Authentication of Money: Detecting Counterfeit Currency Techniques

This report provides an overview of money authentication, focusing on methods to detect counterfeit currency. It differentiates between authentic and counterfeit money, highlighting the economic impact of counterfeiting. The report outlines analytical and forensic techniques for detection, including visual inspection, watermark verification, security thread analysis, color-changing ink checks, micro printing examination, and the use of counterfeit detection pens and machines. It also discusses advanced methods like infrared bill detectors, Raman spectroscopy, and gas chromatography. Furthermore, the unique role of INTERPOL in combating counterfeit currency through international cooperation, technical databases, training, and online tools is emphasized. Desklib provides this and other solved assignments to aid students in their studies.

AUTHENTICATION OF MONEY
AND
TESTING FAKE MONEY

INTRODUCTION
Money is the most essential commodity and the basic need for survival. Without money, it is
impossible to lead life in modern times. Despite a recent growth in the use of electronic
financial transactions, real currency remains very important. It has withstand the time test.
Real money due to its wide use and susceptible nature is the most favorite target of
defrauders, cheaters and scammers. Recently, the problem of counterfeit has increased on a
large scale and has an extremely serious threat to the economy, financial institutions as well
as consumers. Earlier, only printing houses had the facility to print counterfeit paper notes,
but today everybody has the ability to print counterfeit bank notes at their home simply by
using their own computer and a laser printer. With the advancement of printing and scanning
technology and digital image processing, it is becoming easier to produce fake banknotes on
a large scale and the amount of production is increasing every year.
WHAT IS AUTHENTIC MONEY?
Primarily money is a means of exchange, therefore, it is a way in which a consumer trades
what he already has for what he wants or desires to get. Ideal money or authentic money has
three main features: acting as a medium of exchange; being an economic good; and being the
basis of the economic calculation. (2019)
Medium of Exchange
Going back in the history, one used barter system to get something one needed while giving
away something that one had in abundance. In this system, not everything one possessed was
o the equal value. Thus, a more appropriate tool of exchange was required and, money was
invented. This is how money is a medium of Exchange
Economic Good
With the passing of time, the commodities that were most marketable and durable was used
as medium of exchange since different commodities serving as medium of exchange was
perishable thus Gold and Silver were ideal economic good. Later, money took up the place
Economic Calculation
Amount of money is present in an economy is the calculation for the economy’s growth.
Therefore, money is a calculating factor for the economy.

WHAT IS COUNTERFEIT MONEY?
Counterfeit money is an imitation of a real currency produced with the intention to deceive
people. Producing or using such counterfeit money or fake money is a form of forgery.
(Derrida & Kamuf, 2009). It is one of the oldest crimes in record.
WHY IS COUNTERFEITING A BIG PROBLEM?
Counterfeiting is a huge problem and can devastate an entire economy by creating inflation
i.e. devaluing the currency (2019). If counterfeiting were legal, every person would print as
much money as he or she wanted. This would allow people to have a lot of money and spend
more money than required on goods and services they want. By the laws of Supply and
Demand, prices would rise because one could pay any amount asked for the goods and
services. Thus, no one would need to work. In addition, fake money in hand would help to
finance the criminal and terrorist activities.
HOW TO DETECT COUNTERFEIT?
Two basic ways are used to detect counterfeit– by Analytical method and Forensic method.
(2019) Analytical method means to analyze the fake or counterfeited currencies with the help
of naked eye or by touch. It has to do with the physical appearance of the bank note and to
detect if it is fake or real. ("Counterfeit Prevention", 2019) Forensic method is related to science
or technology and their help to find out the authenticity of the bank note or coin. Given
below, are few manual, analytical and forensic methods used to detect the authenticity of the
currencies.
 Hold the bill towards light and see if there is a holograph of a face image also known
as the watermark image, same as on the bill and both the images on the bill match a
100%. If a holographic image is not exact same as the on the bill then the bill is most
probably a counterfeit. (2019)
 Holding an original bill towards light show a thin strip that runs vertical that contains
text, which spells out the bill’s denomination.
 The new series bills have a color changing ink used on the numerals at the lower
right side corner, which can be seen when tilted back and forth, the color shifts from
black to green and back.
 The watermark is seen when held towards light in an empty space to the right side of
the portrait from both the top and bottom sides of the bill since it is imbedded and not
printed on the paper bill. ("Top Tips For Counterfeit Money Prevention", 2019)
 Holding the bill towards the light will show a security thread, which is a very thin
strip, imbedded on the paper, running vertically from top to bottom of a banknote.

