How Do They ACTUALLY Print Counterfeit Money

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. What do you think about cash? Would you rather have a wallet full of crisp
bills, or just use your phone to pay for everything? Let us know what you think in the comments. Also, be sure to check out our other video
called “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!

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