The widespread use of U.S. currency abroad, together with the outdated security features of the currency, makes it a particularly vulnerable target for international counterfeiters. According to the Federal Reserve, the proportion of U.S. currency in circulation abroad has increased from 40 percent in 1970 to over 60 percent today. High foreign inflation rates and the relative stability of the dollar have contributed to the increasing use of U.S. currency outside the United States. And, in fact, the United States benefits from this international use. When U.S. currency remains in circulation, it essentially represents an interest-free loan to the U.S. government. The Federal Reserve has estimated that the U.S. currency held abroad reduces the need for the government to borrow by approximately $10 billion a year. Despite this benefit, its increasing international use has made U.S. currency a target for counterfeiting. Furthermore, with the exception of two changes introduced in 1990, the security features of the currency have not substantially changed since 1929, which has resulted in the U.S. dollar’s becoming increasingly vulnerable to counterfeiting. (See fig. 1 for the existing security features of the currency.) Congressional groups and the media have continued to highlight their concerns that the counterfeiting of U.S. currency abroad is becoming an increasingly serious problem. Concerns about counterfeiting abroad were heightened in 1992 with the issuance of the first of two reports by the House Republican Research Committee’s Task Force on Terrorism and Unconventional Warfare. These reports charged that a foreign government was producing a very high-quality counterfeit note, commonly referred to as the Superdollar, to support terrorist activities. In 1993, the House Appropriation Committee’s Surveys and Investigations staff completed a report on the Secret Service’s counterfeiting deterrence efforts and briefed the House Appropriations Committee. In the same year, a bill—the International Counterfeiting Deterrence Act—was introduced to address international counterfeiting and economic terrorism; however, it was not passed. The Secretary of the Treasury is responsible for issuing and protecting U.S. currency. Treasury, including the Secret Service and the Bureau of Engraving and Printing, and the Federal Reserve have primary responsibilities for combating the counterfeiting of U.S. currency. The Secret Service conducts investigations of counterfeiting activities and provides counterfeit-detection training. The Bureau of Engraving and Printing designs and prints U.S. currency, which includes the incorporation of security features into the currency. The Federal Reserve’s role is to distribute and ensure the physical integrity of U.S. currency. It receives currency from financial institutions around the world and uses specialized counting and verification machines to substantiate the authenticity of all U.S. currency received. The various counterfeiting deterrence efforts are coordinated through the Advanced Counterfeit Deterrence Steering Committee, which was formed in 1982. The Secret Service is the U.S. agency responsible for anticounterfeiting efforts abroad. At the time of our work, the Secret Service primarily used its six overseas offices, three task forces, two temporary operations, and resources from six domestic offices to conduct this task. (See app. I for a description of Secret Service offices responsible for locations abroad.) Secret Service offices outside the United States typically are staffed by one to six agents. Agents working abroad are involved in the same issues as their domestic counterparts, such as detecting counterfeits, investigating financial crimes, and protecting dignitaries. However, the majority of a typical agent’s time abroad is spent on counterfeiting deterrence efforts. In pursuing these efforts, agents must rely on the cooperation of foreign law enforcement agencies and sometimes are allowed to provide only investigative support. This situation is different from that in the United States, where agents have direct investigative authority. The Secret Service also provides other staff to support international counterfeiting deterrence activities. For example, the Secret Service has assigned two Counterfeit Division staff to work with the Four Nations Group and three agents to work with Interpol—the International Criminal Police Organization. To obtain information on the nature and extent of counterfeiting of U.S. currency abroad, as well as U.S. efforts to combat this activity, we obtained views and material from (1) U.S. government agencies in the United States and abroad; (2) foreign law enforcement and financial organization officials in seven European countries, as referred to us by U.S. embassy officials; (3) Interpol officials in the United States and abroad; and (4) individuals researching the Superdollar case, including the author of the House Republican Task Force on Terrorism and Unconventional Warfare reports on the Superdollar. We performed our review in the United States, England, France, Italy, Germany, Hungary, Poland, and Switzerland. Interpol, State Department, and Secret Service officials recommended these countries for our review on the basis of their knowledge of counterfeiting abroad. To obtain U.S. government perspectives on the nature and extent of counterfeiting as well as on efforts to deter this activity, we interviewed and obtained documentation from senior Treasury officials in Washington, D.C.; Secret Service officials in Washington, D.C.; New York, New York; San Francisco, California; England; France; Italy; and Germany; and Bureau of Engraving and Printing officials in Washington, D.C. We also interviewed Federal Reserve Board officials in Washington, D.C.; Federal Reserve Bank