Funny money an age-old concern

Rash of counterfeit banknotes seized in Macau is the latest skirmish in perennial battle between crooks and governments

PUBLISHED : Sunday, 29 December, 2013, 5:11am
UPDATED : Sunday, 29 December, 2013, 7:29am

Public confidence in banknotes has been dented and a growing number of businesses are refusing to accept HK$1,000 bills after more than 100 bogus notes were seized in Macau in the past week.

So far, the counterfeiters have pulled the wool over the eyes of casinos and banks in the former Portuguese enclave, the biggest victims in the latest seizures.

The scale of the deception is likely to become more clear over the coming days as checks on banknotes are stepped up.

The last high-profile counterfeit scare in the city was in 2007, when more than half of HSBC's HK$1,000 banknotes issued in 2000 and 2002 were withdrawn from circulation after fakes were detected. The recall affected 11 million bills.

Counterfeiting is one of the oldest crimes around, at some times an offence punishable by death.

Even now, counterfeiting - no matter the scale -usually attracts harsh penalties as it poses a threat to a nation's economy.

In a high-profile case in 2007, two Hong Kong men and a mainland man were among a gang of six who went on trial in London for attempting to con the Bank of England out of £28 billion (then worth HK$443.34 billion), using "poor quality" counterfeit notes.

Mak Ping-shuen, 56, and Chung Chi-kuen, 53, of Hong Kong, and mainlander Chan Kwok-kwong, 55, were accused of being part of the gang that produced an "avalanche" of rare £1,000 notes and 360 "special issue" £500,000 notes in a failed attempt to defraud the central bank.

Bank officials were allegedly told by the gang that they represented a former top Chinese Nationalist family. But the counterfeiters raised alarm bells from the first e-mail they sent to officials, asking the bank to honour the old notes.

Since £500,000 notes never existed and only 63 £1,000 notes were left in circulation in 1968 after being withdrawn in 1943, it seems it was a poorly researched scam.

Soon after the trial began, the case collapsed.

While criminal networks and gangs focus on cracking the evolving technology of the security measures on banknotes, they are not the only ones dealing in bogus bills.

North Korea has engaged in its own sophisticated act of economic sabotage against the US, creating hard-to-detect fake US$100 notes, dubbed "superdollars". Washington estimates that the hermit kingdom has generated US$25 million per year for several years from counterfeit production.

With Pyongyang counting the cost of economic sanctions from years of developing nuclear technology, the fake bills are "one of several illicit activities by North Korea apparently done to generate foreign exchange that is used to purchase imports or finance government activities abroad", according to the US Congressional Research Service.