Low cost, better tech could lead to rise in counterfeit banknotes, RBA warns

In its Recent Trends in Banknote Counterfeiting report released last week, the Reserve Bank of Australia warned that the declining cost of counterfeiting and the growing sophistication of technology could make it easier for counterfeiters to produce fake banknotes on a large scale than was previously possible.

While the counterfeiting rate is down from a high of 26 fake banknotes per million in circulation in 2015 to around 15 fakes per million in 2018, this is still higher than the rate of five to 10 fakes per million in the early 2000s, and the RBA believes the counterfeiting rate is unlikely to return to those low levels.

Much of the recent decline in the counterfeiting rate can be attributed to  a number of successful police operations, which disrupted several large counterfeiting sources, the RBA said.

While the counterfeiting rate has declined over the past four years in Australia, the quality of fake banknotes seized has gone up – around 40 per cent of counterfeits seized in the past two years were considered high quality.

The rate of counterfeit $100 banknotes in circulation has also increased in recent years from relatively low levels, with their overall volume now around half that of $50 counterfeits, which is still the most common counterfeit note.

According to the RBA, receiving a counterfeit can have severe consequences for businesses with small profit margins, such as retailers. It estimated that the average retail business would need to sell around $2,200 worth of goods or services to recoup the loss sustained through a single $100 counterfeit banknote.

Still, the Bank said that counterfeits that successfully replicate security features such as the microprint, shadow image, see-through register or intaglio (raised ink) print are rare, and members of the public can check these security features if they suspect a counterfeit.

If a person or business receives a suspicious banknote missing any of the security features, they should handle the banknote as little as possible and store it in an envelope; try to remember as many details as possible about when, where and how they came into possession of the banknote; and report the incident to the local police or AFP.

The Bank noted that a country’s counterfeiting rate is dependent on a number of factors, including the broader crime rate, the security of a country’s banknotes, how cash is used and the cost of the equipment used to counterfeit banknotes.

Australia’s counterfeiting rate is around average – well below the 50 fakes per million banknotes in circulation in the euro area and 140 fakes per million in the UK, but above the very low rates of less thank one fake per million banknotes in circulation in New Zealand.

RBA’s tips for checking banknote security features

There are a number of security features that can be used to confirm whether a banknote is genuine.

All Australian banknotes are produced on polymer, which contributes to their distinct texture and makes them difficult to tear. They should spring back when crumpled.

The ink is raised, and you should be able to feel it with your finger. The print should also be sharp, not blurry or fuzzy. This means that when looking closely or with a magnifying glass, the microprint should be clearly legible.

The window should be clear and look like it is integrated into the design, and when examined under UV light, certain elements on the banknote will glow.

On the first series of polymer banknotes, you can also look for the shadow image produced when the banknote is held to the light, or the see-through register that is formed.

On the new series of polymer banknotes, the clear top-to-bottom window is an additional security feature. Within the window are multiple elements, including holographic sections, a flying bird, and the value of the banknote switching directions when the banknote is held at different angles. In the top corner of the banknote you can also see a rolling-bar colour effect.

See the Reserve Bank’s Banknotes microsite to learn more about security features you can use to verify a banknote.

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