When it comes to their common currency, Europeans may be getting more than they bargained for. Their goal in introducing the euro was to create a global currency to rival the U.S. dollar. Now that the euro has become the world's second-most-traded currency, it is also becoming an increasingly popular target for counterfeiters.
The European Central Bank says that 413,000 phony euro notes were confiscated during the first half of this year, the highest six-month tally since the currency's 2002 launch and a 32% increase over the same period last year.
Fakes Traced to Criminal Gangs Watchdogs at the Hague-based Europol, an organization of European police agencies, say there's no cause for panic. "The figures have to be compared with the number of genuine bank notes in circulation, which is also increasing," says Michael Rauschenbach, who heads the group's forgery and payment-card fraud unit. Over the past two years, four new countries—Cyprus, Malta, Slovenia, and most recently Slovakia—have adopted the euro as their national currency, boosting the number of euro zone members to 16.
Still, phony bills are spreading more quickly than real ones. The number of authentic euro bills in circulation this year is up only 8.6%, to 12.5 billion.
Europol says counterfeiters operate in highly organized criminal groups. About 70% of seized bogus bills have been traced to three major gangs, all based in Italy and the Balkans. Police say the spike in seizures of phony bills this year stems from increased production by one of the three gangs in 2008.
The €20 bill, worth about $28 at current exchange rates, accounts for nearly half of seized fake bills. Counterfeiters prefer it to higher-denominated bills that are likely to be more closely inspected, and to €10 and €5 bills that yield lower profits. The second-most-copied denomination is the €50 note, accounting for 34% of seized bills.
Porous Borders The absence of border controls between most European Union nations makes tracking counterfeiters more difficult. Jean-Louis Perrier, the deputy chief of the anti-counterfeiting unit within France's Police Nationale, says many of the fake euros entering France are brought in by crooks from Poland, Lithuania, and Bulgaria. National police frequently cooperate with each other and with Europol on cross-border investigations.
One such investigation helped Europol bust a criminal gang in Bulgaria earlier this month, leading to the arrest of 17 people who had distributed counterfeit bills with a face value of more than €16 million.
For now, fake euros are found almost exclusively within the euro zone—unlike counterfeit dollars, which circulate worldwide, since the greenback is used for unofficial trade in many countries. The U.S. doesn't release figures on dollar counterfeiting, but European police say the rate of euro forgery is much lower.
Easy to Spot How authentic do those phony euros appear? An ECB counterfeiting expert, who provided a background briefing to BusinessWeek, says the quality of most fake bills is so poor that almost anyone can easily detect them, using a simple "feel, look, and tilt" test. Genuine euro bank notes have raised print that can be felt with the fingers, as well as watermarks and other security features that can be seen with the naked eye, and holograms that shift when the bill is tilted from side to side.
Counterfeiters haven't figured out how to replicate those features. But the continuing spread of fakes shows there are still plenty of people who accept bills without carefully scrutinizing them. The advice of Soren Kragh Pedersen, chief of public relations at Europol: "Spend the necessary time to check."
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