officials in San Francisco and New York; and State Department officials in Washington, D.C., and abroad. To secure information on the extent of the problem of counterfeit U.S. currency abroad, we obtained Secret Service data on domestic and international counterfeit detections. We then reviewed the Secret Service’s counterfeit-detection data for fiscal year 1987 through fiscal year 1994. We also reviewed Interpol’s 1991 to 1993 annual reports on international counterfeiting activity. We did not independently verify the accuracy of the data that the Secret Service and Interpol provided. To gain perspective on both counterfeiting and deterrence efforts abroad, we obtained input from foreign law enforcement and financial organization officials in the countries we visited. (See app. II for a listing of foreign agencies and organizations we contacted while abroad.) In conducting our interviews, we did not pose the same questions to all officials. Thus, the responses we obtained cannot be generalized. The scope of our work was limited by a number of factors related to national security and investigative concerns. First, due to the criminal nature of counterfeiting, the actual extent of counterfeiting abroad cannot be determined. Second, since current known counterfeiting activities involved ongoing investigations, we were not able to fully explore and discuss these investigations with law enforcement and intelligence officials. Third, due to the sensitive nature of the ongoing investigation of the so-called Superdollar, we were unable to fully explore this extremely high-quality, allegedly foreign government-sponsored, counterfeiting operation. As a result of these limitations, this report is not evaluative, and it thus contains no conclusions or recommendations. This report was prepared using unclassified sources of information. The draft report underwent a security classification review by the appropriate agencies, including Treasury and the Secret Service, and was released as an unclassified report. Although they initially stated that some of the information was or should have been classified, Treasury and the Secret Service later rescinded this statement after they performed a full security classification review and we reached agreement with them on a minor revision to appendix VII. (See app. VIII, pages 66 and 67, for Treasury and Secret Service statements that the report is unclassified.) We conducted our review from September 1994 to May 1995 in accordance with generally accepted government auditing standards. In June and then again in November 1995, we updated our work on Secret Service staffing abroad. We obtained written agency comments on a draft of this report from the Departments of the Treasury and State and from the Federal Reserve. These comments are discussed at the end of this report and presented in appendixes VIII through X. The nature of counterfeiting of U.S. currency abroad is diverse, including various types of perpetrators, uses, and methods. The relative sophistication of the counterfeiter and method used results in counterfeit notes of differing quality. According to a National Research Council report requested by Treasury, the counterfeiting problem will increase as technologies improve and are made more accessible to the public. Already, the Secret Service has been troubled by some very high-quality counterfeits of U.S. currency identified as originating abroad. Perpetrators include both the casual and the professional counterfeiter. The casual counterfeiter is a person who commits the crime because it is convenient or easy to do. For example, an office worker may use a copying machine to counterfeit U.S. currency. The number of casual counterfeiters is expected to increase with the greater accessibility of and improvements to modern photographic and printing devices, according to the National Research Council report. Conversely, the professional counterfeiter may be a member of a gang, criminal organization, or terrorist group. Foreign law enforcement and Secret Service officials that we interviewed told us of suspected links between counterfeiting and organized crime. Counterfeit U.S. currency is used for economic gain and is sometimes linked to other crimes. According to foreign law enforcement and Secret Service officials, counterfeit U.S. currency is sometimes distributed in conjunction with drug trafficking, illicit arms deals, and other criminal and/or terrorist activities. Moreover, Secret Service and foreign law enforcement officials told us that counterfeit U.S. currency is now sometimes produced by counterfeiters in one country for export to another country. For example, in Milan, Italy, counterfeiting has become an industry in which counterfeit U.S. currency is produced for export, according to Italian law enforcement officials. They added that the counterfeits typically were exported to the former Soviet Union and Eastern Europe. The methods used by counterfeiters of U.S. currency abroad are the same as those used within the United States, according to Secret Service officials. Common techniques include using black and white, monochromatic, or color photocopiers; cutting and taping or gluing numerals from high denomination notes to the corners of a note of lower denomination, also known as making “raised notes”; using sophisticated computers, scanners, and laser or ink jet printers; bleaching good notes and reprinting higher denominations on the genuine paper; and using photomechanical or “offset” methods to make a printing plate from a photographic negative of a genuine note. Depending upon the sophistication of the counterfeiter and the method used, the quality of counterfeit notes can vary a great deal. The Secret Service has found good, fair, and poor quality notes for each method used. For example, a good color