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--> Appendix B: Synopsis of National Materials Advisory Board Report 472, Counterfeit Deterrent Features for the Next-Generation Currency Design This study began in 1992 when the Department of Treasury's Bureau of Engraving and Printing requested that the National Research Council, through its National Materials Advisory Board, analyze and recommend overt counterfeit-deterrent features that could be incorporated into the redesign of U.S. banknotes. The major objectives of this study were to: analyze and recommend new overt counterfeit-deterrence features that could be incorporated into U.S. currency in the short term, intermediate term, and long term; and assess technological directions of future reprographic techniques that could be used for counterfeiting by "casual" and "professional" counterfeiters. A committee of 12 volunteers with expertise in advanced reprographic technology, chemistry, color, optical science and engineering, paper, physics, security marking, and systems engineering was formed. The Committee on Next-Generation Currency Design met six times between June 1992 and June 1993. Invited presentations by experts from industry and government provided data relevant to the production and inspection of banknotes, advanced reprographic technology, and advanced counterfeit-deterrence features and methods. This appendix is a summary of the major findings and recommendations of the committee; information regarding counterfeiting threats, feature description and assessment, deterrent strategies, and advances in reprographic technology can be found in the report. Synopsis Traditional counterfeiting deterrents, such as unique high-quality paper, fine-line engravings, and high-pressure (intaglio) printing, were adequate in the past to restrict counterfeiting to the dedicated craftsman with access to a printing press; these have kept counterfeiting to a reasonably manageable level in the United States. However, with the advent of advanced reprographic systems, such as color copiers and scanner/computer/printer systems, these methods are no longer sufficient. Widespread availability of these systems, reproduction quality, ease of use, and relative freedom from discovery combine to create an atmosphere for occasional, casual counterfeiting—a crime of opportunity. These systems also provide a
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--> convenient base technology for the more professional counterfeiters, so that they need only concentrate on simulating the deterrent features and not on the engraving and printing processes. The counterfeiters task is made easier by a public in the United States that, for a variety of reasons, does not appear to aggressively examine its banknotes and report counterfeit bills. Placement of new nonimpact color copier and printer systems in 1995 is expected to exceed 2 million units in the United States, and a similar number is expected for the rest of the world. The number of counterfeit notes produced using nonimpact reprographic technology (i.e., copiers, scanners, and computer printers) is presently small in contrast to that produced by lithographic processes that use specialized equipment. The rate of growth, however, is geometrical. An illustration of how large the problem could become would be to assume that the rate of counterfeiting with nonimpact reprographic equipment doubles every year until year 2000, as it has since 1989. With this assumption, the present-day value of counterfeit currency could grow to almost $2 billion in the year 2000. Such a large amount of counterfeiting would cause severe problems for the economy, as well as impact the ability of law-enforcement agencies to respond. Fortunately, appropriate actions can be taken long before counterfeiting becomes a problem of such proportions. Over the course of this study, technical information about numerous deterrent features was gathered from vendors, expert witnesses, the Bureau of Engraving and Printing, the Federal Reserve Board, and the Secret Service. This information ranged from conceptual proposals with little or no supporting data to prototypes with extensive test results. A limited amount of data was also available for features already in use on the currency of other countries. The overall effectiveness of an individual feature was determined by two primary considerations: resistance against technical threat and technical success probability. Resistance against technical threat assumes success in deploying the deterrent and is a measure of the feature's value as a counterfeit deterrent. This category is subdivided into four subcategories: (1) visual and tactile recognizability, (2) inherent resistance to copying, (3) resistance to simulation, and (4) ease of machine readability. Technical success probability is a measure of the risk of incorporating a feature into a banknote. This category is also subdivided into four subcategories to identify the primary areas of consideration. These are (1) availability and manufacturability, (2) change to recurring production costs, (3) durability, and (4) capital cost of new or modified production tooling. The two categories, with their eight subcategories, form the cornerstone of the committee's evaluation by helping identify the relative strengths and weaknesses of each feature. The committee did not expect that any single feature would rank first in all categories, and none did. Hence, the committee thought it was important to understand the intent (target) of each deterrent. The committee believed that, in order to provide a multifaceted system of deterrents, consideration should be given to deploying multiple features that complement each other. A well-designed set would address issues of visibility and recognizability under different viewing conditions; require different methods and skills for simulation; and, generally, require too many additional process steps for anyone but the dedicated professional to attempt. Some caution is required, however. The use of too many features could overwhelm the public and thereby reduce the overall effectiveness of the deterrents. Features that defeat the casual counterfeiter do not necessarily work effectively against professional counterfeiters. Casual, opportunistic counterfeiters do not have the skills, resources,
