Forgers ready to cash in on euro

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Counterfeiters are ditching sterling in favour of the mass production of European currencies as British gangs export their world-renowned expertise in printing high-quality fake notes.

Counterfeiters are ditching sterling in favour of the mass production of European currencies as British gangs export their world-renowned expertise in printing high-quality fake notes.

City of London detectives have recently completed Operation Catacomb, a series of raids on what they say is by far the biggest counterfeiting operation in Britain. They estimate it had been producing more than £14m in foreign currencies including Spanish pesetas, US dollars, Irish punts and sterling over the past decade - seven times the size of the previous largest discovered banknote forgery haul.

They now believe other gangs may be preparing to swamp the Continent with an unprecedented volume of counterfeit francs, Deutschmarks and pesetas. A flood of phoney euros is also expected.

"Our counterfeiters are regarded as the best in the world and they have been moving into the production of foreign currencies, especially the European ones, in a big way over the past few years," confirmed Detective Sergeant Paul Wright of the City of London Police. "Gangs have become much more sophisticated in their methods of printing and the ways they distribute the currency. They know the difficulties that police have in dealing with issues that cross national borders where there can be very different legal systems."

Evidence of counterfeiters' increasing involvement in European currencies has been uncovered in a series of police operations over the past five years. In 1995, printing plates for Deutschmarks were found when two Essex counterfeiters were caught producing £2m of £20 notes. The following year Scottish police discovered a plot to produce Danish kroner and £20 notes to be distributed during the Euro 96 football championships. A joint operation by the City of London and Spanish police in 1998 led to the discovery of a Lincolnshire-based gang producing more than £1m of pesetas.

Derek Porter, head of the forgery of money group at Europol, the European police network, said: "In the past, counterfeiters in the UK were constrained by the size of the market. You can only put out sterling counterfeits in one area every few months or you saturate the market. So it makes sense for them to link up with European groups that are able to organise the wider distribution of currency."

Britain has earned an unenviable reputation with police forces around the world for the high volume and quality of "snide" notes, as forgeries are known. Police believe gangs plan to use the launch of euro notes in January 2002 as cover to swamp the Continent with forgeries of the new currency. The new euro notes will be unfamiliar to shop and bank staff, especially in the changeover period.

"Introduction of euro notes is a unique opportunity for counterfeiters," said Mr Porter. "We are monitoring the situation and are aware of the potential of criminal organisations in Britain to cash in on this opportunity. There will be a great deal of pressure on the banks and a dramatic upsurge in cash transactions. This will be the best time to capitalise on the confusion and pressures by introducing fake currency into the system."

The European Banking Federation is already working on plans on how to deal with an increase in counterfeiting during the launch of the euro, according to Frederic de Brouwer, legal adviser to the federation's fraud working group.

Wayne Smith, head of the specialist crime unit of Britain's National Criminal Intelligence Service, said: "Policing of the euro is likely to be fragmented as there is not currently one body with the authority, resources or will, to undertake all of the work."

Concern about the distribution of fake notes and the laundering of criminals' profits will be raised next week by Glyn Ford MEP, Labour's trade and industry spokesman in Europe.