Counterfeit bills have long been a problem for businesses – but did you know they’ve even been used as an instrument of war?

During World War II, Operation Bernhard was a secret Nazi plan to flood the British economy with counterfeit Bank of England notes, aiming to destabilize the economy. The counterfeit notes were so meticulously crafted that they were nearly indistinguishable from genuine ones, even by experts of the time.

The good news is that today’s money counting machines can detect counterfeit bills.

Let’s take a look at how…

How do money counting machines detect fake currency?

Money counting machines (also know as currency or money counters themselves) identify fake notes through the latest detection technology which includes the following:

Ultraviolet (UV) detection

Modern banknotes often include UV-sensitive features that are invisible to the naked eye but can be seen under UV light.

Money counting machines use UV sensors to detect these features in fake bills, as counterfeit notes typically lack these UV markings or use incorrect ones.

Magnetic ink detection

Genuine banknotes often use magnetic inks in their printing. Counting machines are equipped with magnetic sensors to detect the presence and correct placement of this ink.

Counterfeiters often find it difficult to replicate this magnetic property accurately, making it a reliable technique for the magnetic detection of of counterfeit money.

Infrared (IR) detection

Genuine banknotes often reflect or absorb ultraviolet or infrared light in particular ways. Today, infrared sensors can detect specific patterns and inks and use these properties to verify those patterns.

Counterfeit notes generally fail to replicate these IR properties accurately, making infrared sensors and IR detection an effective tool against counterfeiting.

Measure the size and thickness of each note

Genuine notes are printed on paper with specific dimensions and thickness. Counterfeit notes often fall short of these standards. These physical attributes are therefore a big help in identifying fake currency notes.

Watermark and hologram verification

Many banknotes include watermarks or holograms that are difficult to reproduce accurately.

Money counting machines use optical sensors to verify these security features, helping to identify counterfeits. Moreover, genuine notes often contain micro-printing and other fine details that are challenging to reproduce. Only the most sophisticated and rare counterfeits can achieve this.

Counting machines equipped with high-resolution cameras and image recognition software can detect these intricate details, distinguishing real notes from fakes to save time.

Fake notes: An overview

The scale of of the problem

In recent years, the incidents of counterfeit banknotes has significantly decreased.

According to European Central Bank, in 2023, 467,000 counterfeit euro banknotes were withdrawn from circulation; one of the lowest levels ever in proportion to the total banknotes in circulation.

This translates to just 16 counterfeits per million genuine notes. It will come as no surprise that more than 70% of these were €20 and €50 denominations.

In the United States, approximately $100 million in counterfeit currency was detected and removed from circulation in 2022. The most commonly counterfeited cash denominations are the $20 and $100 bills.

However, according to Central Banking, in 2023, the number of counterfeit banknotes increased in the Czech Republic, Germany, Slovakia, and Slovenia.

Denmark announced security upgrades to its banknotes.

In Germany, counterfeit usage rose by 28.2% compared to 2022, driven by significant fraud cases involving €200 and €500 notes, according to Burkhard Balz of the Deutsche Bundesbank.

How were fake notes previously identified?

Historically, identifying counterfeit notes relied heavily on manual inspection and various low-tech methods. Some of the techniques and anecdotes from history include:

Historical methods of identifying fake notes

1. Watermark and paper quality:
One of the oldest methods involved checking for watermarks, which were difficult to replicate accurately. Counterfeit notes often lacked the fine details of genuine watermarks.

The texture and quality of the paper were also scrutinised. Genuine banknotes were printed on high-quality paper with unique fibres, while counterfeits often used inferior paper.

2. Ink and printing techniques:
Before modern printing technology, genuine notes were printed using high-quality intaglio printing, which gave the ink a raised texture. Inspectors would run their fingers over the note to feel for this texture.

Counterfeit notes often used flat printing methods, marking them out from genuine notes.

3. Visual inspection:
Inspectors used magnifying glasses to examine the fine details of the note’s design. Genuine notes featured intricate designs and micro-printing that were hard to replicate.
Consistency in design and colour was checked, as counterfeits often had slight variations in these elements.

4. Use of special pens:
Special counterfeit detection pens, which contained iodine-based ink, were also used. When marked on genuine currency, the ink would remain clear or amber. On counterfeit paper, it would turn black.

5. Tearing and light tests:
Inspectors would tear a small corner of the note to see if it tore easily, as genuine banknotes were more durable.

Holding the note up to light was another common practice. This would enable checking for embedded security threads or other features visible only when backlit.


In the 19th century, bank clerks would sometimes chew on the notes or taste them, as counterfeit notes often had a different taste due to the different materials used.

In colonial America, Benjamin Franklin’s printing firm incorporated tiny imperfections and misspellings into the designs of legitimate paper currency, which were difficult for counterfeiters to copy accurately.

Where does the word counterfeit come from?

In English, the word ‘counterfeit’ originates from the Old French term “contrefaire,” which literally means “to imitate.”

This Old French word is composed of “contre” (meaning “against” or “opposite”) and “faire” (meaning “to make” or “to do”), ultimately tracing its roots back to Latin.

The term evolved to denote the act of producing false or imitation versions of something genuine, particularly in the context of currency and goods.

The future of fake notes

The resurgence of cash use in many countries such as the UK and its continuing popularity in many other countries means that fake currency is likely to grow proportionately.

For organisations accepting and managing cash, it’s good news that today’s money counting machines are better equipped than ever with new technology to spot fake money.

PayComplete has a range of smart money coin and note counting machines equipped with the latest counterfeit detection technology. Our our business cash experts are on hand to help find the right solution for your business!