How Much Counterfeit Money Is in Circulation?

Counterfeit money is a deceptive imitation of genuine currency, produced without legitimate authority. It threatens financial stability, erodes public trust, and can lead to financial losses for individuals and businesses. Understanding its prevalence helps maintain confidence in the monetary system.

Estimating Counterfeit Currency in Circulation

Precise figures for counterfeit money circulating are difficult to determine due to its clandestine nature. Estimates are primarily based on seizures and intelligence gathered by agencies like the U.S. Secret Service and the Federal Reserve. The U.S. Department of the Treasury estimated approximately $70 million in counterfeit bills are in circulation, representing about one fake note for every 10,000 genuine ones. Other estimates suggest the stock of counterfeits could be around $15 million, or about one in 80,000 genuine notes, marking a significant decline from past figures.

The exact amount is difficult to track due to its clandestine nature, the dynamic flow of currency, and ongoing counterfeiting efforts. Despite these challenges, the amount of counterfeit currency is generally a very small fraction compared to the total legitimate currency in circulation. For example, less than 0.01% of the approximately $600 billion in U.S. currency in circulation was estimated to be counterfeit in fiscal year 2001. This low percentage is a testament to ongoing anti-counterfeiting measures.

Sources and Methods of Counterfeiting

Counterfeit currency originates from both domestic and international sources. Domestically, individuals or small groups often use readily available technology like inkjet printers and scanners. Some counterfeiters bleach ink off lower denomination bills, such as $1 notes, then print higher denominations like $100 marks onto the genuine currency paper. This method makes detection more difficult as the paper itself is authentic.

International sources frequently involve larger, more sophisticated operations, often linked to organized crime. These groups utilize advanced printing techniques to create convincing replicas. Historically, high-quality counterfeit banknotes, known as “Superdollars,” were widely distributed and believed to originate from state-sponsored operations. The U.S. dollar is a common target for counterfeiters globally due to its widespread use.

While the $100 bill is the most commonly counterfeited note internationally, the $20 bill is the most frequently counterfeited within the United States. This difference is partly because $20 bills are commonly used in daily transactions and may receive less scrutiny than higher denominations. The ease of passing smaller denominations makes them attractive to counterfeiters, even if the profit per bill is lower.

Detection and Seizure Efforts

The U.S. Secret Service is the lead investigative agency in combating counterfeit currency, established in 1865 for this purpose. The agency collaborates with federal, state, and local law enforcement, financial institutions, and the public to detect and seize fake money. Financial institutions train tellers to spot fakes and employ specialized equipment for verification. Banks use high-speed machines that count bills and simultaneously check for dirt, graffiti, and potential counterfeits.

Retailers and businesses also employ basic methods to check currency at the point of sale. Many use counterfeit detector pens, which contain iodine that reacts with starch in regular paper, turning black or brown. Genuine currency paper, made of cotton and linen, will not react.

Public awareness campaigns encourage individuals to report suspected counterfeits, emphasizing that knowing security features helps avoid accepting worthless bills. If a suspected counterfeit is received, it should not be returned to the passer. Instead, handle it minimally, place it in a protective covering, and surrender it to a police officer or Secret Service agent.

Once counterfeit currency is detected, it is seized and sent to the Secret Service for examination; individuals who unknowingly accept fake notes are not reimbursed for their losses. Annually, the Secret Service makes significant seizures. For example, the agency reported seizing $21.8 million in fake currency in a recent year, leading to 197 arrests. These seizures prevent fake money from circulating further and help dismantle counterfeiting operations, with the Secret Service also seizing assets linked to these illegal activities.

Security Features and Prevention

U.S. banknotes incorporate various security features designed to make them difficult to counterfeit and easy for the public to authenticate. The watermark, a faint image matching the portrait, is visible from both sides when held to light. The security thread, a thin, embedded strip, runs vertically through the paper, is inscribed with the note’s denomination, and glows a distinct color under ultraviolet (UV) light. Different denominations have different glowing colors.

Color-shifting ink is found on denominations of $10 and higher; the numeral in the lower-right corner changes color from copper to green when tilted. Microprinting, tiny text or patterns, is incorporated in various locations on denominations $5 and higher. This microprinting appears sharp and clear on genuine bills but may be smudged or unclear on counterfeits.

Raised printing, or intaglio printing, gives genuine banknotes a slightly rough texture that can be felt. This distinct feel is difficult for counterfeiters to replicate. Genuine U.S. currency paper is composed of 25% linen and 75% cotton, with small red and blue security fibers randomly disbursed throughout.

The $100 bill also features a 3-D security ribbon woven into the paper, displaying images of bells and “100s” that move as the note is tilted. These features, along with ongoing efforts by the Bureau of Engraving and Printing and the Federal Reserve, serve as the primary defense against counterfeit money entering circulation.