Tech Industry

Countering high-tech counterfeiters

newsmaker Digital technology could soon make it possible for anyone to copy and print real-looking currency. Robert Schafrik led a group seeking solutions.

newsmaker Record labels, Hollywood studios and software makers aren't the only ones that have to worry about high-quality digital copies. So, too, does the Department of the Treasury.

That's because printers and copiers are rapidly advancing to the point where just about anyone could become a successful counterfeiter. For all the changes that the U.S. government has made in recent years to the $10 bill, the $20 bill and other banknotes, readily available technology continues to make it easier to make fakes.

Given the potentially dire economic consequences of a flood of counterfeit bills, the Bureau of Engraving and Printing--the arm of the Treasury Department that oversees U.S. currency--sought insights into current and emerging technology from a group of experts in areas including materials science, image analysis and printing technology. That group, under the auspices of the National Research Council, earlier this year delivered its report, "A Path to the Next Generation of U.S. Banknotes."

Among the ideas raised by the group (presented as options for the BEP, and not specific recommendations) were the possible use of plastic in the fabric of the banknote, windows or even lenses for displaying certain features, or nanotechnology to allow for new inks with novel characteristics.

To find out more about how high-tech can both foster counterfeiting and defend against it, CNET News.com talked with Robert Schafrik, the chairman of the NRC committee and general manager, materials and process engineering department, for GE Aviation.

Q: How widespread is counterfeiting?
Schafrik: If you look at it from the 20,000-foot level, the incidence of counterfeiting of U.S. banknotes is among the lowest of the currencies. Counterfeiting in the U.S. is mainly focused on the $20 bill, which makes sense because that's what normally you would get from the bank tellers and that sort of thing, but overseas it's the $100 bill that's the most widely counterfeited. So percentage-wise, it's pretty low...it's like three per million (banknotes), something like that. But that's a little bit biased because of all the $1 banknotes that are printed.

Which are not a big deal for counterfeiters.
Schafrik: Yeah, it seems to be that way. If they're going to go through the risk, they're probably not going to risk a jail term for a $1 bill. So if you can take that out, then maybe those rates will about double. The U.S. is generally doing pretty good at deterring counterfeiting.

A lot of those things that require an expert to do now--almost a graphic artist--will be easily done by improved software.

What kind of a high-tech threat exists right now?
Schafrik: At the far end, we have what's known as the state-sponsored counterfeiter, and that's someone that has really deep pockets and can spend quite a lot of money in purchasing the right kind of equipment, etc. What's been publicized is North Korea printing the so-called supernote, which is the $100 bill. That's kind of the extreme end of what a counterfeiter could do.

And they need specialized machines to make those.
Schafrik: Yes, and because it is state-sponsored--they print their own currency (in North Korea)--they're able to have access to the same kind of printing equipment that the Bureau of Engraving and Printing would use, and they have obviously skilled people there. Our committee saw some of those (bank)notes, which most of us would accept without any question, really. Some very skilled people, though, could tell a little bit of a difference in the feel of those banknotes. They're not exactly printed on the same kind of paper that we have and there are some subtle defects in the way they're printed. But I'd say almost anyone who would be a casual user of currency--you'd accept it without a question. Thankfully there's not a whole lot of those around, and the Federal Reserve does have some very sophisticated equipment--every time a banknote goes through their system, they scan them and they're able to pull out the counterfeit notes. That's more of a problem for the State Department, if you will. The biggest concern would be the counterfeiting that could be done on the type of digital (equipment), the reprographic equipment that's readily available.

So we're still not talking laser jets and inkjets?
Schafrik: Well, it could be, sure--that will be the output of them. The reason that is looked upon as a serious threat is the diffuse nature of those counterfeiters. So the focus really of a lot of things that we tried to think of in the committee would be to put features in a banknote that would make it obvious (to nonspecialists) if someone used that kind of reprographic equipment to make a bad note.

The report had also said that within 10 years even low-skilled amateurs would be duplicating the images.
Schafrik: With the huge demand that people like you and myself have for taking digital photographs and being able to print them out to look very nice--and most us don't want to mess around with Photoshop, etc., and all those filters, to make them look very nice. The advancements we see coming in software says that a lot of those things that require an expert to do now--almost a graphic artist--will be easily done by improved software.

And that's within 10 years.
Schafrik: Yes. It's happening now, but within 10 years it will be a piece of cake.

Looking at just the domestic counterfeiters, how many right now are making the kind of bills you and I would be able to (spot) right away, with smudgy ink and that sort of thing, and how many are using the more sophisticated, high-tech methods?
Schafrik: That's a good question, and that's why we separated the counterfeiters into five different categories. The lowest category--it's immediately obvious those are counterfeit notes and so we didn't spend a whole lot of time on that class of counterfeiter...The petty criminal, and the opportunistic counterfeiter, that's really the most onerous ones that we considered.

