Counterfeit Currency is currency produced outside of the legal sanction of a state or a government, usually in a deliberate attempt to imitate that currency and so as to deceive its recipient. Producing or using counterfeit money is a form of fraud or forgery, and is illegal in all jurisdictions of the world .The extracts of section 28 of the then penal code is produced here below.
“Counterfeit”.—A person is said to “counterfeit” who causes one thing to resemble another thing, intending by means of that resemblance to practise deception, or knowing it to be likely that deception will thereby be practised.
1 [Explanation 1.—It is not essential to counterfeiting that the imitation should be exact.
Explanation 2.—When a person causes one thing to resemble another thing, and the resemblance is such that a person might be deceived thereby, it shall be presumed, until the contrary is proved, that the person so causing the one thing to resemble the other thing intended by means of that resemblance to practise deception or knew it to be likely that deception would thereby be practised.]”1
CASE LAWS RELATING COUNTERFEIT CURRENCY
1) “Emperor v. Jwala And Another – In this case Badri was convicted of an offence of possessing instruments or materials for counterfeiting currency notes, under section 489A of counterfeiting currency notes. The question therefore will not arise whether his ability and the materials at his command could have produced a note which may be termed counterfeit according to the definition given in the section 28 of the Indian Penal Code.”2
2) “State Of Kerala v. Mathai Verghese And Others- The respondents were charged with offences punishable under Section 120-B,489-A,489B and Section 420 read with Sections 511 and 34 IPC, the decision made by the high court was thus unsustainable. The judgement and order of discharge was rendered by the high court were reversed and set aside.”3
3) Mohan Lal vs State of Rajasthan (2015)- The appellant was caught with counterfeit currency notes and was charged under Sections 489B and 489C of the IPC. The trial court and the High Court had convicted him. Judgement: The Supreme Court emphasised the need for strict adherence to procedural safeguards when handling counterfeit currency cases. The court reduced the sentence, considering the lack of proper evidence about the intent to use the counterfeit currency in transactions.
“Counterfeiting currency-notes or bank-notes.[Whoever counterfeits, or knowingly performs any part of the process of counterfeiting, any currency-note or bank-note, shall be punished with 2[imprisonment for life], or with imprisonment of either description for a term which may extend to ten years, and shall also be liable to fine.”4
STATISTICS
The RBI data shows that fake notes peaked in 2016-17 at ₹43.46 crore 5. This was the year when the demonetisation was announced. However, since then, it has declined sharply to ₹8.26 crore in FY22 and further to ₹7.98 crore in FY23. Sabnavis adds, “The increase in security features to detect fake currency has made it more difficult for counterfeiters to bypass the mechanisms in place. This could be a reason why the incidence of counterfeit currency is decreasing.”
In a Lok Sabha debate, Minister of Finance, Pankaj Chaudhary, said, “The RBI issues various instructions to banks on measures to safeguard against forged notes. The RBI regularly conducts training programmes on detection of counterfeit notes for employees/officers of banks and other organisations handling large amounts of cash. It has issued a Master Circular on detection and reporting of counterfeit notes.
THE ON MAP CENTRES
The fake currency trade has been haunting Indian security establishments as well as economic intelligence agencies for quite a long time. February 2014, the finance minister of India informed the Upper House of Parliament (Rajya Sabha) 6 that counterfeit Indian currency notes worth INR 107.33 crores (approximately US $17 million) have been seized between January 2010 and June 2013. If the intelligence agencies are to be believed, the FICNs are printed in Pakistan and brought to India through couriers via Bangkok, Kathmandu and Dhaka airports. There are also reports that the FICN cartels are pushing counterfeits through China, Malaysia, the United Arab Emirates (UAE), Denmark, Netherlands, Singapore and Sri Lanka. To deal with this growing menace, the government has constituted a special FICN coordination (FCORD) group within the Union Ministry of Home Affairs to share intelligence and information amongst different central and state government agencies. 7 The Central government has asked the Research & Analysis Wing (R&AW) to conduct a security audit of the international firms supplying ink and paper for printing currency. Sources indicated that ‘groups based in Pakistan have managed to source similar paper and security ink from some foreign countries.”
CHALLENGES IN COMBATING COUNTERFEIT CURRENCY
Combating counterfeit currency is a challenge in itself for the government, law enforcement agencies and the different financial institutions worldwide. The problem affects the economies by undermining the authenticity of the original currency. 8 The technological advancement being one of the major reasons for the increase in counterfeit notes in the country, the digital printing being easily available, the access of which increases the ease of counterfeiting the currency. Public awareness being one of the other major reasons for the spread of counterfeit notes,9 a lot of people are unaware of the fake currency being spread due to lack of information and knowledge to the majority of the people residing especially in the rural areas.
GLOBAL MEASURES IN COMBATING COUNTERFEIT CURRENCY
Regional efforts directed towards stopping currency counterfeiting exchange measures include but are not limited to: laws, technology and mutual cooperation. Governments impose stringent laws with severe penalties in order to discourage counterfeiting activities, and they continuously enhance the security features of their currencies – there are more and more currencies with holograms, watermarks, color-shifting inks , to name just a few. The integration of machine-readable elements and AI-based detection technologies is also critical in the authentication of note-based currency. Coordination at the international level is also very important, including Interpol and the Financial Action Task Force (FATF) which have helped in sharing intelligence, joint operations, and formulating international standards. These efforts are complementary to the fight against counterfeiting, which is a cat-and-mouse game of always adapting to ever-evolving counterfeiting techniques.
CONCLUSION
Forged money continues to be a problem faced by many countries posing a threat to economies and causing lack of trust in money as a unit of exchange. This study has proved that counterfeiting is a diverse concept and its impact extends to the demand for currency, economic effects as well as the impact of the measures that have been put in place to detect counterfeiting. An increase in counterfeiting allows society to accept reduced physical cash in circulation as it becomes hard to trust banknotes and consumers tend to pay using other means such as electronic money transfers.
The social cost incurred towards counterfeiting is very high and many surveys show that even the slightest alteration in the volume of counterfeiting will take a few years and cause the economy to lose millions. This indicates the need for powerful measures and advertising campaigns against counterfeiting to win back faith in money. Technology, on the other hand, has also brought along new detection intervention imaging, for instance, image processing as well as hyper-spectral imaging which assists in differentiating between a real and a fake note.
However, in addition to these technologies, there is a need for the education of individuals and businesses on banknote security features to help people perform authenticity checks. To sum up, several strategies need to be integrated to fight against the use of counterfeit currency and this includes using technology and most importantly, educating the public about the threat as well as the policy measures that can be taken to reduce the threat. Measures put to combat counterfeiting must evolve because economic crimes will not cease but rather develop more sophisticated methods that can compromise vigilance. Finally, all efforts will need to be put in place to address this issue in practice as all parties will need to engage in research and finding solutions collaboratively.
REFERENCES-
- India Code: Section Details
- Emperor v. Jwala And Another | Allahabad High Court | Judgment | Law | CaseMine
- Emperor v. Jwala And Another | Allahabad High Court | Judgment | Law | CaseMine
- India Code: Section Details
- Reserve Bank of India
- The Indian Kattalio Game: mapping the counterfeit currency network in India
- https://www.oecd-ilibrary.org/docserver/9789264278349-5-en.pdf?expires=1730893773&id=id&accname=guest&checksum=9C46A933A0CEA51B6A5B575C8BA1B519
- Fake currency route worries India | India News – Times of India
- A Detailed Guide on How to Spot Fake Money | HDFC Bank
Article by-
VIDHI KOTHARI