copier-produced note could be better than a poor ink jet-produced note. However, the offset printing method generally results in the highest quality counterfeits, whether produced abroad or domestically. (See app. III for descriptions of common methods used and some examples of counterfeit notes.) Recently, very sophisticated counterfeiters have been producing very high-quality notes using the offset process. High-quality counterfeit notes are difficult for the general public to discern, but according to Federal Reserve officials, the notes can be detected by experienced bank tellers. (See app. IV for case examples of high-quality counterfeit notes produced in Canada, Colombia, and the Middle East.) The criminal nature of the activity precludes determination of the actual extent to which U.S. currency is being counterfeited abroad. The best data available to reflect actual counterfeiting are Secret Service counterfeit-detection data. However, these data have limitations and thus provide only a limited measure of the extent of counterfeiting activities. Use of these data should be qualified to reflect these limitations so that conclusions reached using the data do not mislead. Overall, detected counterfeits have represented a minuscule amount of the currency in circulation. According to Secret Service officials, the data that they gathered was supplemented by intelligence information and field experience to demonstrate an increase in counterfeiting activity abroad. However, our analysis of the same counterfeit-detection data proved inconclusive. Moreover, foreign officials’ views about the seriousness of the problem of counterfeit U.S. currency were mixed. Foreign financial organization and law enforcement officials that we interviewed reported no significant numbers of chargebacks and few reported instances of U.S. currency not being accepted abroad. On the basis of the number of Secret Service counterfeit-detections, Treasury officials concluded that counterfeiting of U.S. currency was economically insignificant and thus did not pose a threat to the U.S. monetary system. According to Secret Service and Treasury officials, detected counterfeits represented a minuscule portion of U.S. currency in circulation. Secret Service and Federal Reserve data showed that, in fiscal year 1994, of the $380 billion in circulation, $208.7 million had been identified as counterfeit notes, a figure which represented less than one one-thousandth of the currency in circulation. However, while Treasury and Secret Service officials agreed that, overall, counterfeiting was not economically significant, they considered any counterfeiting to be a serious problem. The Secret Service reported that counterfeiting of U.S. currency abroad was increasing. It used counterfeit-detection data, supplemented with intelligence information and field experience, to support this claim. It also employed two counterfeit-detection data measures to illustrate the extent of counterfeiting abroad: (1) counterfeit-detections abroad and (2) domestic detections of counterfeits that were produced abroad. Counterfeits detected abroad are categorized as “appearing abroad,” while counterfeits detected domestically are divided into two separate categories. Domestic detections of counterfeits not yet in circulation are called “seizures,” and those counterfeits detected while in circulation are called “passes.” The Secret Service has reported a significant recent increase in detections of counterfeit U.S. currency abroad. In one analysis, it reported that the amount of counterfeit currency detected abroad increased 300 percent, from $30 million in fiscal year 1992 to $121 million in fiscal year 1993, thereby surpassing domestic detections in the same period (see fig. 2). The Secret Service has also reported that, in recent years, a larger dollar amount of the notes detected as domestic passes has been produced outside the United States. Since 1991, the dollar amount of counterfeit U.S. notes detected while in circulation and produced abroad has exceeded the dollar amount of those produced domestically (see fig. 3). In fiscal year 1994, foreign-produced notes represented approximately 66 percent of total domestic passes detected. The true dimensions of the problem of counterfeiting of U.S. currency abroad could not be determined. Treasury and the Secret Service use Secret Service counterfeit-detection data to reflect the actual extent of counterfeiting. However, although these data are the best available, they have limitations. Specifically, they are incomplete and present only a partial picture of counterfeiting. If these limitations are not disclosed, the result may be misleading conclusions. First of all, the actual extent of counterfeiting could not be measured, primarily because of the criminal nature of this activity. Secret Service data record only those detections that are reported to the Secret Service; they do not measure actual counterfeiting. As a result, the data provide no information about the number of counterfeiters operating in any given year or the size and scope of their operations. More importantly, these data could not be used to estimate the volume of counterfeit currency in circulation at any point in time. In the case of counterfeit currency appearing abroad, reasons for this include the following: (1) the data do not distinguish between how much counterfeit currency was seized and how much was passed into circulation; (2) they could not provide information about how long passed counterfeits remained in circulation before detection; and (3), most critically, they provide no indication of how much counterfeit currency was passed into circulation and not detected. Second, counterfeit detection data may in part be a reflection of where the Secret Service focuses its efforts. Use of these