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--> or determination to defeat sophisticated individual deterrents or combinations of them, whereas professional counterfeiters do have these skills and the resources to simulate or duplicate any single deterrent, and probably most combinations, given sufficient time. Certain combinations of features, rather than features acting alone, offer robust potential for defeating the casual counterfeiter and slowing down the professional. In the committee's opinion, the set of deterrent features need not be the same on all denominations of banknotes. For example, more sophisticated features may be used on the $100 banknote than on a $5 (or $1) note. Recommendations Although there are many new features that can be used to deter counterfeiters, the Bureau of Engraving and Printing should continue to utilize fine-line engraving, intaglio printing on high-quality pale-tinted paper, and the security thread as methods of deterrence against "classical" printing technologies and present-day reprographics. Future banknote designs should also incorporate additional visible features to serve as deterrents against counterfeiting and as a means for rapid visual authentication. If analysis shows it is cost-effective to do so, some of these overt features could be incorporated into a banknote and their existence not publicly disclosed until they are needed to thwart a new counterfeiting threat. The BEP should implement a system of complementary features on each banknote that create added complexity for simulation by all levels of counterfeiters. They should not, however, constrain their design by a requirement that the same set of counterfeit-deterrence features be on all denominations of bills. The BEP should redesign U.S. banknotes to include at least some of these recommended features, making such changes in appearance as are necessary to produce a new series of notes that effectively and efficiently incorporates these advanced counterfeiting deterrents. The recommended features fall into three categories: near term, intermediate term, and long term. In the near term, the committee recommends incorporation of at least some of the following visible features: color-shifting inks for printing; moire (alias-generating) line structures, with color added as necessary to enhance the effect; security-thread modifications (e.g., with location or width based on the denomination; variable-size dot patterns, with color added to enhance the effect; and localized watermarks. For the intermediate term, features requiring inexpensive visual aids for detection at the point of sale are recommended. These include: infrared inks for printing; optically active coated fibers and particles embedded in the substrate; and photoluminescent inks for printing.
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--> Longer-term plans for advanced deterrents should include additional development and understanding of the following features: diffraction-based holograms and related devices; embedded zero-order diffraction gratings; laminated paper substrates with selected features; metallic or specular woven security features; optical fibers embedded in the substrate; and random pattern encryption methods. For the far term, the Bureau of Engraving and Printing should continually assess fundamental advances in the chemical, applied physical, and biological sciences for developments that are applicable to innovative deterrent features. Assessment of research in psychophysics would also be pertinent, since a better understanding of how people perceive visible features may provide insight into the selection of the "best" features. Before any new counterfeit-deterrent feature is implemented, it should be evaluated by adversary-analysis experts to determine how readily it can be defeated. This process would be aided by having a means to quickly produce currency with appropriate design changes. There are other aspects of a counterfeit-deterrent strategy that should be developed along with incorporating new features in banknotes. To begin with, counterfeit-detection education should be emphasized for point-of-sale persons as a priority, and it should be available for the public at large. Potential incentives that would encourage the public to turn in counterfeits should be closely studied to determine which would be effective and not subject to abuse. Industry should be encouraged to develop effective point-of-sale aids to assist in banknote authentication. Efforts that will lead to a high degree of authentication, particularly for the higher denomination bills, should be continued. The Department of Treasury should investigate the cost-effectiveness of requiring source identification, such as machine serial numbers, to be embedded in images produced by new copier and printer systems that are capable of producing quality color counterfeit banknotes. If it is determined to be cost-effective, appropriate U.S. legislation requiring source identification should be encouraged. In addition, the Department of Treasury should strongly encourage the use of sensors built into color copier and printer systems that can recognize and inhibit banknote copying. For this approach to be most effective, a unique feature with a high signal-to-noise ratio should be identified, developed, and applied universally to currency, possibly in conjunction with other nations. To stay ahead of the evolving counterfeiting threats, the Department of Treasury (perhaps led by the Bureau of Engraving and Printing) should establish a multiphased program of identifying and evaluating advances in relevant technologies. Understanding the technological progress in nonimpact printing technologies, and which counterfeiting techniques and methods are being employed, would help the Department of Treasury anticipate advances in the sophistication level of counterfeiters, so that the type and timing of counterfeit deterrents could be planned accordingly. Appropriate mechanisms to accomplish this can take the form of advisory panels, committees, workshops, and briefings.
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--> The Bureau of Engraving and Printing should continue to reevaluate its current materials, process specifications, and tests against actual use requirements, taking into account that different use requirements may apply to different bill denominations. Correlation should be made between the different failure modes of currency experienced in practice and the suite of specification tests performed by the Bureau of Engraving and Printing. Long-range systematic planning for incorporation of features should be instituted as a regular part of the mission within the Department of Treasury. Finally, the Department of Treasury should continuously gather data from other nations as to the effectiveness and durability of features such as color-shifting inks and holograms that have been incorporated into their currency.
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