 If the bill is authentic then a $5 bill glows the colour blue; a $10 bill glows in the
color orange, a $20 bill glows the color green, a $50 bill glows yellow, and a $100 bill
glows in the color red when held up to an ultraviolet (UV) light. ("fakenote-
prevention", 2019)
 There are very minute works of micro printing on the security threads and the
portrait. The authentic bills have a very fine text. Counterfeiters fail to have printing
equipment sophisticated enough to duplicate micro printing as fine as the authentic
ones. If looked through a magnifying glass the text should be easily readable, if not, it
is a counterfeit. (2019)
 All of the authentic US reserve notes have a raised printing known as Intaglio
printing, which is felt by running the finger on it. It is an unsmooth texture due to the
ridges. For Counterfeiters it is very difficult to copy this feature.
 The serial number on a currency note is a unique alphanumerical identifier that is
engraved on the notes. All notes have a serial number that contains serial
information of each denomination and matches the year printed on the bill. (2019)
Each letter at the beginning of a serial number on a notes corresponds to some
specific year, such as the following:
E = 2004;
G = 2004A;
I = 2006;
J = 2009;
L = 2009
 A counterfeit banknote detection pen is a kind of pen that uses an iodine-based
chemical ink. This ink is applied on bank notes in an attempt to detect their
authenticity. The iodine-based solution mixed with the ink reacts with the starch
contained in the counterfeit notes and form a black stain on the paper. When this ink
is applied on fiber-based paper that is used in real authentic currency notes, the paper
shows no discoloration and stain mark. These Counterfeit banknote detection pens is
very helpful to detect counterfeit currencies such as Swiss franc, dollar and euro, and
many others.
 There are various Counterfeit Money detector and they come in many forms. It is
primarily a machine that reads the security features in bank notes to determine
whether any given bill is a counterfeit or is it genuine. It uses one or more different
features to detect or verify bank notes through the help of their security features.
Some of these methods include UV Counterfeit Detection, Magnetic Counterfeit
Detection, Size Detection, watermark and metal thread detection. Some of the
common and useful Counterfeit Money Detectors are Watermark Lamps, Ultraviolet
Lamps, Magnetic Ink Scanners, Multi-test Scanners etc. ("Forensic Accounting For Cash",
2019)
 Infrared bill detector or scanners detect that part of banknotes, which has been
printed in infrared ink. Infrared ink is not visible by naked human eye. To see infrared

ink, a “viewer” is required that makes it possible to see the IR ink. The viewer has an
LCD screen that shows the image of the banknote. Different denominations have
different portions of the bank notes where the IR ink is used. It is to be keep in mind
that the cashier and other similar level employee needs to be train to recognize the IR
feature appropriately. For instance, one has to memorize that, a $20 bill has a thin
band IR security on lower left, while a $5 has two narrow bands, and a $100 has a
narrow band and a wide band. Thus, it is more convenient that these IR features are
machine-readable characters and not human readable. Vending machines and slotting
machines have the features to detect, read and identify these IR security features on
the bank notes.
 Near Infrared (NIR) can penetrate deeper into samples than mid-infrared radiation.
It is one of the methods to detect counterfeit currency by testing the bill using Near
Infrared beams in a spectrum, which is below 1250 nanometers. It measures the
reflectance of the beams and compares values of the reflectance of the fake currency
to the values of reflectance of a genuine currency.
 Raman Spectroscopy is an advanced analytical device that studies the molecular
structure of a material and allows to evaluate their composition on the basis of the
characteristic vibrations of the molecules initiated by monochromatic light. Raman
spectroscopy can identify a material very fast. The materials are identified by the help
of Raman Spectra. Every chemical substance, its composition or its modification has a
unique set of molecular vibrations, which gets recorded in Raman spectrum as rising
and falling peaks. Using these basic features of Raman spectroscopy, the authenticity
of banknotes are investigated. Raman spectroscopic analysis made on the inks and the
paper used on the currency can reveal whether currency is counterfeited. Differences
identified in the composition of the inks or in the paper appear in the peak graph of
the Raman Spectra and their distribution in the spectrum. The analysis by the Raman
spectra provide information about the authenticity of currency and point out any
forgeries.
 High-performance liquid chromatography (HPLC) is a chromatographic technique
used in analytical chemistry. The main purposes for using HPLC are for identifying,
quantifying and purifying the individual components of the mixture.
 Bank notes may have cocaine or other drugs on its surface without our knowledge.
The surface of the note become weary after prolong use and can absorb oils and sweat
that can hold dirt, contamination and at times, even drugs such as cocaine. Gas
Chromatography (GC) is a type of chromatography used in analytical
chemistry for splitting and examining compounds, which can vaporize
without decomposition. GC-MS can be used to quantify the amount of cocaine
present on a banknote.
THE UNIQUE ROLE OF INTERPOL IN DETECTING COUNTERFEIT MONEY

