THE MODERN METHODS OF CURRENCY VERIFICATION Ladies and Gentlemen. Let me introduce myself and our company. The Systema LLC is the leading manufacturer and the supplier of the banking equipment in all ex-soviet republics and now we are extending our activity to many international markets. We produce different types of cash handling equipment, but today I would like to state our point of view on principles and methods of cash verification. I. Standard Verification of Security Features. Most of national banks and other authorities supervising the cash flow advise to check banknotes up to the following features: 1. Watermark 2. Protective fibers 3. Security thread 4. The code on the security thread 5. Metallic ink 6. Latent image 7. Microprinting 8. Corresponding designs 9. Images with variable colour. There is no doubt that the above mentioned protective features enable to distinguish counterfeited banknotes from the genuine ones. But not always. According to the report of Central Bank of Russia the proportion of the of the counterfeited features is as follows: 1. Watermark - in 95 % of cases. 2. Protective fibers - in 95 % of cases. 3. Security thread - in 75 % of cases. 4. The text on the security thread - in 87 % of cases. 5. Microprinting - in 70 % of cases. These features were forged generally on the most popular banknotes among the counterfeiters: (50 Euro in Europe, 20$ in the USA, 500 roubles in Russia). Let me emphasize that it takes too much time for the verification of the recommended protective features: 1. Watermark - 8 seconds 2. Microprinting - 8.6 seconds 3. Color protective fibers - 9.6 seconds 4. Security thread - 10.1 seconds. So, the visual verification of a banknote takes about 40 seconds even if we check up only a few from the recommended ways of protection. In some situations it is completely unacceptable. To say more, such a long verification procedure does not provide 100% guarantee
that the examined banknote is genuine. The point is that the elements recommended for checking are practically always counterfeited. II. Deviations In The Statistics Of The Registered Counterfeited Banknotes I would like to pay your attention to one peculiar issue - the deviation in the official statistics of the registered counterfeited banknotes. In many countries of the world it is possible to see not conterminous figures of false banknotes registered by official authorities. For example, according to the statistics specified at the 3 rd International Conference Security Printing in St Petersburg the Central Bank of the Russian Federation registered 10 000 false banknotes meanwhile the experts of the Criminal Expertise Center of the Ministry of Internal Affairs of the Russian Federation announced 20 000 counterfeits traced during the same period of time. It might seem strange, but both figures were correct. The Central Bank reported about the number of forgeries detected by their own means directly during the process of money circulation. The Criminal Expertise Center of the Ministry of Internal Affairs (CES of MIA) meant the forgeries traced by their own sources. Besides there are some other state services in Russia responsible for counterfeit protection but the number of the counterfeited banknotes traced by them was not included to the statistics neither of the Central Bank nor of CES of MIA. The amount of the forgeries detected by all responsible organizations in total proves to be much higher. The Banknotes Life Cycle diagram demonstrates that the reality is not that festive. 1 y e a r 2 ART WORK PRINTIG WORKS NATIONAL BANK SECURITY FEATURES 6 MONTHS RETAIL BANKS 1 WEEK PUBLIC 1 DAY BUSINESS Thus having spent 1 or 2 years on development of design of the banknotes and the printing process the National bank releases the banknotes. Around six months later the National Bank (NB) gets the banknotes back. Now the Bank is able to check its money after being in
circulation. Generally national banks are equipped adequately to check up and reveal forgeries in mass quantities. The period of cash circulation between commercial banks and business companies and the public is much shorter - about 1 week. This period looks to be the best stage to trace a forgery. Some commercial banks pay much attention to the problem of counterfeit protection and they have all relevant high quality equipment. But the attitude of some other banks to this problem as well as their equipment leaves much to be desired. Such banks do not understand, that tracking of monetary circulation is one of the functions of any financial institution, therefore they replace responsibility for the counterfeit control to cashiers equipping their working places only with the calculator. The Banknotes Life Cycle diagram indicates that the false banknote may take part in a cash circulation up to 180 times within 1 year period until it is revealed by the experts of national bank. Approximate calculation shows that one fake banknote of 50 Euros denomination may cause the damage for the economy of the country for the amount of 9000 Euros within its circulation period. In most reports on the tracking of false banknotes the damage is estimated by summing up the values of the fake banknotes instead of multiplying these values on the number of circles of the counterfeits. III. The Methods Of Currency Verification The next issue at which we would like to pay your attention is the methods of printing of the banknotes. Most of security features are intended for visual control of authenticity of banknotes. As we understand it is done to make the recognition of original and false banknotes easy for individuals. But we have some comments about such methods. First, we would like to remind our statement that the security features aimed for the individuals can easily be counterfeited and they require a lot of time for verification. Second, let us notify that most commercial institutions (supermarkets, restaurants and banks) but not individuals suffer from false money. Counterfeiters submit their products to banks or supermarkets trying to exchange them. These very commercial institutions are responsible for primary submission of forgeries into the monetary circulation system. These institutions can not afford to rely only on visual control. The cash flow is too intensive there. Therefore counterfeit detectors are available for their assistance. These devices are able to reveal the features of the banknotes which are not visible with the naked eye. A. Verification By Means Of Ultraviolet Detectors Ultraviolet detectors are mostly widespread among different types of counterfeit detectors. They are rather cheap and simple in work. The cashier places the banknote in the UV light to detect that it is false if it starts shining violet. The cashier can also identify the forgery if the special UV images are absent in the UV light. The UV protective features can be checked easily, but they are also simple to counterfeit. It is not a problem to find the paper which does not shine in the UV light. E.g. newspapers will not shine, as their paper absorbs the UV light and does not reflect it. Special UV images are more difficult to counterfeit. UV images are made by special ink which practically were not available in the market not long ago. Nowadays you can get them without any problem. But the UV designs are not stable and they can be rubbed and worn off (e.g. UV marks are getting weaker after laundry). The aplication of more advanced detectors with the bottom light, additional devices for check of the microprinting or magnetic marks certainly provides more careful authentication of the banknotes. But having won in the quality of verification we lose in time. The check of the above mentioned feature will take 40 seconds again.
