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Counterfeiting of American Currency Counterfeiting of American Currency.

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Presentation on theme: "Counterfeiting of American Currency Counterfeiting of American Currency."— Presentation transcript:

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2 Counterfeiting of American Currency Counterfeiting of American Currency

3 Definition: Definition:  A counterfeit is an imitation that is made with the intent to deceptively represent its content or origins. The word counterfeit most frequently describes forged money or documents, but can also describe clothing, software, pharmaceuticals, or any other manufactured item

4 Definition: Definition:  Legal Tender Section 102 of the Coinage Act of 1965 (Title 31 United States Code, Section 392) provides in part: " All coins and currencies of the United States, regardless of when coined or issued, shall be legal tender for all debts, public and private, public charges, taxes, duties and dues."

5 History  Counterfeiting is one of the oldest crimes in history  Native Americans used wampum, beaded string, as their currency to use as a form of exchange  The Europeans counterfeited wampum using their iron tools, this led to inflation and the devaluing of this type of currency  During the American Revolution, the British counterfeited US currency in such large amounts that it became worthless  During the Civil War, one-third to one-half of currency was counterfeit  It was a serious problem when each bank was issuing its own currency  There were over 1500 banks printing their own notes  It was very difficult to determine which bills were counterfeit because there were 7000 varieties of genuine notes and 4000 counterfeit varieties

6 History  A national currency was adopted in 1863 to help solve the counterfeiting problem  This was soon counterfeited in such large amounts that the government established the Secret Service to detect and track these notes  One of the first anti-counterfeiting measures applied to money was making coins uniformly round and with milled edges  In 1929, portraits were standardized and red and blue fibers were embedded in currency  The green color was chosen because it was found to be high in its resistance to chemical and physical changes and was psychologically identified with the strong and stable credit of the government

7 Goodwin- author of Greenback  “Paper money was the social contract in motion, a signal of value that presumed upon the trust of a community. Paper money cost nothing to produce; it was just a promise, like America.”

8 “Average” counterfeiter “Average” counterfeiter  Almost always male  Younger (20s, early 30s)  Comfortable with technology  Above-average intelligence  Often have a degree in law or business  The main ethnic groups involved in counterfeiting include Nigerian, Asian, Russian, Armenian, and Mexican groups  Make relatively small amounts of counterfeit money, good enough to be passed at retail outlets

9 Jail time  Manufacturing counterfeit currency or altering genuine currency to increase its value is punishable by a fine of up to $5,000, or 15 years imprisonment, or both (Title 18, Section 471)  Possession of counterfeit US currency with fraudulent intent is punishable by a fine of up to $15,000, or 15 years imprisonment, or both (Title 18, Section 472)  Anyone who manufactures a counterfeit US coin in any denomination above 5 cents is subject to the same penalties as all other counterfeiters  Anyone who alters a genuine coin to increase its value is punishable by a fine of up to $2,000, or 5 years imprisonment, or both (Title 18, Section 331)

10 Jail Time Jail Time  Forging, altering, or trafficking in US Government checks or bonds is punishable by up to $10,000 fine, or 10 years imprisonment, or both (Title 18, Section 510)  Printed reproductions, including photographs of paper currency, checks, bonds and postage stamps are punishable by a fine of up to $5,000, 15 years imprisonment, or both (Title 18, Section 474)

11 Counterfeit Laws  Rules for the printing or publication of color illustrations of US currency (Chapter 25, Title 18) Counterfeit Detection Act of 1992:  The illustration must be of a size less than three-fourths or more than one-half  The illustration must be one-sided  All negatives, plates, graphic files, and any other thing used in the making of an illustration must be destroyed after final use

12 Damaged Money  Worn notes are destroyed during processing and replaced with new bills  The life expectancy of a $1 bill is 18 months and larger bills last longer  The Treasury Department will replace a bill if more than half of the original remains  Damaged or mutilated notes should be taken to a bank for redemption

13 Coin counterfeiting Coin counterfeiting  Most coin counterfeiting is done to simulate rare coins  This often involves adding, removing, or altering a feature of a genuine coin  The most effective way to detect a counterfeit coin is by weight

14 Effect on Society Effect on Society  Undermines the confidence the public puts in “real” money  Causes more money to be circulated in the economy leading to a general rise in prices, inflation  The value of money is determined by its acceptability, acceptance as legal tender, and relative scarcity; counterfeiting undermines these values  Companies are forced to increase prices due to counterfeits because they are not reimbursed

15 What one man can do, another can copy  Counterfeit bills have increased with new technology  Instruments of production are more readily available  Capabilities of the machines continue to improve  Techniques are more readily understood by an increasingly larger segment of the population

16 Evaluation of Currency  Appearance  Look and feel of the paper  Red and blue fibers  Color shifting ink  Watermark

17 Detection defenses Detection defenses  People are first, if people took the time to really look at their money 90% of counterfeiting could be detected  Next is the bank, bank tellers have programs to determine counterfeits  Next, bills go through machines at the Federal Reserve where machinery and human eyes detect counterfeits

18 What to do if you think you have a counterfeit  Write your initials and date on back of the bill and on the white border areas  On a separate sheet of paper record how you received the bill, who gave it to you, where you got it, and when you got it  Handle it as little as possible to preserve any fingerprints  Contact nearest secret service office or local police  You are not reimbursed for turning in counterfeit bills

19 Foreign counterfeiting  Approximately 2/3 of American currency in circulation exists outside of the U.S.  64% of all counterfeit currency is produced abroad  Some of the best counterfeits come from Colombia  The Secret Service estimates that up to one-third of all counterfeit money in circulation domestically is Columbian in origin  The $100 dollar bill is the most commonly counterfeited bill outside the US (domestically it is the $20 bill)

20 Random Facts  Counterfeit circulating in the U.S. is only 3/100 of 1% of the total currency  In 1999, counterfeiters produced an estimated $180 million dollars in fake money  About 90% of all known counterfeit currency is seized before it reaches the public  In 1995 less than 1% of counterfeit notes detected in the U.S. were digitally produced. By 2002 that number had grown to nearly 40%  Counterfeits account for about 1 to 2 notes in every 10,000 genuine notes

21 More random facts….. More random facts…..  Bureau of Engraving and Printing produces 7 to 9 billion banknotes per year worth over $80 billion for the Federal Reserve system  At the Federal Reserve of Boston approximately counterfeit notes are detected each day

22 Treasury Secretary Jacob J. Lew

23 The End


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