Mr. Joel Zlotnick, of Counterfeit Forensics, LLC approached us a number of months ago requesting a listing on our Industry Links page. After vetting the necessary credentials and finding them to be beyond reproach, we agreed to list his company. Since that time, Mr. Zlotnick has provided us with insight and instruction regarding both the art and science of counterfeit detection. As a follow-up to our recent ‘Suspect versus Counterfeit‘ post, we are pleased to offer an expert forensic perspective on this oft debated topic…

“Suspicious” or “Counterfeit” Currency?

Joel Zlotnick       Counterfeit Forensics, LLC           www.CounterfeitForensics.com

Since 1865, the U.S. Secret Service has held jurisdiction for investigating the counterfeiting of U.S. currency.  Many nations similarly designate a specific law enforcement agency (or the central bank) with the same mission.  The ultimate authority to determine whether a specific banknote is counterfeit or not is held by this entity in each jurisdiction, and any banknote should only be regarded as “suspicious” until positively determined to be “counterfeit” by the designated agency.  What special capability provides any such legally designated law enforcement or government entity with this ability?

In many jurisdictions, agency authority to identify a banknote as counterfeit can be exercised not merely because of an administrative mandate, but also on the basis of a real technical authority that must be maintained by the designated agency to support credibility in its decisions about banknote authenticity.  Depending on specific jurisdiction, this technical authority may be comprised of various components: access to third level (forensic) security features present in the currency and unknown to the public, an understanding of production variation, an understanding of the effects of a wide variety of post-issuance wear or damage, ongoing constructive contact with banknote production facilities and materials suppliers, knowledge of contemporary counterfeiting practices and technology, knowledge of both current and past products of known counterfeiting operations, and use of a complete toolkit of analytical techniques (including both machine-readable and manual examinations) to render highly accurate conclusions.  Many of these capabilities require specific information known only within the government or by the banknote manufacturer, and which members of the public receive only in a restricted form.  Put bluntly, it would be unexpected for a public entity to have access to technical information about both genuine and counterfeit currency that is of the same quantity and nature as that possessed by the issuing government.  That fact is critically important to an understanding of what it means to say a banknote is “counterfeit” and in understanding who is qualified to do so.

Consider the commercial banknote processing equipment manufacturer’s task.  Manufacturers of banknote processors analyze currency to develop profiles of “normal” banknotes, and can achieve great accuracy in detection of notes that are different from “normal” currency.  However, all such manufacturers that have limited access to proprietary government information must make several assumptions to build functional products.  These assumptions include that the currency will have a limited range of variability and a certain standard of quality control across machine-readable characteristics; that sufficient characteristics of the currency are amenable to automated inspection; that counterfeits will differ appreciably from genuine notes in one or more such machine-readable characteristics; that production or style changes to the genuine currency will be communicated effectively and in advance by the issuing government; that characteristics of wear and post-issuance damage can be recognized and accommodated in processing workflow, and so on.

This is a challenging task, and in reality, not all of these assumptions are true at all times for all equipment manufacturers, or all currencies.  Banknote equipment manufacturers have to choose appropriate inspection technologies with or without the help of the issuing government.  Only a limited sample of genuine banknotes to study and calibrate against will be available (regardless of whether they are provided by the government or not) and even in our current age of high quality control and refined inspection technologies, there can be no guarantee that the test banknotes will be representative of all circulating or issued banknotes in every possible respect.  Any intentional changes or unintentional production variations that may occur as new notes of the same designs are issued, and their potential effects on the manufacturer’s inspection process, may or may not be communicated regularly or effectively by the issuing government.  Specific strategies used by counterfeiters, or the specific technical characteristics of currently active counterfeit shops, will not necessarily be known to banknote equipment manufacturers.  Even if they are, they could change quickly without the knowledge of equipment manufacturers.  Furthermore, cash users can be creative when conceiving of new ways to abuse currency, from normal wear and tear to soiling to chemical contact, all of which might serve to modify the machine-readable properties of banknotes in new ways that may foil correct decision-making.

From a theoretical perspective, an automated commercial banknote processing machine that is built without such proprietary government knowledge – regardless of complexity, or lack therefore – must always identify suspect banknotes probabilistically on the basis of previously captured data on a sample of banknotes.  Machine calibration always originates from a limited (and to some degree, historical) sample of genuine notes, which might not be representative of the whole note population even if a large sample size is available, and possibly to a limited sample of counterfeits, the characteristics of which must also change over time.  Add to this wear, defacement, soiling and other confounding factors that may be present on both genuine and counterfeit notes and the problem becomes even more complex.  Can the machine affirmatively recognize chemically stained genuine currency that no longer manifests the expected machine-readable characteristics?  What about quality control variations that have a similar effect?  Or counterfeits that intentionally mimic machine-readable banknote characteristics?  All of these problems exist theoretically for both the smallest tabletop note authenticators as well as large high-throughput equipment, though they may be of varying relevance in practice.

While many commercial processing machines might do an excellent job of rejecting banknotes that are inconsistent with the expected properties of genuine currency, this pool of discards may include both counterfeit and genuine currency.  An assertion that mechanical inspection by a commercial banknote processing machine can detect “counterfeits” in an absolute sense, as opposed to “suspicious” notes, overlooks this possibility.  The designated government or production facilities that have access to forensic-level security features, production information and other proprietary knowledge are able to rely on their expanded knowledge base to make the most accurate determinations about which notes are truly “counterfeit” and not just “suspicious.”  These determinations are made using capabilities that extend beyond machine-readable features, and which are able to control for wear, soiling, production variations and other confounding factors, and permit the best possible analytical decisions about which notes are truly counterfeit.  The rest of us, who lack access to this detailed information, should be wary of ourselves and always mindful of the limits of our capabilities in determining banknote authenticity, regardless of whether we claim to detect “suspicious” or “counterfeit” notes.