The police colonel was stunned by the skill of the 13-year-old arrested during a raid on counterfeiters in Lima’s gritty outskirts, how he deftly slid the shiny plastic security strip through a bogus $100 banknote emblazoned with Benjamin Franklin’s face.
The boy demonstrated his technique for police after they arrested him on the street with a sack of $700,000 in false U.S. dollars and euros that he’d received from a co-conspirator and he led them to a squat house where he and others did detail work.
With its meticulous criminal craftsmen, cheap labor and, by some accounts, less effective law enforcement, Peru has in the past two years overtaken Colombia as the No. 1 source of counterfeit U.S. dollars, says the U.S. Secret Service, protector of the world’s most widely traded currency.
In response, the service opened a permanent office in Lima last year, only its fourth in Latin America, and has since helped Peru’s police arrest 50 people on counterfeiting charges.
Over the past decade, $103 million in fake U.S. bills “made in Peru” have been seized — nearly half since 2010, Peruvian and U.S. officials say. Unlike most other counterfeiters, who rely on sophisticated late-model inkjet printers, the Peruvians generally go a step further — finishing each bill by hand.
“It’s a very good note,” said a Secret Service officer at the U.S. Embassy. “They use offset, huge machines that are used for regular printing of newspapers, or flyers.”
“Once a note is printed they will throw five people (on it) and do little things, little touches that add to the quality,” he said, speaking on condition he not be further identified for security reasons.
The phony money heads mostly to the United States but is also smuggled to nearby countries, including Argentina, Venezuela and Ecuador, said Col. Segundo Portocarrero, chief of the Peruvian police’s fraud division.
Peru became more attractive to counterfeiters as Washington’s decade-long Plan Colombia program tightened the screws not just on drug traffickers in that neighboring Andean nation but other criminals as well, he speculated.
Counterfeiting in Peru, meanwhile, got better.
“It’s much more profitable than cocaine,” said a top investigator on Portocarrero’s team, noting another of Peru’s illegal exports.
Counterfeiters earn up to $20,000 in real currency for every $100,000 in false bills they produce after expenses, the investigator said.
Well-crafted bills are easily introduced into circulation in the United States in retail stores, where clerks are less vigilant, the Secret Service agent said.
Only $100 bills get shipped by counterfeiters to the United States, while $10s and $20s are sent to Peru’s neighbors, Portocarrero said. Demand is particularly great in Argentina and Venezuela because currency controls make the dollar so coveted and they mostly circulate on the black market.
Counterfeiters employ the methods of cocaine traffickers to get their product abroad: Couriers carry notes in false-bottom suitcases, hide them in handcrafts, books, food products. People have even swallowed bills rolled up in latex for intestinal journeys.
For all their skill, says Portocarrero, Peruvian counterfeiters’ handiwork will always get tripped up by the infrared scanner banks use to authenticate currency. That, he says, owes to their continued reliance on standard “bond” paper, the variety used by consumers that is available in stores and that easily disintegrates when wet.
If they were able to obtain “rag” paper, the cloth type used for banknotes, all bets would be off, Portocarrero said.
“The day they get it and perfect the finish a bit more, (their bills) will go undetected.”
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