Counterfeiting of American
Currency
Definition:
 A counterfeit is an imitation that is made
with the intent to deceptively represent its
content or origins. The word counterfeit
most frequently describes forged money
or documents, but can also describe
clothing, software, pharmaceuticals, or
any other manufactured item
Definition:
 Legal Tender
Section 102 of the Coinage Act of 1965 (Title
31 United States Code, Section 392) provides
in part:
" All coins and currencies of the United States,
regardless of when coined or issued, shall be
legal tender for all debts, public and private,
public charges, taxes, duties and dues."
History
 Counterfeiting is one of the oldest crimes in history
 Native Americans used wampum, beaded string, as their currency
to use as a form of exchange
 The Europeans counterfeited wampum using their iron tools, this
led to inflation and the devaluing of this type of currency
 During the American Revolution, the British counterfeited US
currency in such large amounts that it became worthless
 During the Civil War, one-third to one-half of currency was
counterfeit
 It was a serious problem when each bank was issuing its own
currency
 There were over 1500 banks printing their own notes
 It was very difficult to determine which bills were counterfeit
because there were 7000 varieties of genuine notes and 4000
counterfeit varieties
History
 A national currency was adopted in 1863 to help solve the
counterfeiting problem
 This was soon counterfeited in such large amounts that the
government established the Secret Service to detect and track
these notes
 One of the first anti-counterfeiting measures applied to money was
making coins uniformly round and with milled edges
 In 1929, portraits were standardized and red and blue fibers were
embedded in currency
 The green color was chosen because it was found to be high in its
resistance to chemical and physical changes and was
psychologically identified with the strong and stable credit of the
government
Goodwinauthor of Greenback
 “Paper money was the social contract in
motion, a signal of value that presumed
upon the trust of a community. Paper
money cost nothing to produce; it was
just a promise, like America.”
“Average” counterfeiter
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Almost always male
Younger (20s, early 30s)
Comfortable with technology
Above-average intelligence
Often have a degree in law or business
The main ethnic groups involved in counterfeiting
include Nigerian, Asian, Russian, Armenian, and
Mexican groups
 Make relatively small amounts of counterfeit money,
good enough to be passed at retail outlets
Jail time
 Manufacturing counterfeit currency or altering genuine
currency to increase its value is punishable by a fine of
up to $5,000, or 15 years imprisonment, or both (Title
18, Section 471)
 Possession of counterfeit US currency with fraudulent
intent is punishable by a fine of up to $15,000, or 15
years imprisonment, or both (Title 18, Section 472)
 Anyone who manufactures a counterfeit US coin in any
denomination above 5 cents is subject to the same
penalties as all other counterfeiters
 Anyone who alters a genuine coin to increase its value
is punishable by a fine of up to $2,000, or 5 years
imprisonment, or both (Title 18, Section 331)
Jail Time
 Forging, altering, or trafficking in US
Government checks or bonds is punishable by
up to $10,000 fine, or 10 years imprisonment,
or both (Title 18, Section 510)
 Printed reproductions, including photographs of
paper currency, checks, bonds and postage
stamps are punishable by a fine of up to
$5,000, 15 years imprisonment, or both (Title
18, Section 474)
Counterfeit Laws
 Rules for the printing or publication of color illustrations of
US currency (Chapter 25, Title 18) Counterfeit Detection Act
of 1992:
 The illustration must be of a size less than three-fourths
or more than one-half
 The illustration must be one-sided
 All negatives, plates, graphic files, and any other thing
used in the making of an illustration must be destroyed
after final use
Damaged Money
 Worn notes are destroyed during processing and
replaced with new bills
 The life expectancy of a $1 bill is 18 months and larger
bills last longer
 The Treasury Department will replace a bill if more
than half of the original remains
 Damaged or mutilated notes should be taken to a bank
for redemption
Coin counterfeiting
 Most coin counterfeiting is done to
simulate rare coins
 This often involves adding, removing, or
altering a feature of a genuine coin
 The most effective way to detect a
counterfeit coin is by weight
Effect on Society
 Undermines the confidence the public puts in “real”
money
 Causes more money to be circulated in the economy
leading to a general rise in prices, inflation
 The value of money is determined by its acceptability,
acceptance as legal tender, and relative scarcity;
counterfeiting undermines these values
 Companies are forced to increase prices due to
counterfeits because they are not reimbursed
What one man can do,
another can copy
 Counterfeit bills have increased with new
technology
 Instruments of production are more readily
available
 Capabilities of the machines continue to
improve
 Techniques are more readily understood by an
increasingly larger segment of the population
Evaluation of
Currency
 Appearance
 Look and feel of
the paper
 Red and blue
fibers
 Color shifting ink
 Watermark
Detection defenses
 People are first, if people took the time to
really look at their money 90% of
counterfeiting could be detected
 Next is the bank, bank tellers have
programs to determine counterfeits
 Next, bills go through machines at the
Federal Reserve where machinery and
human eyes detect counterfeits
What to do if you think
you have a counterfeit
 Write your initials and date on back of the bill
and on the white border areas
 On a separate sheet of paper record how you
received the bill, who gave it to you, where you
got it, and when you got it
 Handle it as little as possible to preserve any
fingerprints
 Contact nearest secret service office or local
police
 You are not reimbursed for turning in
counterfeit bills
Foreign counterfeiting
 Approximately 2/3 of American currency in circulation
exists outside of the U.S.
 64% of all counterfeit currency is produced abroad
 Some of the best counterfeits come from Colombia
 The Secret Service estimates that up to one-third of all
counterfeit money in circulation domestically is
Columbian in origin
 The $100 dollar bill is the most commonly counterfeited
bill outside the US (domestically it is the $20 bill)
Random Facts
 Counterfeit circulating in the U.S. is only 3/100
of 1% of the total currency
 In 1999, counterfeiters produced an estimated
$180 million dollars in fake money
 About 90% of all known counterfeit currency is
seized before it reaches the public
 In 1995 less than 1% of counterfeit notes
detected in the U.S. were digitally produced.
By 2002 that number had grown to nearly 40%
 Counterfeits account for about 1 to 2 notes in
every 10,000 genuine notes
More random facts…..
 Bureau of Engraving and Printing
produces 7 to 9 billion banknotes per
year worth over $80 billion for the
Federal Reserve system
 At the Federal Reserve of Boston
approximately 20-40 counterfeit notes
are detected each day
Treasury Secretary
Jacob J. Lew
The End