money

How Do They ACTUALLY Print Counterfeit Money

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At The Infographics Show, we're endlessly fascinated by the creative ways people have

found to break the law, as well as the creative ways the authorities have dealt with those

lawbreakers throughout history.

Past episodes have covered history's greatest thieves, as well as the laws you yourself

break every day.

Today we're answering a question from our viewer Petros, who wants to know, a) how counterfeit

money is made, and b) how realistic it is.

We'll assume he's asking for a friend.

And, for our Secret Service viewers, rest assured that we would never advocate any of

the systems we'll be describing.

As you'll see, counterfeit money is a niche crime requiring a great deal of skill in organization

to do well, and probably not even worth trying for small-time operators.

So, warnings noted, here's what you would do, if you did, which you shouldn't.

Counterfeiting has been the bane of all money-based economies, and the penalties in former times

were surprisingly harsh.

In 17th-century Britain, for example, men caught counterfeiting were hanged, while women

were burned at the stake.

Yes, somehow they even managed to work sexism into that arena.

The death sentence was a common penalty for counterfeiting until relatively recently.

It was seen as a challenge to state authority, and on a more practical level, fake money

threatened to slow down national economies by making people less likely to accept any

money at all.

Widespread counterfeiting also had the potential to cause rapid inflation, by increasing the

total money supply, although it took until the early modern era for this second principle

to really sink in.

Countries at war took to flooding their enemies with counterfeit cash as a way to wreck their

economy, although the logistics sometimes prevented the scheme from working.

In World War II, the Nazis printed up a supply of fake British pound notes, which they intended

to drop from airplanes flying over Great Britain.

This plan literally never got off the ground.

The United States government started minting coins in 1792, but paper money was a different

story.

Identifying counterfeit bills among all the various designs around at the same time required

vigilance, and apparently was really difficult, because by the Civil War, a third of all paper

money in the U.S. was counterfeit, not to mention the piles of fake Confederate money

the Union printed to sabotage the economy of the rebel states.

To deal with the scourge of counterfeit currency, Abraham Lincoln created the Secret Service–its

earliest incarnation only dealt with counterfeiting.

Over the course of the late 19th century, a series of reforms centralized the issuing

of paper currency under the supervision of the Treasury Department, and by 1877 the Bureau

of Printing and Engraving was actually manufacturing all the country's greenbacks.

Completely standardized currency followed in the 20th century.

Federal Reserve Notes–still the class of currency in use today, issued by the central

bank since 1913–began to replace earlier notes issued directly by the Treasury.

Uniformity made counterfeit bills harder to pass than in the early days of the republic,

but some crafty criminals were up to the challenge.

The technique of replicating the fine lines of the dollar denominations required a similar

attention to detail as the creation of fake works of art.

The distribution of counterfeits became, like extortion and smuggling, a specialties of

America's crime syndicates.

The Secret Service continued to investigate and shut down these domestic operations, although

never decisively.

And then came the supernotes.

Supernotes, also called superdollars, started showing up at the end of the 1980s.

Unlike garden variety fakes, which an expert could usually identify without difficulty,

a supernote was virtually identical to a real hundred or fifty.

Law enforcement could only speculate who was turning out the high end knockoffs, but they

believed the culprit had to be a hostile government to pull off the quality of workmanship.

Real U.S. money is printed on proprietary paper stock, a blend of linen and cotton,

with tiny red and blue threads scattered in the mix, and the private Crane Currency company

is the exclusive supplier, with the federal government its exclusive buyer.

Genuine dollars also require intaglio printing, a multistage process that creates a distinct

texture.

Whoever was making the supernotes had access to equipment functionally identical to the

U.S. government.

Suspects initially included East Germany and Iran, although conventional wisdom settled

upon North Korea.

Speculation even pointed to the CIA as the underground operation.

The source remains unknown.

With a new level of technique threatening to make a serious dent in public confidence,

or perhaps even the stability of the dollar, the Treasury Department, Federal Reserve,

and Secret Service worked on the first major paper note redesign in decades, with a new

version of the $100 released in 1996.

The new security features included a watermark, the now-familiar security strip, which glows

pink under a blacklight, microprinting beyond the scope of most consumer digital processes,

ink that changes color when viewed at different angles, and a hologram.

As new versions of other denominations followed, a common tactic was to continue to mimic the

old designs, which were still legal tender.

And despite the formidable obstacles thrown up by the new hundreds, fifties, and twenties,

almost immediately, counterfeiters began to reverse engineer the details.

It's perhaps unsurprising that next-generation supernotes hit the market, given the resources

available to their printer, whoever it was.

But street-level printing was also quick to catch up, with the notorious Art Williams,

junior, setting the standard.

As journalist Jason Kersten details in his 2010 book The Art of Making Money, Williams

began his counterfeiting career in 1987, at the age of 15, learning the art of hand printing

money from a mentor called "Da Vinci."

Over the course of the 1990s, he refined his own method which combined traditional printing

techniques with digital manipulation with Photoshop–a pirated copy, of course.

He had a stable of underworld clients for his wares, selling his prints for 20 cents

on the dollar.

Following his release from his second brief prison stint in 1996, his girlfriend Nathalie

showed him one of the new hundred dollar bills.

He thought he could crack it, and got to work.

In addition to the layers of artwork and coloration required to match the design, he wanted a

paper that could stand up to the iodine pen test, which turns black when applied to most

wood-based papers.

