A Path to the Next Generation of U.S. Banknotes Keeping Them Real (2007) / Chapter Skim
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2 Understanding Counterfeiting
2 Understanding Counterfeiting
Pages 22-39
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Table 2-3 shows what access to various kinds of current digital technology the different classes of counterfeiter have. The relative threats associated with each criminal class are depicted in Figure 2-1.
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Understanding coUnterfeiting TABLE 2-1 Classes of Banknote Counterfeiter, Their Tools, General Location, and Impact Class Typical Practitioner Primary Tools Location Impact of Activity Primitive Unusually motivated Manual artistry Domestic Very low individual or foreign Opportunist Opportunistic young Home office equipment Domestic Created largest adult, typically works increase in $20 alone domestic-passed currency Petty All ages, criminal Home office equipment Domestic Low, stable level criminal intent, typically works plus specialty materials of activity alone and processes Professional Criminal, trained in Offset printing, high- Domestic Low, stable level criminal printing technology, end ink-jet printers, or foreign of activity often part of a criminal specialty materials and group processes State- Professional, profiteer All materials and Foreign Strategic concern sponsored or terrorist, member of processes, including a large organization specialty paper, intaglio and offset printing, security features TABLE 2-2 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 Opportunist 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 large networks, often by unwitting accomplices TABLE 2-3 Digital Technology Access, by Class of Counterfeiter Ink-Jet All-in-One Color Flatbed Ink- Digital High-Quality Imaging Class Printer Device Copier Jet Printer Press Scanner Software Primitive Not applicable -- does not use digital technology. Opportunist ● ● ● ● Petty criminal ● ● ● ● ● Professional criminal ● ● ● ● ● ● ● State-sponsored Not applicable -- reproduces government processes directly.
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If the substrate is an existing Federal Reserve note (FRN) , the counterfeit note retains the correct feel of genuine currency and may have advanced security features such as a watermark and a security strip, albeit for the wrong denomination.
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Secret Service by commercial establishments, financial institutions, and law enforcement.3 1 U.S. Department of the Treasury.
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Secret Service.
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While these notes would fool most cash handlers and even some machine authenticators, they can still be identified by the Federal Reserve System and the Secret Service.
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A FLOW MODEL FOR COUNTERFEITING Counterfeiting begins -- but does not end -- with the printing of bogus bank notes. After producing (and possibly stockpiling)
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As such, these ovals are "virtual" repositories of counterfeits; no actual notes reside there. The effect of these virtual repositories is captured in ρ, the counterfeit production rate, which reflects the effects of technology stoppers or the difficulty of feature simulation for the purpose of feature evaluation.
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The boxes indicate the components of the counterfeiting system. The ovals represent processes by which counterfeit notes are removed from the system.
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ρ Counterfeit production rate ($ per unit time) Other parameters Fraction of pass attempts held and not reported to the USSS; h = 1 – s – r h Fraction of pass attempts reported by recipient r Fraction of successful pass attempts s Time since start of production t result is a set of linear differential equations, which yield the temporal change of the amounts of counterfeit currency located in the boxes and ovals, and which provide the underlying dynamical relations among the parameters and variables in the system.
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suggests that they are different in their effect on deterring counterfeiting. TABLE 2-1-1 Counterfeit Production Rate and Passing Fraction for the Flow Model Counterfeit Passing Amount Production Rate ρ Circulating y(t = ∞)
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EVALUATING SECURITY FEATURES WITH THE FLOW MODEL The goal of any anticounterfeiting effort is to minimize x, the amount of stockpiled counterfeit notes, and y, the amount of circulating counterfeit notes. A flow model can show how these amounts are affected by various flow rates and parameters.9 Analyzing and understanding the factors that affect the flow provide a basis for understanding the counterfeiting threats and evaluating the outcomes of potential new features.
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● ● ● Watermark ● ● ● Security strip ● ● ● Intaglio printing ● ● ● Offset color blending ● Optically variable ink ● ● ● Intaglio microprinting ● Offset microprinting ● Colored threads Machine readable Paper fluorescence ● ● Magnetic ink feature ● ● ● Magnetic ink pattern ● ● ● Metameric inks ● ● ● Digital watermark ● Digital Banknote Detection System ● Fluorescent security strip ● ● ● NOTE: Human-perceptible features are those that can be verified using normal sight and touch. Machine readable features are those that can be verified through the use of an auxiliary device.
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The possession of counterfeit currency is a crime investigated by the Secret Service. To carry out its mission, the Secret Service works with state and local law enforcement agencies, the U.S.
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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.14 Thus, educating cash handlers to recognize security features is undeniably an important factor in counterfeit deterrence. One of the most basic yet revolutionary methods intended to disrupt passage of counterfeits is the growth of machine authentication.
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However, industry representatives report that even low-end denominators detect and capture 90 percent of domestic counterfeits, with authenticators nearing 100 percent.16 Therefore, machine readers represent a significant deterrent to the passing of counterfeits. Because rejected notes are typically returned to the consumer, this tool does not require the cash handler to deal with the consequences of accepting a counterfeit, making machine readers particularly attractive to the retail sector.
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rather than contact the authorities. Similarly, manufacturers of currency-handling equipment report that some retailers tend not to purchase dedicated counterfeit-detection modules for their machine counters in order to avoid the inconvenience of dealing with counterfeits that cash handlers had accepted at the point-of-sale.18 There is no question that such an attitude toward counterfeit identification interferes with the identification and removal of counterfeit notes, as well as with the eventual capture of the responsible counterfeiters.19 It may be possible to provide incentives to citizens who turn in counterfeit notes.
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• An analytical flow model can provide a quantitative basis for prioritizing features and feature sets so as to provide the best overall defense against counterfeiting.
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