Foiling fraud: banks outfit themselves with the latest technology to catch criminals.

• Author: Bjorklund, Todd
• Position: Bank Fraud

BANK FRAUD is serious business in the United States, costing financial institutions in excess of $15 billion a year. Two major kinds of fraud have long been concerns of both banks and businesses: counterfeit currency and check fraud. Now, new technologies are transforming these old crimes, on one hand creating new ways for crooks to commit fraud, while on the other giving financial institutions new tools to fight it.

Counterfeit Currency

According to the U.S. Secret Service, about $30 million in counterfeit money entered into circulation in 1996. Last year the figure was $48 million. The reason for such dramatic growth? Technology. The Bureau of Engraving and Printing estimates that almost 40 percent of counterfeiting is now done with desktop publishing software, instead of "traditional" methods like setting up sophisticated printing operations or just photocopying bills. Using desktop publishing software and high quality copiers and printers, technologically adept crooks can create very realistic bills, and according to Wells Fargo Bank's "Countering Counterfeiters," because these crooks "operate on such a small scale, they're harder to apprehend and more of their products are circulated."

Banks have responded to this challenge with technology of their own. In addition to the critical steps of training tellers and sales clerks to spot counterfeits, banks run currency through hightech machines designed to detect fakes. These machines can measure magnetic ink, identify an embedded security thread, verify the paper type, and check watermarks or other specific design features to weed out counterfeit bills.

Check Fraud

Check fraud is more damaging to banks and businesses than counterfeiting because of the wide scope of the crime and the amount of money lost. According to Wells Fargo's "Check This," 42 million fraudulent checks are passed each month in the U.S., costing businesses $19 billion a year. With off-the-shelf desktop publishing software, scanners, copiers and printers, crooks can replicate standard business checks. Tech-savvy crooks can scan and alter stolen checks, or they can forge a company's checks using off-the-shelf blank checks (the same kind that legitimate businesses obtain from office supply stores), even duplicating the business' colors and logo with design software.

As with their efforts against counterfeiting, banks employ an arsenal of old and new tools to fight check fraud:

Educational programs: Wendy Parker, Bank of...