Counterfeiting of Counterfeiting of American American CurrencyCurrency

Definition:Definition: A counterfeit is an imitation that is made A counterfeit is an imitation that is made

with the intent to deceptively represent its with the intent to deceptively represent its content or origins. The word counterfeit content or origins. The word counterfeit most frequently describes forged money most frequently describes forged money or documents, but can also describe or documents, but can also describe clothing, software, pharmaceuticals, or clothing, software, pharmaceuticals, or any other manufactured itemany other manufactured item

Definition:Definition: Legal TenderLegal Tender

Section 102 of the Coinage Act of 1965 (Title Section 102 of the Coinage Act of 1965 (Title 31 United States Code, Section 392) provides 31 United States Code, Section 392) provides in part: in part:

" All coins and currencies of the United States, " All coins and currencies of the United States, regardless of when coined or issued, shall be regardless of when coined or issued, shall be legal tender for all debts, public and private, legal tender for all debts, public and private, public charges, taxes, duties and dues."public charges, taxes, duties and dues."

HistoryHistory Counterfeiting is one of the oldest crimes in historyCounterfeiting is one of the oldest crimes in history Native Americans used wampum, beaded string, as their currency Native Americans used wampum, beaded string, as their currency

to use as a form of exchangeto use as a form of exchange The Europeans counterfeited wampum using their iron tools, this The Europeans counterfeited wampum using their iron tools, this

led to inflation and the devaluing of this type of currencyled to inflation and the devaluing of this type of currency During the American Revolution, the British counterfeited US During the American Revolution, the British counterfeited US

currency in such large amounts that it became worthlesscurrency in such large amounts that it became worthless During the Civil War, one-third to one-half of currency was During the Civil War, one-third to one-half of currency was

counterfeitcounterfeit It was a serious problem when each bank was issuing its own It was a serious problem when each bank was issuing its own

currencycurrency There were over 1500 banks printing their own notesThere were over 1500 banks printing their own notes It was very difficult to determine which bills were counterfeit It was very difficult to determine which bills were counterfeit

because there were 7000 varieties of genuine notes and 4000 because there were 7000 varieties of genuine notes and 4000 counterfeit varietiescounterfeit varieties

HistoryHistory A national currency was adopted in 1863 to help solve the A national currency was adopted in 1863 to help solve the

counterfeiting problemcounterfeiting problem This was soon counterfeited in such large amounts that the This was soon counterfeited in such large amounts that the

government established the Secret Service to detect and track government established the Secret Service to detect and track these notesthese notes

One of the first anti-counterfeiting measures applied to money One of the first anti-counterfeiting measures applied to money was making coins uniformly round and with milled edgeswas making coins uniformly round and with milled edges

In 1929, portraits were standardized and red and blue fibers were In 1929, portraits were standardized and red and blue fibers were embedded in currencyembedded in currency

The green color was chosen because it was found to be high in its The green color was chosen because it was found to be high in its resistance to chemical and physical changes and was resistance to chemical and physical changes and was psychologically identified with the strong and stable credit of the psychologically identified with the strong and stable credit of the governmentgovernment

Goodwin- Goodwin- author of author of

GreenbackGreenback ““Paper money was the social contract in Paper money was the social contract in motion, a signal of value that presumed motion, a signal of value that presumed upon the trust of a community. Paper upon the trust of a community. Paper money cost nothing to produce; it was money cost nothing to produce; it was just a promise, like America.”just a promise, like America.”