data thus may not identify all countries with major counterfeiting activity, but simply countries where agents focused their data collection efforts. For example, in fiscal year 1994, almost 50 percent of detections abroad occurred in the six countries where the Secret Service was permanently located. In other countries, counterfeit-detection statistics tend to be more inconsistent. For example, in fiscal year 1994, certain African and Middle Eastern countries reported no counterfeiting activity to the Secret Service. This lack of reported detections, however, does not necessarily indicate that counterfeiting activity did not occur in these countries. Third, detection data for high-quality notes may be underreported. The Secret Service has said that, because so few Superdollars have been detected, this indicates that there are not many in circulation. However, according to the Task Force on Terrorism and Unconventional Warfare report, the majority of Superdollars are circulating outside the formal banking system and therefore would not be reported to the Treasury if detected. Also, as we discovered on our overseas visits, many foreign law enforcement and financial organization officials had inconsistent and incomplete information on how to detect the Superdollar. Thus, financial institutions abroad may be recirculating the Superdollars. Fourth, reported increases in counterfeiting abroad, as supported by Secret Service detection data, may be due to a number of factors other than increased counterfeiting activity. For example, in 1993, the Secret Service changed its reporting practices abroad to be more proactive in collecting counterfeit-detection data. Instead of relying solely on reports from foreign officials, agents abroad began to follow up on Interpol reports and intelligence information in order to collect additional data. Also, according to Treasury officials, foreign law enforcement officials have improved their ability to detect counterfeit U.S. currency and report it to the Secret Service. Furthermore, although domestic reporting and detection practices have been more consistent, the increase in domestic detections of counterfeits produced abroad is also subject to interpretation. For example, rather than foreign-produced notes increasing, it is possible that the Secret Service’s ability to determine the source of counterfeit currency has simply improved over time. Fifth and finally, counterfeit-detection data fluctuate over time, and one large seizure can skew the data, particularly for detections abroad. For detections outside the United States, the Secret Service has relied heavily on information provided by foreign law enforcement organizations, and has obtained little information from financial organizations. Thus, counterfeit detections “appearing abroad” have primarily been seizures reported by foreign law enforcement organizations, and the size of these seizures can have a significant impact on detection data. For example, according to the Secret Service, several large seizures accounted for the jump from $14 million in counterfeit detections abroad in fiscal year 1988 to $88 million in fiscal year 1989. The following year, the data indicated a significant drop in detections (see fig. 2). Overseas law enforcement and financial organization officials’ views on the extent of the problem of counterfeit U.S. currency varied. Foreign law enforcement officials tended to be more concerned about counterfeit U.S. currency than foreign financial organization officials. Financial organization officials we met with said that they had experienced minimal chargebacks, and most expressed confidence in the ability of their tellers to detect counterfeits. Furthermore, we heard few reports from foreign financial organization and foreign law enforcement officials about U.S. currency not being accepted overseas because of concerns about counterfeiting. Most foreign law enforcement officials we spoke with believed that the counterfeiting of U.S. currency was a problem, but their opinions on the severity of the problem differed. While the Swiss, Italian, and Hungarian law enforcement officials said that it was a very serious problem, French and English law enforcement officials said that the problem fluctuated in seriousness over time; German, French, and Polish officials said that the counterfeiting of U.S. currency was not as serious a problem as the counterfeiting of their own currencies. Some of these law enforcement officials expressed concern over increases in counterfeiting in Eastern Europe and the former Soviet Union. Some also expressed particular worry about their ability, and the ability of financial organizations in their countries, to detect the Superdollar. Conversely, most foreign financial organization officials we spoke with were not concerned about the counterfeiting of U.S. currency. Of the 34 organizations we visited in 7 countries, officials from 1 Swiss and 1 French banking association and 2 Hungarian banks viewed the counterfeiting of U.S. currency as a current or increasing problem. According to other foreign financial organization officials, they were not concerned about U.S. counterfeiting activity because it did not have a negative impact on their business. For example, none of the 16 financial organization officials with whom we discussed chargebacks told us that they had received substantial chargebacks due to counterfeit notes that they had failed to detect. In addition, some of these officials cited other types of financial fraud and the counterfeiting of their own currency as more significant concerns. For example, officials from one French banking association were more concerned with credit card fraud, and officials from two financial organizations in Germany and one financial organization in France said counterfeiting