threatening to make a serious dent in public confidence, or perhaps even the stability of the dollar, something had to be done. New notes were created with a new security feature that included a watermark, the now-familiar security strip, which glows pink under a back light, micro printing beyond the scope of most consumer digital processes ink that changes color when viewed at different angles, and a hologram.
Later, Williams a counterfeiter that sold fake currency to black market and underworld clients devised a more refined technique. In addition to the layers of artwork and coloration required to match the design, he wanted a paper that could stand up to the iodine pen test, which turns black when applied to most wood-based papers. Trial and error led him to develop a product with two layers of newsprint glued together, which also allowed the insertion of a fairly realistic security strip. Impressing his old buyers, he now had a market with fewer competitors, and could up his asking price.
Even though the bills would pass the iodine test, they weren’t foolproof. In early 2000s, another tier of counterfeiters emerged on the scene. In a trend analogous to music file sharing, enterprising teens and people in their early twenties started realizing the potential of high dpi inkjet printers. Many of these two-bit forgers never successfully passed a single bill, with law enforcement sometimes seeming more embarrassed for them than anything.
Some kids were pragmatic, printing low denomination bills for routine purchases. In many cases, they were using regular printer paper, which feels smooth instead of textured. And a magnifying glass could reveal the blurred details. Others were more ambitious, bleaching the color off of singles or fives, and reprinting them as $100 or $50 notes. By 2004, forty percent of the counterfeit currency in the U.S. originated in these small scale, DIY set-ups.
However, the real action was happening in South America. Colombia, for a time, dominated the professional counterfeiting market, developing a distribution network along the lines of the drug cartels that once held a grip on that country. But Peru proved to be the lasting home of the industry. Labor costs in Peru are especially low, and even though the U.S. Secret Service now has its own office in the country’s capital of Lima, enforcement remains a challenge. Dealing with fake currency is a fact of daily life in the capital, and cashiers keep a hole punch by the register, ready to destroy any bills their customers try to pass.
The manufacturing process uses high-end offset printing equipment, which involves the automated etching of metal plates based on finessed photos. Venezuelan currency, which has suffered severe inflation, now serves as a source of paper stock.
Ten or more craftspeople each perform a step in the assembly and refinement, such as sewing a security strip into the note or simulating the texture of an embossed stamp. The work is spread out over multiple locations, with the artisans kept in the dark about their colleagues’ whereabouts.
In Lima, multiple buyers package the bills in hiding places such as stuffed animals or suitcase linings, and travelers known as “burriers” fly with the goods to various distribution points around the world. It enters the U.S. via Mexico, where the burriers hand them off to coyotes, or traffickers, who in turn smuggle the bills into the States.
Hardening the Mexican border might put a squeeze on that supply network. But don’t bank on it: counterfeiting is proving more lucrative than cocaine, and most of the fake dollars are destined for the international market rather than the United States.
Meanwhile, Euros remain a potential growth market, despite the EU’s recent instability. Counterfeit American currency remains very rare: 99.99% of all U.S. currency in circulation is genuine. There’s a natural bottleneck: at some point, the bills have to hit the street, and that requires personal transactions. Whether the product of a dorm room operation or an international cartel, the notes have to pass into the marketplace. If they make it past one transaction, they’re very likely to get stopped and confiscated when the retailer attempts to make a bank deposit.
Banks send money through scanners to read the magnetic signature of their ink. Even the best Peruvian reproductions fail that test and there’s no compensation by the bank, or the authorities, since for all they know, you’re trying to run a scam yourself. It’s a frustrating moment for you if you’re the customer who’s out a hundred bucks, but the bill is out of circulation.
The economy as a whole doesn’t suffer too much, although there is some loss of confidence. After a centuries-long arms race between states and scoundrels, the ultimate demise of fake money could come with the decline of real money.
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