INTERPOL is the largest International police organization in the world whose role is to look
after the various crimes that happen in its member countries. ("Counterfeit currency /
Counterfeit currency and security documents / Financial crime / Crime areas / Internet / Home -
INTERPOL", 2019)
While the counterfeiter have brought in various sophisticated techniques to fake currencies,
so did the INTERPOL provide its member countries with new tools and services. These tools
and services include technical databases, training, forensic support and operational assistance.
Online services and tools
It is important to share data among countries and sectors to control or combat the
counterfeiting and distribution of counterfeit currency. INTERPOL facilitates exchange of
information on operational matters, such as seizing counterfeit notes and closing down illegal
shops where printing takes place.
Various web-based tools are available for users to authorize through INTERPOL's
communication network that is secure, known as I-24/7:
 Counterfeit Alerts– the alerts regarding recently discovery of counterfeit banknotes in
the international market, along with a detailed analysis is made available;
 Counterfeit Currency Statistics– A statistical report detailing quantities and the types
of counterfeit currencies that has been reported by INTERPOL member countries
annually is available;
 Warning Messages– Warnings with detailed notice of alerts are published by the
European Central Bank and Europol which provides relevant information about the
Counterfeit Euro banknotes;
 Document checker Banknotes from Keesing Technology– It is an online reference
database, which enables investigating, and authenticating more than 4,500 different
banknotes, which includes over 60,000 images and detailed security features.
Forensic laboratory
INTERPOL runs a Counterfeit Currency and Security Documents laboratory, which provides
support to the ones who are inspecting. The following are included in these services:
 Collecting, and analyzing specimens of any banknotes that are newly issued;
 Collecting counterfeit banknotes, analyzing them, classifying them into categories and
storing them;
 Forming technical and analytical support and reports.
Training
It is very important that law enforcement community and other parties such as banks and
financial institutions be equipped with full knowledge and skills to easily detect and identify
fake currency successfully.
INTERPOL, often in partnership with other organisations, has brought into action a number
of training courses and seminars, the combination of which helps to form a comprehensive

capacity-building program. The end goal is to increase the knowledge regarding currency
counterfeiting and encourage more innovation, so that the training turns into operational
practice.
Co-operation
Counterfeiting Currency is a huge problem, which cannot be solved only by the enforcement
of law. The INTERPOL works with monetary issuing authorities, central banks and the
security printing industry to make the law work.
WHAT ABOUT COUNTERFEIT COINS?
Most of the counterfeit coins that are available are made by pouring down liquid metal into
moulds or dies. This process often makes a mark of the die on the coin, such as a cracks or
metal pimples. Presently counterfeited coins are primarily made with the motive to simulate
rare coins with great value to collectors. Sometimes genuine coins are also altered to increase
their numismatic value. (Ilao, 2019) The most common changes visible are the addition,
alteration or even removal of the dates on the coin or even the mintmarks. Sometimes coins
have their outer edges corrugated, which is referred to as “reeding”. Reeding on genuine and
authentic coins are even and quite distinct. However, the reeding on counterfeit coins may be
uneven, crooked, or even missing.
If you doubt that you may possess a counterfeited or an altered coin, compare it with a
genuine coin of the exact same value.
COUNTERFEIT MONEY DETECTION AND PREVENTION
Different way in which money can be detected and counterfeiting money can be prevented
largely are as follows:
 There should be an increase in the professional competency of the bankers and people
who handle currency. Employees must be trained since they are the ones who handle
money most frequently. ("Counterfeit Money: How to Spot Fake Bills", 2019)
 Not only that, every citizen of a country should be able to know his or her own
currency well in depth. In this way, one can have idea about counterfeit money. It is
also good for one to have certain idea about the international currencies as well.
 The local police should hold educational programs.
 Special knowledge on how to recognize and detect the fake notes with naked eye
without any technical help should be provided to all.
 People should now to authenticate real note.

