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    Counterfeit Currency: Feds Say "Fake Money" Trafficking is Worth More Than Cocaine Trade!

    Counterfeit Currency: Feds Say "Fake Money" Trafficking  is Worth More Than Cocaine Trade!

    By: Carly Souther

    Downloadable Product: U.S. Secret Service "Know Your Money" PDF

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    During the 2015 fiscal year, the U.S. Secret Service seized about $146 million in fake banknotes.

    Fact: Although we may asosciate agents with protecting federal officials and their families, the U.S. Secret Service was created in 1865* to help prevent counterfeit money. At this point in history, it was estimated that between 1/3 and 1/2 of all U.S. circulated currency was forged. To date, the Secret Service remains involved in creating new methods to fight against counterfeit cash. They investigate criminal organizations and individuals who traffic fake U.S. bills. 

    Most recently, in November 2016, the Secret Service announced its largest ever seizure of fake U.S. bills. $30 million and €50K were recovered from buildings in Lima, Peru. Jose, a Secret Service agent, explains that currency trafficking is "very similar to the drug war. The modus operandi is very similar, and a lot of the smuggling routes and the hierarchy of organizations involved are very similar, as well as the execution."

    Although there are many similarities between narcotrafficking and fake money-trafficking (and, admittedly, there is some overlap between the two illcit activities), this "product" is not related to cocaine or other aspect of the drug trade, authorities say. Yet, the profits created by the fake bills - known as the "Peruvian note" - may be worth staggering than cocaine. According to the Secret Service, Peru is responsible for producing more than 60% of the world's fake American money (much more than any other country). 

    Jose adds, “A lot of these organizations are family-run. Making a counterfeit note is a skill that’s been passed down. It’s an art, and the skill isn’t easily transferrable.”

    The fake bills are carefully created in rural Peruvian facilities using cheap labour, and then sent to gangs in the capital city of Lima. At this point, the forged notes are often hidden inside hollowed-out Bibles, luggage, children's toys, tennis shoes, pottery, or large shipping containers that are bound for major U.S. ports, such as Miami. Ultimately, the notes are sent to large northeast cities such as New York and Boston. In these big cities, federal agents say, a few powerful crime organizations transfer the counterfeit funds to splinter gangs and reap huge dividends before authorities can react. 

    Some counterfeit notes, such as the Peruvian note and North Korea's "supernotes," are difficult-to-create: They are made from the same three-quarters cotton, one-quarter linen fiber paper composition used in real U.S. dollars. Others, such as a Virginia hairstylist's "washed" notes, are easier to create (but nonetheless difficult to detect): $5 bills are soaked in degreaser, then the ink is scrubbed off with a toothbrush. After the bills dry, images of $50 and $100 notes are printed onto the now-blank surfaces. 

    Perhaps you think that your employees have examined so many authentic bank notes that they can quickly spot a fake. Yet, this may not be the case. There are countless examples of institutions passing on counterfeit currency to customers. For example, a retired New Jersey teacher received a nasty surprise when he withdrew $2,500 from his local bank - which was unaware the $50s and $100s weren't legitimate - and attempted to deposit the bills into his Bank of America (BOA) account. A BOA teller told him one of the $100 bills was fake and couldn't be deposited. When the teacher asked his local bank for an authentic note, the supervisor apologized for their improper handling of the forged bill, but refused to exchange the note because of bank policy.

    Although the money becomes the customer's property when s/he leaves your institution, strict policies on refunding bills do not instill customer trust nor are the good for your corporate image

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    In April 2016, the Federal Reserve and U.S. Secret Service published a 3-Page "Know Your Money" guide, which provides tips for identifying the signs of fradulent currency. Download the PDF

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    If you'd like to learn more about the financial impacts of counterfeit currency and the protective measures your institution can take to prevent the receipt of fake money, register for our upcoming "Fraud Fighter" program on Thursday, 18 of May at 11AM ET. 

    *President Abraham Lincoln signed this bill into law on the 14th of April 1865, the same day he was fatally shot by the actor and criminal John Wilkes Booth. This would be the same day the R.M.S. Titanic would sink 47 years later.