Central Banks close the net on counterfeiters

Leading central banks have almost completed a project to disable commercial copying and printing equipment from processing images of banknotes in order to choke off the growing problem of amateur counterfeiting. A press release from the Bank for International Settlements this week announced that the central bank counterfeit deterrence group (CBCDG) had made "important progress". An insider confirmed to centralbanknet.com that the group has persuaded most manufacturers of printers and copiers to include the anti-counterfeiting technology in all new products. Some scanner manufacturers remain to agree to the additions though.

The 27 members of the CBCDG, representing the world's major currencies (including the euro, yen and US and Canadian dollars), have been working on the anti-counterfeiting technology since May 2000 when the G10 central bank governors asked them to come up with a solution to the growing problem of electronic counterfeiting. Central banks have been concerned that the falling cost, and growing sophistication of colour printers, copiers and scanners was making counterfeiting too easy. Forging technology which once costs tens of thousands of dollars is now available for a fraction of the cost.

The group's response was to develop software code which identifies whether a user is attempting to scan or copy certain, normally indistinguishable, security features embedded in banknotes. Group members have spent the last four years trying to persuade hardware and software manufacturers to include the features in new products.

This process of persuasion has been conducted behind closed doors, and manufacturers have not publicised the inclusion of the anti-counterfeiting code in their products. However, following complaints from users it was recently confirmed that the technology has been incorporated into Adobe's marketing-leading Photoshop scanning software and that of Taiwan-based competitor Ulead.

Users of the latest version of the Photoshop software noticed the change when they were prevented from scanning dollar bills and instead received an error message instructing them to visit the website www.rulesforuse.org. This site normally gives information on national policies for reproducing images of banknotes but, embarrassingly, has been unavailable since the recent BIS announcement.

Although the group has no power to compel manufacturers to incorporate the technology, the majority have now done so for several years. Since most printers, for instance, have a lifespan of only 3-4 years, the coverage of the new technology is thought already to be widespread. In addition, users of old equipment who update their driver software may have the new code incorporated as part of the upgrade.

At the moment the technology only covers certain major currencies. However the group is keen for other central banks to join the scheme. The BIS, which houses the group's secretariat, is operating a licence scheme. In return for a fee, central banks outside the group will be able to join the system and, once they have signed a licensing agreement and the necessary security features have been incorporated into their notes, they will also benefit from this counterfeit protection.

Compulsory in Europe?

In a change from the behind-the-scenes character of most of the group's work, the European Central Bank broke cover in October last year with a proposal to make incorporation of the technology compulsory for all relevant equipment sold in the EU. Their consultation announcement of 24 October 2003 requested comments from the industry about the costs of this, and whether it would put EU firms at a disadvantage.

Following comments from large and small manufacturers, it now seems that the ECB is stepping back from the idea of making compliance obligatory. A spokesman said that responses had been "very constructive" and that, while not ruling new legislation out, the ECB is "currently further exploring the option of voluntary cooperation with the industry".