Latest Measures for Combating Euro Counterfeiting Allister McCallum Head of Anti-Counterfeiting Section European Central Bank Pericles Seminar, Rome, 30 November 2009
Background: counterfeiting statistics By Quantity (pcs) By Quality (FSI) 250,000 6 200,000 5 150,000 4 3 100,000 2 50,000 1 0 Q2 2007 Q3 2007 Q4 2007 Q1 2008 Q2 2008 Q3 2008 Q4 2008 Q1 2009 Q2 2009 Q3 2009 0 Q2 2007 Q3 2007 Q4 2007 Q1 2008 Q2 2008 Q3 2008 Q4 2008 Q1 2009 Q2 2009 Q3 2009 By Value ( ) By Average Face Value ( ) 12,000,000 80 10,000,000 70 60 8,000,000 50 6,000,000 40 4,000,000 30 20 2,000,000 10 0 Q2 2007 Q3 2007 Q4 2007 Q1 2008 Q2 2008 Q3 2008 Q4 2008 Q1 2009 Q2 2009 Q3 2009 0 Q2 2007 Q3 2007 Q4 2007 Q1 2008 Q2 2008 Q3 2008 Q4 2008 Q1 2009 Q2 2009 Q3 2009 2
Background: genuine note statistics 3
National comparison FR IT ES NL DE BE AT Most commonly occurring counterfeit Highest commonly dispensed ATM note 20 20 50 50 50 50 100 20 20 50 50 50 50 100 For the 7 countries with the highest quantity of counterfeits the most commonly recovered counterfeit denomination is the same as the most commonly dispensed ATM note It is professional cash handlers, not the public, that are in the front line of the attack by counterfeiters 4
Banknote Recycling Framework Published by ECB in Dec 2004 following CR 1338/2001 Started to be implemented by NCBs in 2005 Main obligations: Banks/other professional cash handlers may re-circulate euro banknotes only if these banknotes have been checked for authenticity and fitness Euro banknotes re-circulated via ATMs/other customeroperated devices shall be checked on banknote handling machines successfully tested by an Eurosystem NCB Euro banknotes re-circulated over the counter may be checked by trained staff or by successfully tested banknote handling machines 5
Banknote Recycling Framework Machine testing: ECB publishes all machine types successfully tested and, hence, suitable for checking purposes Manufacturers have to submit their machine types for initial and annual (re-)tests to a Eurosystem NCB Monitoring of banks/other professional cash handlers: Data reporting to Eurosystem NCBs (master/operational data) On-site inspections by Eurosystem NCBs at banks/professional cash handlers to audit machines BRF compliance and related working procedures 6
Status of BRF Implementation BRF converted by Eurosystem NCBs into national arrangements Different approaches to the conversion: Legal acts, together with contracts to be obligatorily concluded with NCB (e.g. FR) Binding NCB instructions (e.g. GR, IT, SI) Contractual arrangements between NCB and banks (e.g. DE, IE) Professional cash handlers have to adapt existing banknote handling machines and related working procedures (including data reporting to NCB) during transitional period, which has been extended for 6 Member States AT BE CY DE ES FI FR GR IE IT LU MT NL PT SI SK 2007 2007 2007 2007 2007 2007 2008 2009 2009 2009 2010 2010 2010 2010 2010 2010 7
Amendment of Regulation 1338/2001 European Council adopted Regulation 44/2009 (45/2009) amending Regulation 1338/2001 (1339/2001) to oblige credit institutions, and other institutions referred to in Article 6 to check euro banknotes and coins for authenticity before putting them back into circulation In particular, Article 6 prescribes: Any euro banknotes/coins intended for re-circulation shall be checked for authenticity and counterfeits removed Verification of euro banknotes shall be carried out in line with the procedures of the ECB (an explicit reference to the BRF) Extension of addressees: payment service providers other economic agents (e.g. traders, casinos) supplying banknotes to the public via ATMs (cash dispensers) 8
Implications Authenticity checks of euro banknotes also mandatory for non euro area Member States: verification either by trained staff, or by a machine for handling banknotes published by the ECB Member States shall adopt the laws, regulations and administrative provisions for applying the amendments to Article 6 by 31 December 2011 at the latest. Under Art. 6(3) the ECB is empowered to fix another date Preamble of the amending Regulation, for euro area Member States, refers also to suitability for circulation (fitness) 9