of their country’s currency was a greater problem. Furthermore, foreign financial organization officials we spoke with were confident about their tellers’ ability to detect counterfeits and, in some countries, tellers were held personally accountable for not detecting counterfeits. In most of the countries we visited, detection of counterfeit U.S. currency relied on the touch and sight of tellers, some of whom were aided by magnifying glasses or other simple detection devices, such as counterfeit detection pens. Other counterfeit-detection devices used abroad, like ultraviolet lights, did not work effectively on U.S. currency. While foreign financial organizations appeared confident of their tellers’ ability to detect counterfeits, some of these organizations had incomplete information on how to detect counterfeit U.S. currency, particularly the Superdollar. Finally, foreign financial organization and law enforcement officials provided a few isolated cases in which U.S. currency was not accepted abroad. For example, when it first learned about the Superdollar, one U.S. financial organization in Switzerland initially stopped accepting U.S. $100 notes, although it later resumed accepting the U.S. notes from its regular customers. Also, Swiss police, Hungarian central bank, and French clearing house officials reported that some exchange houses and other banks were not accepting $100 notes. We were unable to confirm these reports. However, a State Department official commented that, because drug transactions tended to involve $100 notes, some foreigners were reluctant to accept this denomination, not because of counterfeiting concerns, but rather because of the notes’ potential link to money laundering. The U.S. government, primarily through the Treasury Department and its Secret Service and the Federal Reserve, has been increasing its counterfeiting deterrence efforts. These recent efforts include redesigning U.S. currency; increasing exchanges of information abroad; augmenting the Secret Service presence abroad; and undertaking efforts to stop production and distribution of counterfeit currency, including the Superdollar. In an effort to combat counterfeiting both domestically and abroad, Treasury is redesigning U.S. currency to incorporate more security features intended to combat rapid advances in reprographic technology. This change, the most significant to the U.S. currency in over 50 years, is, according to some U.S. and foreign officials, a long overdue one. The redesigned currency is planned for introduction in 1996 starting with changes to the $100 note, with lower denominations to follow at 9- to 12-month intervals. According to Treasury officials, the currency redesign will continue, becoming an ongoing process, because no security features are counterfeit-proof over time. These officials also said that the old currency would not be recalled and would retain its full value. Moreover, Treasury is leading a worldwide publicity campaign to facilitate introduction of the redesigned currency, ensure awareness and use of the overt security features, and assure the public that the old currency will retain its full value. Through this campaign, the Federal Reserve hopes to encourage the public to turn in old currency for the redesigned notes. (See app. V for further information on the currency redesign.) In addition, the Secret Service, through its team visits abroad in company with Treasury Department and Federal Reserve officials, has both gathered further information on counterfeiting and provided counterfeit-detection training. As of May 1995, the team had met with law enforcement and financial organization officials in Buenos Aires, Argentina; Minsk, Belarus; London, England; Zurich, Switzerland; Hong Kong; and Singapore. According to Secret Service officials, their visits were successful because they were able to develop better contacts, obtain further information about foreign financial institutions’ practices, learn more about tellers’ ability to detect counterfeits, and provide counterfeit detection training seminars for both law enforcement and financial organization officials. Future trips were planned to Russia and possibly the Middle East. Further, the Secret Service has been attempting to increase its presence abroad, although it has encountered difficulties in obtaining approval. The Secret Service has over 2,000 agents stationed in the United States, but it has fewer than 20 permanent positions abroad. The Secret Service first requested additional staff in February 1994 for permanent posting abroad beginning in fiscal year 1996. However, due to uncertainties over the funding of the positions as well as to other priorities within the Treasury Department, as of June 21, 1995, the Secret Service had secured approval for only 6 of 28 requested positions abroad. Subsequent to our discussions with the Secret Service, Treasury, and State, on July 21, 1995, Treasury approved the remainder of the positions and passed them on for State’s approval. As of November 30, 1995, the respective chiefs of mission had approved only 13 of the 28 positions, and only 1 agent had reported to his post abroad. (See app. VI for further information on increasing the Secret Service presence abroad.) Additionally, the U.S. government has undertaken special efforts to eradicate the highest quality counterfeit note—the Superdollar. These efforts include the use of task forces and diplomatic efforts among senior policy-level officials of the U.S. and certain foreign governments. Due to the sensitivity and ongoing nature of this investigation, we were made generally aware of these efforts but not provided with specific information. (See app. VII for further information on U.S. efforts to eradicate the Superdollar.) The Department of the Treasury, including the Secret