Counterfeiting of Money, Bank Cards and Other
International criminal enterprises are increasingly using fictitious
securities and negotiable instruments to defraud the government,
individuals, corporations and financial institutions.
Advanced design, copying and publishing technology is enhancing
the capability to produce high-quality counterfeit currency and
financial instruments such as commercial checks, traveler's checks
and money orders.
A new generation of fraudulent alteration or counterfeiting emerged
when computerized colour laser copiers became capable of high-resolution
copying, the modification of documents and even the creation of
false documents without benefit of an original. They can easily
produce documents whose quality is indistinguishable from that
of authentic documents except by an expert.
Criminals have used these bogus instruments to obtain government
benefits, underwrite loans, serve as insurance collateral, and
defraud individual investors, pension funds and retirement accounts.
Because of vigorous anti-counterfeiting measures, the amount of
counterfeit currency has dropped precipitously, with passed and
seized counterfeit $100 bills falling from $126 million to $53
million between 1994 and 1997.
Also, the percentage of counterfeit U.S. currency passed in the
United States, that was produced using inkjet color copiers, has
jumped from 0.5% in 1995 to 43% in 1998. During the same period,
the value of Canadian counterfeit bank notes passed and seized
in Canada was $5.2 million. This was double that of the previous
year, and primarily due to a large counterfeit operation producing
$100's. A major investigation resulting in twelve arrests slowed
the activity of this particular series of counterfeit banknotes.
In fiscal 2001, about 39 percent of the $47.5 million in seized
counterfeit money that entered circulation in the United States
was made using computers or scanners, said Jim Mackin, a Secret
Service spokesman compared to less than 1 percent in 1995.
In 1996, approximately 65% of all counterfeit U.S. currency detected
domestically was produced outside its borders.
The Federal Reserve System estimates that approximately $450 billion
of U.S. currency circulates worldwide and that two-thirds of that
currency circulates outside the country. As the demand for genuine
U.S. currency grows overseas, so will the threat of counterfeiting
by foreign organized crime groups.
Credit Card Fraud
Financial fraud crimes have become more prevalent in recent years
as international criminals take advantage of the significantly
greater personal and corporate financial information now available,
and readily exploitable, through computer technology and access
devices such as credit cards, debit cards and smart cards.
As a result, financial losses to American businesses from insurance
and credit card fraud are increasing. Based on potential losses,
major credit card issuers suffered fraud losses in excess of $2
billion in 1996, about one-third of which occurred because of international
fraudulent activity. The Association of Certified Fraud Examiners
estimates financial losses in the United States from fraud schemes
by domestic and international criminals at more than $200 billion
In 1998, the Canadian Bankers Association reported losses due
to credit card frauds totaling over $142 million, with one half
of those losses due to counterfeiting.
Take out a bill and examine the following aspects of the money
you handle each and every day.
Canadian Currency Security Measures
Colour Change Patch (Optical Security Device)
Appears only on current series $20, $50, $100, $1000 notes.
No patch on $5 and $10 notes.
Look: Changes colour from gold to green when tilted.
Feel: Cannot be peeled off.
Green Dots (Planchettes)
Look: Small green dots that appear randomly on both sides
of the note and glow (fluoresce) under ultraviolet light.
Feel: Will peel off if scratched.
Raised Ink ( Intaglio)
Look: Clarity and sharpness of images and printing.
Feel: The ink used on the numerals, portrait, coat of arms,
broad bands and vignette of the Parliament Buildings feels thicker
to the touch.
Counterfeit bank notes are usually surface printed which has no
raised effect. Counterfeit bank notes, if produced by colour copiers,
will be composed of yellow, magenta, cyan, and black toner dots.
Toner will flake off the paper when scraped
Look: Sharpness around eyes; fine lines in hair and face.
Feel: Raised ink feels thicker to the touch.
In the background on the front of the note, the denomination numeral
and the words "Bank of Canada Banque du Canada" are printed
in extremely fine print requiring a magnifying glass to see.
Printed on back as a three letter with seven digit number. No
two bills should have the same number. When photocopied many crooks
overlook this fact and try to pass several identical bills at the
A genuine note should not glow under ultraviolet light except
where the tiny dots are located.
Colour is hard to match when forging, so use a known genuine next
to suspect note for comparison.
What to do?
Keep notes. Take down particulars of individual, car etc. Notify
police. Delay passer if possible to contact police. Write initials
and date on the bill and give only to the police or government
American Currency Security Measures
Portrait - The enlarged portraits are easier
to recognize while the added detail is harder to duplicate. The
portrait is now off-centre, providing room for a watermark and
reducing wear and tear on the portrait.
Fine Line Printing Patterns - The fine lines
printed behind the portrait and in the sky behind the building
are difficult to replicate. Check that both sides are clear, not
splotchy or composed of dots.
Watermark - A watermark identical to the portrait
is visible from both sides when held up to the light. Because the
watermark is in the paper, not printed on it, the watermark looks
the same from the reverse side.
Colour Shifting Ink - The number in the front
lower right corner looks green when viewed straight on but appears
black when viewed at an angle.
Low vision feature - Large numeral on back easier
for correct reading with poor vision. Machine readable by scanners
for the blind.
Micro-printing - Extremely small printing is
embedded in front bottom left numeral and at base of oval around
portrait on the $20. On the $50 it appears in the side borders
and in Grants collar. On the $100 it appears in the lower left
corner numeral and in Franklin's coat.
Security Thread - A polymer thread embedded vertically
within note at far left of portrait on $20's, far right on $50's
and far left again on $100's will glow green on the $20's, yellow
on the $50's and red on the $100's under ultraviolet light.