Next steps Since the BRF is explicitly referred to in Art. 6, the ECB is taking the opportunity to lay down its rules and procedures in a legal act (ECB Decision) This ECB Decision: is addressed to those institutions defined in Art. 6 will make the procedures directly applicable to cash handlers will contain certain clarifications, e.g. for teller assistant recycling machines, self-check-out terminals, statistics will be published/enter into force Q2 2010 (plan) 10
Cash Handler Survey 2009 4134 cash handlers were interviewed from all 16 eurozone countries Focus was on knowledge of security features and effectiveness of training measures Cash handlers working in 5 different sectors: Supermarkets and big shops Food retail Non-food retail Eating / drinking places (hotels/restaurants/cafes) Financial services (e.g. banking) Fieldwork conducted August and September 2009 11
Respondent profile Gender: 60% female, 40% male Age: 12% aged under 25 41% 25-39 36% 40-54 11% 55+ Experience: 51% have been handling cash at work for 10+ years Education: 56% finished between 16 and 19 30% finished at 20+ Working hours: 82% work full time, 18% part time Location: 49% in large towns / cities 36% in small / medium towns 15% in rural areas / villages 12
Main findings: checking behaviour 81% of cash handlers claim that they check that Euro banknotes are genuine at least sometimes In 2007 79% checked at least sometimes What triggers a check? Suspicious banknote : 59% (64% 07) High denomination: 55% (47% 07) suspicious person giving the banknote : 33% (40% 07) 13
Main findings: checking behaviour 44% of those who say that they do not check banknotes say it is because it is hard to detect counterfeits Only 21% don t check because they don t want to embarrass customers 14
Main findings: high denominations 44% would not accept a 500 note 26% would not accept a 200 note 52% would accept all denominations of note Main reasons for declining large denomination notes Would not have enough change (63%) Concern over potential financial loss if fake (41%) 15
Main findings: euro banknotes are safe Euro banknotes are viewed as quite or absolutely secure against counterfeiting by 54% of cash handlers A slight increase from 07 (51%) Sustaining the increase seen since 04 (30%) Highest in the finance sector (73%, up from 67% in 07) However, 41% still consider euro banknotes to be insecure A slight improvement from 07 (44%) 16
Main findings: coming across counterfeits 25% of the respondents claim to have encountered a fake banknote in the past 6 months However, 48% have never come across one This figure is exactly the same as 2004 47% think it is unlikely they will encounter a fake euro note in the next six months 38% think it is likely But only 10% think it is very likely 17% are absolutely confident and 51% reasonably confident that they would be able to identify a fake banknote 17
Main findings: use of security features 2009 2007 2004 Feel of the paper checked by: 74% 70% 56% Security thread checked by: 46% 41% 34% Watermark checked by: 44% 47% 36% Hologram checked by: 37% 41% 37% 18
Main findings: security features on reverse Knowledge/use is limited: 2009 2007 Colour-changing number ( 50): 21% 23% Glossy stripe ( 20): 20% 20% Microprinting (front and back): 8% 5% 19
Main findings: use of tools No change in use: 2009 2007 Ultraviolet lamp: 19% 26% Pen to check genuine paper: 14% 9% Infrared viewer: 8% 7% Auto-checking machine: 8% 3% 20
Main findings: provision of guidelines 66% of cash handlers have no guidelines at their place of work on what to do if they suspect they have been given a fake banknote This figure is similar to that seen in 2007 and 2004 65% know there is no compensation for fake banknotes (also in 07) However, 28% are uncertain And 7% believe there is some form of compensation available Up from 5% in 07 21
Main findings: action If given a fake banknote 73% would hand it back (75% in 07) If they identified a fake after a customer had gone, 11% would try and pass it on to another person But most would take it to a supervisor (28%) the bank (21%) or the police (15%) 22
Questions???????? 23