Trial and error led him to develop a product with two layers of newsprint glued together,

which also allowed the insertion of a fairly realistic security strip.

Impressing his old buyers, he now had a market with fewer competitors, and could up his asking

price.

Art and Nathalie also turned the operation into a romantic adventure that played like

a Oscar contender.

The couple headed out on a cross country crime spree, lighting up a constellation of shopping

malls along the route to Oregon.

In each town, they'd case not just the mall, but also the town center to get an idea how

fast the cops could show up.

For each job, they took a set path into and out of the mall, using one of the department

store anchor chains, which they would skip, as their entrance.

Then Nathalie would make her way from store to store, with Art carrying the packages and

resupplying Nathalie with fake hundreds.

Now they were making substantially more than 20 percent on each bill, as they pocketed

the change from each purchase.

Adding to the folk hero charm of the couple, they began purchasing items specifically for

charitable donations at churches and Salvation Army drop centers.

It was back in Chicago, though, that cops caught up with him, discovering the counterfeit

money while busting him for marijuana possession in a hotel room.

Part of what made the road trips so successful was the duo's understanding that they couldn't

hit the same store, or even the same mall, twice in a row.

Small towns also proved less likely to question the bills' authenticity than, for instance,

people in Los Angeles.

The bills would pass the iodine test, but they weren't foolproof.

Meanwhile, in the late 90s and early 2000s, another tier of counterfeiter emerged on the

scene.

In a trend analogous to music file sharing, enterprising teens and twenty-somethings started

realizing the potential of high dpi inkjet printers.

Many of these two-bit forgers never successfully passed a single bill, with law enforcement

sometimes seeming more embarrassed for them than anything.

Some kids were pragmatic, printing low denomination bills for routine purchases.

In many cases, they were using regular printer paper, which feels totally wrong--smooth instead

of textured.

And a magnifying glass could reveal the blurred details.

Others were more ambitious, bleaching the color off of singles or fives, and reprinting

them as $100 or $50 bills.

By 2004, forty percent of the counterfeit currency in the U.S. originated in these small

scale, DIY set-ups.

The real action, though, was happening in South America.

Colombia, for a time, dominated the professional counterfeiting market, developing a distribution

network along the lines of the drug cartels that once held a grip on that country.

But Peru proved to be the lasting home of the industry.

Labor costs in Peru are especially low, and even though the U.S. Secret Service now has

its own office in the country's capital of Lima, enforcement remains a challenge.

Dealing with fake currency is a fact of daily life in the capital, and cashiers keep a hole

punch by the register, ready to destroy any bills their customers try to pass.

The manufacturing process uses high-end offset printing equipment, which involves the automated

etching of metal plates based on finessed photos.

Venezuelan currency, which has suffered severe inflation, now serves as a source of paper

stock.

Ten or more craftspeople each perform a step in the assembly and refinement, such as sewing

a security strip into the note or simulating the texture of an embossed stamp.

The work is spread out over multiple locations, with the artisans kept in the dark about their

colleagues' whereabouts.

In Lima, multiple buyers package the bills in hiding places such as stuffed animals or

suitcase linings, and travelers known as "burriers" fly with the goods to various distribution

points around the world.

It enters the U.S. via Mexico, where the burriers hand them off to coyotes, or traffickers,

who in turn smuggle the bills into the States.

Hardening the Mexican border might put a squeeze on that supply network.

But don't bank on it: counterfeiting is proving more lucrative than cocaine, and most of the

fake dollars are destined for the international market rather than the United States.

Meanwhile, Euros remain a potential growth market, despite the EU's recent instability.

Counterfeit American currency remains very rare: 99.99% of all U.S. currency in circulation

is genuine.

There's a natural bottleneck: at some point, the bills have to hit the street, and that

requires personal transactions.

Whether the product of a dorm room operation or an international cartel, the notes have

to pass into the marketplace.

If they make it past one transaction, they're very likely to get stopped and confiscated

when the retailer attempts to make a bank deposit.

Banks send money through scanners to read the magnetic signature of their ink.

Even the best Peruvian reproductions fail that test.

There's no compensation by the bank, or the feds, since for all they know, you're trying

to run a scam yourself.

It's a frustrating moment for you if you're the customer who's out a hundred bucks, but

the bill is out of circulation.

The economy as a whole doesn't suffer too much, although there is some loss of confidence.

You probably have noticed signs at mom-and-pop shops indicating that they won't take anything

bigger than a twenty.

Or maybe you haven't, because you pretty much don't use cash, anyway.

After a centuries-long arms race between states and scoundrels, the ultimate demise of fake

money could come with the decline of real money.

Fraud, though, is here to stay.

Identity theft and counterfeit goods are much bigger business than the quaint art of printing

your own money.

And the decline of cash and the transition to digital cash only means that cyber threats

are more dangerous than ever and getting worse all the time.

Even just having your one of your online accounts or credit cards hacked can seriously harm

your life and the financial impact can be devastating.

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Do you even use cash anymore?

What’s the last thing you actually had to open up your wallet to buy when they annoyingly

wouldn’t accept Apple pay?

Tell us in the comments.

Then go watch our other video the “Fastest Way People Turned $1 Into $1 Million” Thanks

for watching, and, as always, don’t forget to like, share, and subscribe.

See you next time!