 Opportunity should be made available for people to know regarding latest currency
technologies that are being invented to make fake notes. (Know your money, 1960)
 Enriching knowledge on banknote should be provided.
 Counterfeit detection machines should be put to action, which is able to easily scan
notes and identify any fake bills. There are a variety of machines available and used
for this purpose including UV lights detectors, magnetic ink detectors, counterfeit
detecting pens, machine readable character devices and infra-red viewers, which are
the most technologically advanced counterfeit detection tools. ("Counterfeit Money",
2019)
 Genuine citizens should not be harassed with fake note and counterfeit note.
 There should be an interaction between technologists, bankers and experts so as to
always be one step ahead of counterfeiters
 Country should highly discourage Counterfeiting.
 Research should be done to be able to identify the nature of fake note.
 Confidence should grow among the bankers.
 Currency users should feel safe and secured while transacting money and because of
the belief of the users in safe and shift cash transactions, banks will be benefited.
(Zone, 2019)
 Users should be given awareness regarding the tools and techniques used by the
counterfeiters.
 Following the above-mentioned steps will help to reduce fake note circulation.
 Transactions at bank counters will increase automatically due to awareness of fake
notes.
 Data tools and techniques that are identified can be used for the preventive measures
by any concern authority.
 Detection will help prepare ways and means to eradicate fake notes and control bank
transactions.
 Members of the public will now be able to express their opinion on counterfeit money
and recognize them and will be able to transfer their knowledge to the concern
authority. (2019)
 Based on the knowledge provided by the users, concerned authorities will be able to
take appropriate actions.
 Investment that is made for incorporation of the security features in the paper notes
will thus be fruitful.
What are you supposed to do if you suspect that during a transaction you have been
offered a counterfeit note ("The Fed - How do I determine if a banknote is genuine? What should
I do if I think I have a counterfeit note?", 2019):

Assess the situation properly to ensure that you are not at any kind of risk. Then you should
do the following:
 Politely refuse to accept the note and explain that you suspect that it may not be a
genuine note.
 Ask to exchange the old note and give a new one (and check the new one too).
 Advice the person you are taking the notes from to check the notes with the local
police.
 Inform your local police about your suspect of a possibility or attempt to circulate
counterfeit money in the locality.
Remember that the person who is in possession of the bill currently could be an innocent
victim who does not realize that the note is suspicious so be polite and courteous.
What to do if you suspect that a note is counterfeit after a transaction:
 If after a transaction is made you suspect that a note that u have just possessed is
possibly a counterfeit then give the note to the local police. If the note is real, you will
get it back. (De Sanctis, 2013)
Either way, the local police should always be informed and made aware of possible
counterfeiting activities in your community. Reporting news on time helps police and
prosecutors bring counterfeiters to justice.
CONCLUSION
The best reply to the fight against currency counterfeiting is to spread education and
knowledge regarding it. While there are various tools and technologies to help detect fake
notes, it will not be of any meaning if there is a huge lack of knowledge in identifying these
counterfeit notes in the first place.
If one educates one’s own self and one’s employees on identifying authentic bill and the
security features the bill should have, one will always be very well protecting one’s business
from sudden shock and unnecessary loss.
Here, one thing needs be kept in mind that every country has a different currency, so the
features present on the currency is also different. Therefore, every country has their own way
of detecting and eradicating counterfeiting and counterfeiters. In this project, common
methodology and ideas have been discussed, mainly keeping in mind the US dollar.

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