Therefore checking with UV devices is recommended for the supermarkets and the banks with low cash flow. Besides the checking depends on the cashiers skills, their health condition and the quality of the banknotes to the great extend. If the cashiers have low cash operation skills or if he/she does not feel well such a detector cannot provide 100% guarantee that the fake banknote is rejected. B. Verification By Means Of Semi-automatic detectors It is reasonable to check a considerable number of banknotes with semi-automatic detectors. The number of the tested currency increases up to 30-60 banknotes in one minute. Such devices are very convenient because they do not oblige the cashier to take the decision on the quality of money. Both the skilled cashier and the beginner can check the banknotes equally well. But such devices have 4 basic disadvantages. The first disadvantage is the quality of verification. The market is overflowed with the semi-automatic devices with extremely low quality of verification which sometimes imitate the verification procedure. As a rule, the detectors of such type are equipped with two sensors for checking the dimensions and the magnetic map of the banknote. The second disadvantage is the quality of the banknotes. There can be some technological deviations in the process of banknote printing. Sometimes the banknote may have deviations in length or may have different intensity and location of security features. The semiautomatic detectors may fail to recognize such deviations and reject the original banknotes. In some cases detectors can reject up to 90 % of genuine banknotes in a pack. That is not acceptable. The third disadvantage is a problem with the software. Automatic detectors are strictly programmed for the certain banknotes. They cannot check the banknote of earlier and brand new issues or the banknotes with printing deviations. Some of modern devices are adopted for upgrading; new software can be simply sent by e-mail and installed by connecting PC with the device, but most of the semi-automatic devices are not equipped with such an option. The fourth disadvantage problems with checking of shabby and worn-off banknotes. There are no mechanical detectors in the world granting 100% accuracy of verification of shabby banknotes: such banknotes are got stuck in the banknote acceptor of the devices very often. Engineers of our company took into account all the above mentioned disadvantages in development of semi-automatic detector the DORS 200. We tried to avoid all of them while creating DORS 200.
The device has a unique set of sensors. Its magnetic heads are wide thus granting verification of all the magnetic protective features across the banknote. The Infra Red sensor and the spectral analysis senor which is our Know How provide world highest standards of authentication. It is worth mentioning the highest speed of verification and lowest noise level. C. Verification By Means of Infra-Red Detectors Some years ago the largest Russian bank - the Savings Bank of Russia - issued the high value promissory note. It was counterfeited at once after it became available in the market. The fakes were of the highest quality and e.g. the iris pattern of the counterfeits was executed even better than on the originals. But all counterfeits could not imitate the Infra Red protective features. The Saving Bank was urgently equipped with our Infra Red detectors the DORS 1000 and the DORS 1100. It saved the promissory note emission from failure. Summarizing the above mentioned facts we would like to state the following: the detectors which can visualize the features which cannot be forged are more effective and promising. Nowadays the best features which can be visualized by means of the detectors and which practically impossible to counterfeit are Infra Red security marks. By means of Infra Red detectors you can see the IR marks of the banknotes which are not visible under standard illumination.
The banknote under standard day light illumination The banknote s image in Infra-Red light The cost of equipment which can make high quality IR marks is very high therefore the counterfeiters cannot afford it. The prices of IR detectors are higher in comparison with UV devices but not that fantastic as they used to be few years ago. Some years ago, if you can remember the devices for verification of IR marks were very huge and they cost dozen thousand dollars. Currently modern IR detectors can be equipped with additional devices, such as a videomagnifier which can be operated either in day light or IR zoom mode. Recently central Bank of Russia has released the new instruction "The Procedure Of Foreign Currencies Cash Handling By The Authorized Banks In The Territory Of The Russian Federation" providing how the working place of the cashiers should be equipped: The List Of The Technical Devices For The Definition Of The Authenticity Of Foreign States Banknotes: 1. The device for the control of the protective features seen in ultra-violet light. 2. The device for the control of watermarks. 3. The device for the control of magnetic marks. 4. 8-10 x zoom magnifiers. 5. The device for the control of the protective features seen in infra-red light. IV Summary Let me summarize the issues which we wanted to convey to you: 1. The check of the recommended security features takes too much time, up to 40 seconds. 2. The very security features recommended for the detailed examination are usually being counterfeited. 3. The methods of visual checking of the banknotes do not guarantee the quality of verification. 4. Ultraviolet detectors help to reject only low quality counterfeits. 5. Semi-automatic detectors are acceptable to check new banknotes, but have certain problems with shabby banknotes. 6. Nowadays Infra Red detectors can be considered to be the most reliable devices for verifications of banknotes of any condition. Always at your disposal, Nikolay A. Stepanov Commercial Director International Sales Systema LLC Federativny pr., 5-2 Moscow 111399 Russia www.dors.biz Tel: +7(095)725-2326 Fax: +7(095)725-2322 Mobile: +7(926)220-2966 mailto:n.stepanov@shq.ru