Is That Real? Identification and Assessment of the Counterfeiting Threat for U.S. Banknotes (2006) / Chapter Skim
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3 A Systems Approach to the Counterfeiting Threat
3 A Systems Approach to the Counterfeiting Threat
Pages 30-46
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Proc. SPIE, Optical Security and Counterfeit Deterrence Techniques V, R.L.
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banknotes more carefully than do U.S. cash handlers, the annual dollar value of passed counterfeit notes reported abroad is constant and small.
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The total dollar value of domestically passed notes is around $40 million to $50 million annually and is approximately constant over time.8 Because Federal Reserve machine readers capture all counterfeits that pass through Federal Reserve banks at the end of the currency's life, this number is a good lower bound of the counterfeiting activity in the United States. However, the estimate does not include counterfeit notes that are withdrawn from circulation by a recipient who neither reports it nor passes it on to others.
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Criminal Class Methods Technologies Banknotes Primitive Uses manual artistry and crafting Skilled artistry, Fine lines and microprinting, supplies bleaching security strip Hobbyist Uses electronic devices and Ink-jet printers, Paper quality and watermark, crafting supplies commonly found color copiers, scanners, special inks and printed in homes, offices, and universities all-in-one devices images, fine lines and microprinting, security strip Petty Deliberately seeks commercially Specialty inks and Fine lines and microprinting, criminal available materials to augment materials, special inks and printed available digital processes bleaches images Professional Has the means to manufacture Lithographic printing, Machine-readable features criminal special materials or to appropriate materials for sophisticated controlled materials simulation of features State- Has full resources to duplicate all Duplicate of technology Machine-readable features sponsored technology used by the government The economic impact of a loss of confidence in U.S. currency could be high.
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Petty criminal All ages, criminal Home office equipment plus Domestic intent, typically works specialty materials and alone processes Professional Criminal, trained in Offset printing, high-end ink- Domestic or Low, stable level of criminal printing technology, jet printers, specialty foreign activity often part of a criminal materials and processes group State-sponsored Professional, profiteer All materials and processes, Foreign Strategic concern or terrorist, member of including specialty paper, a large organization intaglio and offset printing, security features TABLE 3-4 Methods and Extent of Dissemination of Counterfeit Banknotes, by Class of Counterfeiter Class Production Level Stockpiling How Notes Are Passed Primitive Very small None Individually, by counterfeiter Hobbyist Small, as needed None Individually, by counterfeiter or friends Petty criminal Small to moderate, None to moderate Individually, by counterfeiter or criminal often over years associates Professional Large Large Through criminal networks criminal State-sponsored Large Unknown, Through various legitimate and illegitimate presumably networks, often by unwitting accomplices large TABLE 3-5 Digital Technology Access, by Class of Counterfeiter All-in- Flatbed High Ink-Jet One Color Ink-Jet Digital Quality Imaging Class Printer Device Copier Printer Press Scanner Software Primitive Not applicable -- does not use digital technology Hobbyist ++++ ++++ ++ -- -- -- +++ Petty criminal ++++ ++++ ++++ + + ++++ ++++ Professional criminal ++++ ++++ ++++ +++ ++++ ++++ ++++ State-sponsored Not applicable -- reproduces government processes directly NOTE: Within all counterfeiter classes, additional nondigital techniques may be used to improve note simulations (e.g., craft supplies to reproduce features that use color-shifting ink)
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If the substrate is an existing FRN, it retains the correct feel and may have advanced security features such as a watermark and a security strip, albeit for the wrong denomination. Such a note may be passed in a number of ways, however.
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They rarely are passed more than once and generally are not discovered by a Federal Reserve Bank; rather, 80 percent of these counterfeits are turned over to the U.S. Secret Service by commercial establishments, financial institutions, and law enforcement.19 The hobbyist's tools are those typically found in a college dormitory room or home office and include color copiers, scanners, and ink-jet printers.
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In this way, law enforcement and commercial banking organizations around the world can assist in counterfeit identification. Much professional counterfeiting activity is located outside the United States, although a substantial fraction of the counterfeit notes may be passed domestically.
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Even without knowing the actual flows, it would be possible to make some allocation decisions if one could estimate, at each stage of the system, the likelihood of detecting a counterfeit bill as a function of the resources expended for detection at that stage. This structure calls for the consideration of ways to deter or prevent production, to empty counterfeit stockpiles, to disrupt the passing of counterfeits, and to remove counterfeits from circulation.
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counters this threat by integrating security features into U.S. currency to increase the level of effort necessary to achieve a quality simulation.
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Secret Service and also with external groups organized to test the quality of new features;26 · Working with equipment manufacturers and their organizations to develop use limitations on devices that are likely to be used for counterfeiting;27 · The support of academic modeling efforts and red teaming;28 · The development of secure material supply agreements; · Working with the U.S. Secret Service on early detection leading to seized counterfeits; · The development and implementation of educational programs to promote awareness of banknote features; and · The providing of test notes to assist companies in designing reliable machine authentication technologies.
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Of course, large counterfeiting organizations, particularly state-sponsored counterfeiters for whom profit may be secondary, are minimally deterred by banknote features. Other deterrence methods, including law enforcement and political pressure, are required in these cases.
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While the impact of feature recognition has not been quantified in the United States, similar educational efforts in Canada have dramatically decreased the acceptance of counterfeit notes by cash handlers.31 Thus, educating cash handlers to recognize security features is undeniably an important factor in counterfeit deterrence.
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Department of the Treasury began a worldwide public education campaign with the objectives of, first, communicating to the general public that there will be no recall or devaluation of older FRNs, and, second, providing information that will enable the public, law enforcement personnel, central banks, depository financial institutions, and other cash handlers to authenticate the new series notes. The BEP's outreach program has included cash handlers, merchants, business and industry associations, and the media.
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Any counterfeit notes that might escape the branch banks' systems are captured at the Federal Reserve Bank, which use a proprietary machine reader that senses a wide range of overt and machine-readable features. CONCLUSIONS Looking at the counterfeiting threat as a system may reveal approaches or combinations of approaches which may be more effective than that of focusing only on one step in the process.
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Counterfeit deterrence focuses on disrupting or preventing each of these components. Thus, a comprehensive response to counterfeiting must include ways to do the following: · Prevent or deter production, through the use of technology blockers and note features that are difficult to simulate; · Empty counterfeit stockpiles, through law enforcement programs; · Disrupt passing of counterfeit currency, by means of public education and machine authentication of currency; and · Remove counterfeits from continued circulation, through the identification of counterfeit currency by individuals and by special methods within the banking system.
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