Service, the Department of State, and the Federal Reserve provided written comments on a draft of this report. (See apps. VIII, IX, and X.) These comments included technical changes and/or factual updates that have been incorporated where appropriate. However, Treasury, including the Secret Service, also raised and later rescinded issues of security classification and sensitivity and did not fully agree with our characterization of the limitations of the Secret Service counterfeit currency detection data and other supporting methods for estimating trends in counterfeiting. In their comments, Treasury and the Secret Service made frequent reference to activities that they believed provided additional support for the conclusions they drew from the detection data. These activities included contacts with foreign law enforcement and financial organization officials, vault inspections of banks abroad, and analysis of Federal Reserve data. Although the Secret Service recognized the limitations of its counterfeit currency detection data, Treasury and Secret Service conclusions provided in hearings and reports have not always reflected these limitations. Thus, in this report, we discuss the data limitations and conclude that any use of the data should be qualified to recognize these limitations. Although the Secret Service has the best counterfeit-detection data available, this does not negate the potential for the limitations of this data to foster misleading conclusions. First, the actual extent of counterfeiting cannot be determined because of the criminal nature of this activity. Second, counterfeit-detection data may be a reflection of where the Secret Service focuses its efforts. Third, detection data for high-quality notes, which may more easily circumvent detection and reporting abroad, may be even less representative of the actual extent of the problem. Fourth, increases in counterfeiting detections abroad may be due to a number of factors other than increased counterfeiting, such as improved information gathering and reporting. Also, counterfeit-detection data fluctuate over time, and one large seizure abroad can skew the data. We acknowledge in this report that the Secret Service supplements its detection data with intelligence information and field experience. Even though we did not evaluate these specific methods, our work did yield some information on these activities. With regard to Treasury and Secret Service contacts with foreign law enforcement and financial organization officials, in our discussion of additional U.S. counterfeit currency deterrence efforts, we acknowledge that Treasury and Secret Service officials have recently increased their contacts with foreign financial organizations in preparation for the U.S. currency redesign effort. However, almost all of the foreign financial organization officials we met with in September 1994 had had little or no contact with Treasury and/or Secret Service officials before that time. Regarding vault inspections of banks abroad, Secret Service officials initially told us that they were conducting vault inspections during their joint team visits with Treasury and Federal Reserve officials. However, according to Federal Reserve officials, and as subsequently confirmed by Secret Service officials, vault inspections had been conducted in only one of the six locations visited during our review. Secret Service officials told us that the inspections had been conducted in Argentina but were then discontinued because of the limited results obtained there. The officials told us that the inspections might be reinstituted in other countries if it was subsequently decided that the effort was warranted. Finally, regarding the use of Federal Reserve data, the Secret Service and the Federal Reserve confirmed that the Federal Reserve data were actually a component of the Secret Service data, and thus were effectively addressed in our evaluation of the Secret Service data. As agreed with your office, unless you publicly announce the contents earlier, we plan no further distribution until 30 days from the date of this report. At that time, we will provide copies of the report to interested congressional committees, to the Departments of the Treasury and State, and to the Federal Reserve. We will also make copies available to others on request. Please contact me at (202) 512-8984 if you have any questions concerning this report. Other major contributors to this report are listed in appendix XI.

Summary: Pursuant to a congressional request, GAO provided information on counterfeiting of U.S. currency abroad and U.S. efforts to deter these activities. GAO found that: (1) counterfeit U.S. currency is used for economic gain and illegal activities, such as drug trafficking, arms sales, and terrorist activity; (2) there are several techniques used to counterfeit U.S currency, including photocopying, the raised note technique, computer assisted printing, bleaching and reprinting, and photomechanics; (3) the offset printing method offers the highest quality of counterfeit notes and can only be detected by experienced bank tellers; (4) it is difficult to determine the extent of counterfeiting abroad because of the lack of accurate counterfeit detection data and foreign officials reluctance to view counterfeiting as a serious problem; (5) of the $380 billion in U.S. currency circulated in fiscal year 1994, $208.7 million was counterfeit, which represented less than one one-thousandth of U.S. currency in circulation at that time; and (6) the U.S. government is involved in various counterfeit deterrence activities, including redesigning U.S. currency, increasing the presence of the Secret Service and the exchange of information abroad, and seizing the production and distribution capabilities used in counterfeiting of U.S. currency.