How does the Cleveland Fed’s Cash Department handle counterfeit notes?
As appeared in the Cleveland Fed Digest's Ask the Expert
The Cleveland office of the Federal Reserve Bank of Cleveland’s Cash Services Department processes more than 7 million pieces of currency per day, four days a week. We do receive a small number of notes each day that are suspected counterfeits, and we send these suspect notes to the US Secret Service for further analysis. Reports from the US Treasury estimate that less than .01 percent of US currency in circulation is counterfeit.
The Cleveland Fed provides cash services—counting, verifying, and distributing money—to commercial banks and financial institutions within the Fourth Federal Reserve District [Ohio, western Pennsylvania, the northern panhandle of West Virginia, and eastern Kentucky]. Currency is deposited to the Fed via armored carrier, and each banknote is checked for condition and verified for authenticity before putting it back into circulation.
The financial institutions, which have accounts with the Fed in much the same way consumers have accounts with banks, do a thorough job of identifying suspected counterfeits before they deposit currency with us, but, occasionally, counterfeit bills slip through. If we do receive a suspect counterfeit note, we charge the financial institution for the value of that banknote.
For all deposits received, we must verify and count every banknote. First, all deposited currency goes through a high-speed sorting machine to examine it for damage, soiling, and graffiti and to check the banknote’s embedded security features, which help us determine if the note is genuine US currency. Banknotes in good condition are deemed fit, assembled into 1,000 piece bundles, and stored in our vault until they are needed for a future currency order. Notes in poor condition are destroyed. If a note is rejected by the machine, a second verification process kicks into place, and a cash operator feeds it into a slower-speed machine. During that process, operators are manually handling each note and will carefully examine any that do not appear to be genuine.
Cash operators are rigorously trained to look for imperfections and to recognize the unique security features that the US Treasury has designed into each denomination and series year of US currency. For example, in larger denomination notes, a security thread is embedded and can be seen through the note when held up to the light. This thread contains the inscribed dollar amount of the note. Operators also check for color-shifting ink on the newer notes. These are just two security measures in place that we consumers can check ourselves.
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