“ “Average” Average” counterfeitercounterfeiter

Almost always maleAlmost always male Younger (20s, early 30s)Younger (20s, early 30s) Comfortable with technologyComfortable with technology Above-average intelligenceAbove-average intelligence Often have a degree in law or businessOften have a degree in law or business The main ethnic groups involved in counterfeiting The main ethnic groups involved in counterfeiting

include Nigerian, Asian, Russian, Armenian, and include Nigerian, Asian, Russian, Armenian, and Mexican groupsMexican groups

Make relatively small amounts of counterfeit money, Make relatively small amounts of counterfeit money, good enough to be passed at retail outletsgood enough to be passed at retail outlets

Jail timeJail time Manufacturing counterfeit currency or altering genuine Manufacturing counterfeit currency or altering genuine

currency to increase its value is punishable by a fine of currency to increase its value is punishable by a fine of up to $5,000, or 15 years imprisonment, or both (Title up to $5,000, or 15 years imprisonment, or both (Title 18, Section 471)18, Section 471)

Possession of counterfeit US currency with fraudulent Possession of counterfeit US currency with fraudulent intent is punishable by a fine of up to $15,000, or 15 intent is punishable by a fine of up to $15,000, or 15 years imprisonment, or both (Title 18, Section 472)years imprisonment, or both (Title 18, Section 472)

Anyone who manufactures a counterfeit US coin in any Anyone who manufactures a counterfeit US coin in any denomination above 5 cents is subject to the same denomination above 5 cents is subject to the same penalties as all other counterfeiterspenalties as all other counterfeiters

Anyone who alters a genuine coin to increase its value Anyone who alters a genuine coin to increase its value is punishable by a fine of up to $2,000, or 5 years is punishable by a fine of up to $2,000, or 5 years imprisonment, or both (Title 18, Section 331)imprisonment, or both (Title 18, Section 331)

Jail TimeJail Time Forging, altering, or trafficking in US Forging, altering, or trafficking in US

Government checks or bonds is punishable by Government checks or bonds is punishable by up to $10,000 fine, or 10 years imprisonment, up to $10,000 fine, or 10 years imprisonment, or both (Title 18, Section 510)or both (Title 18, Section 510)

Printed reproductions, including photographs of Printed reproductions, including photographs of paper currency, checks, bonds and postage paper currency, checks, bonds and postage stamps are punishable by a fine of up to stamps are punishable by a fine of up to $5,000, 15 years imprisonment, or both (Title $5,000, 15 years imprisonment, or both (Title 18, Section 474)18, Section 474)

Counterfeit Counterfeit LawsLaws

Rules for the printing or publication of color illustrations of US currency Rules for the printing or publication of color illustrations of US currency (Chapter 25, Title 18) Counterfeit Detection Act of 1992:(Chapter 25, Title 18) Counterfeit Detection Act of 1992: The illustration must be of a size less than three-fourths or more than The illustration must be of a size less than three-fourths or more than

one-halfone-half The illustration must be one-sidedThe illustration must be one-sided All negatives, plates, graphic files, and any other thing used in the All negatives, plates, graphic files, and any other thing used in the

making of an illustration must be destroyed after final usemaking of an illustration must be destroyed after final use

Damaged Damaged MoneyMoney Worn notes are destroyed during processing and Worn notes are destroyed during processing and

replaced with new billsreplaced with new bills The life expectancy of a $1 bill is 18 months and larger The life expectancy of a $1 bill is 18 months and larger

bills last longerbills last longer The Treasury Department will replace a bill if more The Treasury Department will replace a bill if more

than half of the original remainsthan half of the original remains Damaged or mutilated notes should be taken to a bank Damaged or mutilated notes should be taken to a bank

for redemptionfor redemption

Coin Coin counterfeitingcounterfeiting

Most coin counterfeiting is done to Most coin counterfeiting is done to simulate rare coinssimulate rare coins

This often involves adding, removing, or This often involves adding, removing, or altering a feature of a genuine coin altering a feature of a genuine coin

The most effective way to detect a The most effective way to detect a counterfeit coin is by weightcounterfeit coin is by weight

Effect on Effect on SocietySociety

Undermines the confidence the public puts in “real” Undermines the confidence the public puts in “real” moneymoney

Causes more money to be circulated in the economy Causes more money to be circulated in the economy leading to a general rise in prices, inflationleading to a general rise in prices, inflation

The value of money is determined by its acceptability, The value of money is determined by its acceptability, acceptance as legal tender, and relative scarcity; acceptance as legal tender, and relative scarcity; counterfeiting undermines these valuescounterfeiting undermines these values