Counterfeiters don't have to do something exactly right--all they have to do is emulate it or make it good enough to pass once.

(Based on) some data from the Secret Service, it looked like about a third of the counterfeits was from the professionals and maybe about 20 percent from the state-sponsored, and then the rest was these opportunistic and petty criminals, so that's almost half. What we really would like to go after is the opportunistic and petty criminals, in fact to discourage them from even trying to counterfeit in the first place.

And what we're talking about here is basically the reproduction of the image, as opposed to the contents or the construction of the currency?
Schafrik: That's the thought. As we advance, the banknote would be more than just the two-dimensional image and would include features embedded--well, like there is now actually, but to do more that sort of thing.

Let's look at some of the specific suggestions. One suggestion was the use of plastic in the currency.
Schafrik: There is a security thread in there, which actually is a strip of plastic, and so one could extend that idea--you know, embed more plastic things or even a plastic window in the currency. There are a lot of neat things that we thought of doing. Of course, the Achilles heel that you've to look at is...the durability.

Counterfeiters don't have to do something exactly right--all they have to do is emulate it or make it good enough to pass once. So the other trick is to design some of these new features like using plastic (so that) if they did try to emulate that feature, it would still be obvious that it was a counterfeit.

I read that one possibility might even be to make currency uncuttable--if you can cut (a banknote), it's counterfeit; if you can't cut it, it's real.
Schafrik: Right. You could embed something on one of the edges that would be made from a very durable type of polymer, and you could twist it, cut it or whatever and that would be proof positive.

Another suggestion had to do with embedding things like little lenses into the bill.
Schafrik: That would be a similar kind of an idea from the plastic window. See the other thing is that if you have a very flat, nice surface--you would on some of these polymers--you could do some very fine printing or put in a very nice feature that is beyond the resolution limit in the foreseeable scanner, the digitized scanner. That would be another type of benefit that would detract from someone just trying to make a digital image of a banknote and print it out. It would take a lot more added steps to be a decent-looking counterfeit.

Some of this new technology, like some of the nanocrystal inks, would lend themselves quite nicely to a more sophisticated sensor that could be easily available in stores or banks.

Another idea that sounded intriguing would be using nanotechnology (to change the nature of the material in the banknotes).
Schafrik: Yes, that's exactly right. So we could conceive of these things but our frustration was we'd like to go to a lab and make up some sample notes and see if the reality kind of matches what the thought process was.

We did think of some vulnerabilities that maybe some of these ideas would have and we didn't want to explain in the report what those vulnerabilities would be, because we didn't want to create a counterfeiter's handbook, if you will, for a new feature that really hasn't been developed. So that was little bit of a quandary. We actually dropped some pretty neat ideas we had because on reflection we thought, well it would be almost impossible for someone to duplicate it exactly, but maybe it wouldn't be that hard for someone to do it good enough to pass only once.

As we look into the future, we could see more of an application for authenticating notes with some sort of an aid and not just with the human senses.

A scanner or reader, or something like that?
Schafrik: People are beginning to use some sort of assistive aid, some of these new features that we talked about in the report, that maybe only need a pen light or maybe a little grid that you can just slide across the note. If the right kind of pattern is printed on there, you'll see some marked effect by just that simple grid, or having infrared light that would make some special ink more visible, that sort of thing. The idea is it doesn't have to be something very expensive or sophisticated. On the other hand, some of this new technology, like some of the nanocrystal inks, would lend themselves quite nicely to a more sophisticated sensor that could be easily available in stores or banks.

There are scanners of some sort already in use--is that just for looking for the watermark or something like that?
Schafrik: That's right. It would be kind of the next step up from there. The problem with the watermark is, the clarity of the image is not high. One of our thoughts would be, what could be introduced into the banknotes would be the next-generation improvements on some of the features which already are in the note. In fact, one probably wouldn't want to make a dramatic change in the notes because we are pretty comfortable and used to our currency now. A dramatic change would be hard to sell to the public. You need public acceptance of these things.

The report also talked about the Internet being a threat. How so?
Schafrik: We said the Internet could be, and in fact it is being exploited now by counterfeiters. In fact, a few of our committee members went on to the Internet to see what they could learn about counterfeiting. And it was amazing, all the information that's out there, almost a recipe for how to do x, y and z, and where to buy supplies, and what's the best kind of equipment to use, and all this sort of thing. You could see as we go into the future and start putting more sophisticated features in the banknote that some of the smart bad guys would like to share that. So in that sense, we said we see the Internet as being a growing threat too.