Serial Numbers - A combination of two letters
followed by eight numbers then one letter appearing twice on the
front of the note only.
For more info see: U.S. Secret Service, Federal Reserve Bank Moneyfactory
You Could Be On the Hook for Check
Fraud in the U.S! By Les C. Cseh
Did you know that the UCC (Uniform Commercial
Code) regulations place responsibility for forgery losses partially
on bank customers, rather than solely on the banks? But in addition
to this exposure, there can be significant expenses and lost
time investigating the crime, not to mention damage to your credibility
Your only defense is to show that you have
taken due diligence. One way to demonstrate this is by implementing
careful practices regarding your checks. Another is to use checks
with well implemented security features.
How Bad Is the Problem?
The problem is so serious that the banks
don't like to reveal the extent of the problem. Estimates range
from hundreds of millions to $10 billion dollars annually.
In 1991, the FBI tracked over 26,000 cases,
but this is just the tip of the iceberg, because the FBI mostly
focuses on cases where the amount exceeds $100,000. Just one
example comes from The Green Sheet (a publication to the Financial
Services Industry), reporting an incident where a family had
allegedly stolen more than $1 million from area merchants since
1993 by writing checks on closed and non-existent accounts at
11 financial institutions in Indiana and Chicago under 25 different
In just 4 years, Northern Trust Bank has
detected more than $3 million dollars worth of counterfeit checks.
What Kinds of Things Do Criminals
It is an endless list, but here are some
of the types of things that someone looking to counterfeit or
tamper might look for:
volume bank accounts where a fraudulent check can easily
that are easy to reproduce using a color copier.
that are easy to tamper with.
access to checkbook or check stock.
What Can You Do To Protect Yourself?
Reduce the chance of someone counterfeiting
or altering your checks, as well as reducing your liability when
Be aware that is is impossible to prevent
fraud. But you can significantly minimize the risk using a two-prong
approach. It is critical that good procedures related to your
check processing are put in place, and that you use a check that
is difficult to counterfeit or alter.
your bank statement promptly. Now that bank statements
are available online, you can do this as frequently as
you feel is necessary for your situation.
access to your checkbook/check stock. Ensure that only
trusted staff that need access have it.
your checks. However, this can be difficult because often
checks are removed from the bottom or middle of the book
a custom design. While this isn't an affordable option
for many businesses, look into it. The next best thing
is to ensure that your check supplier uses comprehensive
security features. Remember though that a custom design
is not a substitute for security features.
your bank branches' officials of the security features
in your checks .. in person or in writing (and keep a
copy of the letter on file!).
you issue a large number of checks, particularly with
a low amount (eg. rebate checks), open a separate account
and alert the bank staff of an upper limit for that account.
Don't take unnecessary chances. The more
security you have through procedures and choice of check form,
the less likely that someone will tamper with your checks.
Check Security Features
There are numerous security features available
today, with new ones coming available all the time. While it
would not be practical to include all the features on a single
check form, the more security features your check has, the better
you are protected against fraud and liability.
The best approach is to combine "overt" and "covert" features.
The overt approach makes it clear to anyone looking at the check
what features you have implemented, with the effect of deterring
criminals and providing bank staff and your staff with an easy
method of identifying tampering. Covert features are deliberately
hidden to surprise and fool most would-be tamperers.
Tamper Detection and Prevention
A common approach to fraud is to alter the
amount or other information on the check by erasing or using
various chemicals. Some inks used on backgrounds and some papers
react to these chemicals by disappearing, fading or staining
in a very obvious way.
Laser printer toner is notoriously easy
to remove. Some check papers are treated so that toner fuses
much better to the paper. This goes by names such as "toner
grip" or "toner fuse".
Beating The Color Copier
The most recent wave of fraud was brought
on by the color copier. They can do such a good job, that security
features beyond the copier's abilities have been developed. These
of the most recent and exciting features uses thermochromic
ink, such as TouchGuard TM used by ASAP. The ink changes
color when rubbed or breathed on, and reappears when
you stop. This requires no special equipment to check,
and the color change characteristic cannot be reproduced
using color copiers or inkjet printers.
is something that color copiers cannot reproduce. Secure
checks may include some printing using flourescent ink,
and/or have flourescent fibers woven into the paper.
While some banks have UV lights which can be used to
detect that the check does not glow, many banks do not,
nor do tellers typically check for this.
fibers are also used for the same purpose. A close examination
of a copied check will reveal that the fibers are only
on the type, watermarks can be viewed from one or both
sides of the form when held up to light at a 45 degree
angle, something that cannot be photocopied or scanned
and is very difficult to duplicate.
void pantograph is a special way of printing a message
in the background that is not obvious to the naked eye.
Because of the resolution used on many copiers, this
printed message becomes very obvious when copied.
is a technique where signature lines or borders are printed
using such tiny text that it looks like a line, but magnified
you can see the text. The text is so small, however,
that current copiers cannot reproduce the text.
Several types of warnings can be used to
discourage criminals and to raise alarms that something is wrong.
message such as "The face of this check is blue
and contains the security features listed on the back" is
padlock symbol indicates that your check contains the
minimum set of security features standardized by the
Financial Stationers Association.
||The "MP" symbol
is used to indicate that elements of the check have been
Les C. Cseh is the owner of ASAP
Checks, Forms & Supplies, a check printer operating out of
Alexandria Bay, NY and Perth Road, Ontario. He has been involved
in financial documents since 1985, and had participated in ANS
X9B standards work. He can be reached at firstname.lastname@example.org
and at 888-85-CHECK. In addition to a variety of secure checks,
the ASAP web site www.asapchecks.com offers a non-commercial section related to check processing issues called
the MICR Repository.