Companies are forced to increase prices due to Companies are forced to increase prices due to counterfeits because they are not reimbursedcounterfeits because they are not reimbursed

What one man What one man can do, can do, another another can copycan copy Counterfeit bills have increased with new Counterfeit bills have increased with new

technologytechnology Instruments of production are more readily Instruments of production are more readily

availableavailable Capabilities of the machines continue to Capabilities of the machines continue to

improveimprove Techniques are more readily understood by an Techniques are more readily understood by an

increasingly larger segment of the populationincreasingly larger segment of the population

Evaluation of Evaluation of Currency Currency

Appearance Appearance LookLook and and feelfeel of of

the paperthe paper RedRed and and blueblue

fibers fibers ColorColor shiftingshifting inkink WatermarkWatermark

Detection Detection defensesdefenses

People are first, if people took the time to People are first, if people took the time to really look at their money 90% of really look at their money 90% of counterfeiting could be detectedcounterfeiting could be detected

Next is the bank, bank tellers have Next is the bank, bank tellers have programs to determine counterfeitsprograms to determine counterfeits

Next, bills go through machines at the Next, bills go through machines at the Federal Reserve where machinery and Federal Reserve where machinery and human eyes detect counterfeitshuman eyes detect counterfeits

What to do if you What to do if you think you have a think you have a counterfeitcounterfeit Write your initials and date on back of the bill Write your initials and date on back of the bill

and on the white border areasand on the white border areas On a separate sheet of paper record how you On a separate sheet of paper record how you

received the bill, who gave it to you, where you received the bill, who gave it to you, where you got it, and when you got itgot it, and when you got it

Handle it as little as possible to preserve any Handle it as little as possible to preserve any fingerprintsfingerprints

Contact nearest secret service office or local Contact nearest secret service office or local policepolice

You are not reimbursed for turning in You are not reimbursed for turning in counterfeit billscounterfeit bills

Foreign Foreign counterfeitingcounterfeiting

Approximately 2/3 of American currency in circulation Approximately 2/3 of American currency in circulation exists outside of the U.S.exists outside of the U.S.

64% of all counterfeit currency is produced abroad64% of all counterfeit currency is produced abroad Some of the best counterfeits come from ColombiaSome of the best counterfeits come from Colombia The Secret Service estimates that up to one-third of all The Secret Service estimates that up to one-third of all

counterfeit money in circulation domestically is counterfeit money in circulation domestically is Columbian in originColumbian in origin

The $100 dollar bill is the most commonly counterfeited The $100 dollar bill is the most commonly counterfeited bill outside the US (domestically it is the $20 bill)bill outside the US (domestically it is the $20 bill)

Random Random FactsFacts

Counterfeit circulating in the U.S. is only 3/100 Counterfeit circulating in the U.S. is only 3/100 of 1% of the total currencyof 1% of the total currency

In 1999, counterfeiters produced an estimated In 1999, counterfeiters produced an estimated $180 million dollars in fake money$180 million dollars in fake money

About 90% of all known counterfeit currency is About 90% of all known counterfeit currency is seized before it reaches the publicseized before it reaches the public

In 1995 less than 1% of counterfeit notes In 1995 less than 1% of counterfeit notes detected in the U.S. were digitally produced. detected in the U.S. were digitally produced. By 2002 that number had grown to nearly 40%By 2002 that number had grown to nearly 40%

Counterfeits account for about 1 to 2 notes in Counterfeits account for about 1 to 2 notes in every 10,000 genuine notesevery 10,000 genuine notes

More random More random facts…..facts…..

Bureau of Engraving and Printing Bureau of Engraving and Printing produces 7 to 9 billion banknotes per produces 7 to 9 billion banknotes per year worth over $80 billion for the year worth over $80 billion for the Federal Reserve systemFederal Reserve system

At the Federal Reserve of Boston At the Federal Reserve of Boston approximately 20-40 counterfeit notes approximately 20-40 counterfeit notes are detected each dayare detected each day

Treasury Treasury Secretary Secretary

Jacob J. Lew Jacob J. Lew

The EndThe End