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MONEY COUNTERFEITING BY ANUJ ISSAR(UM8303) EKTA AGGARWAL(UM8304) JIVJOT SINGH(UM8305)

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Page 1: Money counterfeiting

MONEY COUNTERFEITING

BYANUJ ISSAR(UM8303)

EKTA AGGARWAL(UM8304)JIVJOT SINGH(UM8305)

Page 2: Money counterfeiting

A counterfeit is an imitation that is made with the intent to deceptively represent its content or origins. The word counterfeit most frequently describes forged money or documents, but can also describe clothing, software, pharmaceuticals, or any other manufactured item.

Counterfeit money is imitation currency produced without the legal sanction of the state or government. Producing or using counterfeit money is a form of fraud or forgery.

COUNTERFEIT MONEY

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1. Individuals or a group

• To make quick and easy money

• It is easily detectable as, old technologies and techniques are used which are unable to produce quality clones.

2. ‘Economic subversives’

• Sponsored by unfriendly governments

• Extremely high quality forgeries

• Intention may be to undermine a currency for political ends or

• To support their own economy or overseas activities.

WHY IS MONEY COUNTERFEITED..?

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Nations have used counterfeiting as a means of warfare. The idea is to overflow the enemy's economy with fake bank notes, so that the real value of the money plummets.

Great Britain did this during the Revolutionary War to reduce the value of the Continental Dollar.

A TOOL IN WARFARE

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Before the introduction of paper money, the most prevalent method of counterfeiting involved mixing base metals with pure gold or silver.

Methods used now days include:-• Using photographic plates• Stencils and offset printers• Large printing presses and• The ability to cut intricate designs by hand into

metal plates.

HOW IS MONEY COUNTERFEITED

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Based on the level of operations, resources at disposal and there overall impact on economy.

• ‘Nuisance’ counterfeiters,

• Professional counterfeiters.

WHO ARE COUNTERFEITERS???

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Term used for individuals who counterfeit at small scale using• photocopiers, • scanners,• laser printers etc.

Produce small numbers of crude counterfeits and account for about 5% of counterfeit notes circulating.

NUISANCE’ COUNTERFEITERS

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• More oraganized.• Have better resource or funding.• Work independently or, as part of organised

crime.• account for 95% of counterfeit notes.• Use high quality image preparation and

lithographic printing.

PROFESSIONAL CRIMINALS

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Technology use goes both ways as it aids in both creation and detection of counterfeits notes.• Higher resolution color photocopiers.• Micro printing, aliasing, foil stamps, security

threads. • Softwares such as Photoshop, having photo

enhancing tools.• Ultraviolet lamps to detect fake currency.• Detector pens, detect presence of starch in

currency which is absent in real currency.

ROLE OF TECHNOLOGY

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• Inflation.• Depreciation in value of real money.• Decrease in people ‘s confidence in the

currency.• Increase in illegal overseas activities in

the country.

EFFECTS OF COUNTERFEITING

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• Increase in prices (inflation) due to more money getting circulated in the economy - an unauthorized artificial increase in the money supply.

• Companies are not reimbursed for counterfeits. This forces them to increase prices of commodities.

INFLATION

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 The infusion of new money would lessen the marginal value of money already in circulation, the beginnings of a new round of inflation, albeit quite small.  However having been the first recipient of the new money, forger do not feel the effects of the inflation.

DEPRECIATION IN VALUE OF REAL MONEY

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The fake currencies produced in other countries can be used to fund the terrorist operations in the targeted country.Most of the fake currency in India is suspected to be imported from Pakistan and Bangladesh.

INCREASE IN ILLEGAL OVERSEAS ACTIVITIES IN THE COUNTRY

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• Payees may demand electronic transfers of real money or payment in another currency (or even payment in a precious metal such as gold).

• Decrease in the acceptability(satisfactoriness) of currency.

DECREASE IN PEOPLE’S CONFIDENCE IN THE

CURRENCY

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• Money Counterfeiting creates a vicious circle.

• Common man transfers money it to the bank.

• From bank it is routed to Federal Reserves .

• Federal Reserves then ultimately transfers the burden to common man in from of taxes.

ULTIMATELY WHO TAKES THE HIT?

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• Around 15% of fake rupees are in circulation all over India.

• Major target notes are Rs 500 and Rs 1000 denomination

• Gandhian note of Rs 500 note is virtually undetectable to naked eye and can only be detected using specialized equipment.

EXTENT OF COUNTERFEITING IN INDIA

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There are two factors which makes India more susceptible to counterfeiting

• Cash Based economy

• High denomination currency

INDIA IS MORE PRONE TO COUNTERFEITS

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As most of the transactions are in cash, the amount of cash that people hold is pretty high.Hence floatation of fake currency is easy amidst cash surplus.

In a primitive all-cash economy, counterfeiting would indeed increase the cash in circulation and dilute its value. 

CASH BASED ECONOMY

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HIGH DENOMINATION CURRENCY

Denomination currency means the face value of the notes available.

In India these are 1, 2, 5, 10, 20, 50, 100, 500, 1000.

The basic advantages of high denomination currency are• It makes high value transactions easy,• Cash transactions are non traceable and hence leave no

footprint.

Therefore high denomination currency results in• Accumulating black money created out of tax evasion.• Corruption, hence life blood for parallel economy.

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• However its more wide spread and more harmful impact is fake currency and its consequences which results to weakening of official currency, 

• To print a fake currency note, the cost is about Rs. 30 to 40/-.

• Hence very profitable to print fake notes for the amount 1000, 500 and also 100.

HIGH DENOMINATION CURRENCY (CONTD.)

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High denomination results to• Corruption, • Weakening of banking,• Weakening of official economy and• Of course counterfeiting. Realizing this taken in the past even by other countries from time to time, like US in 1969, they brought down their highest currency to $100. India should remove these denominations higher than Rs. 50/-

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• Polymer Bank notes, created with special mix of polymer compounds aided with Holograms.

• Have distinct non paper like feeling and last till 5 years compared to 12-15 months of a paper note.

• Plastic money based upon credit and debit cards. • Average cost of a high quality counterfeited note is

Rs 30-50 so Doing away with higher denomination notes eg Rs 500 and Rs 1000 will lower the margins and counterfeiting will be less profitable.

PREVENTIVE MEASURES

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• Mandates banks to install money sorting machines.• Creates awareness about the security features in

local languages.• Vigorous advertisement campaign named ‘Paisa

Bolta hai’.• Training to bank cashiers to detect fakes.• Launched ‘www.paisaboltahai.rbi.org.in’ displaying

security features of all the notes.• Plans to launch plastic notes.• Constant security updates in the currency.

STEPS BY RBI

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SECURITY FEATURES IN RS 1000 NOTE