Counterfeiting for Fun

The latest sanctions on Iran have a peculiar but not surprising target - counterfeiting.  That would be counterfeiting of currency by the Iranian government.  This much is in the Wall Street Journal today, though there is probably a lot more to this than the surface story of counterfeiters making Yemeni bank notes so as to bypass European export control restrictions.  If they are doing it on Yemeni bank notes, you can bet they have been doing it with other currency exchanges as well.  They paid for a lot of high-quality equipment to do good counterfeiting and Yemeni bank notes would not be high up on the list of things I would take for payment of anything.  Apparently, some banks are not too particular.  They made hundreds of millions of dollars worth of these bonds and are probably paying for mischief in Yemen with the proceeds.

What we have to ask ourselves about this is how does a government sanction, and support, counterfeiting of currency anywhere?  The risk they take is just the one demonstrated here - they get caught.  There are more consequences to getting caught than just sanctions.

 Iran must believe that it is OK to make money that way.  As long as they don’t get caught, that may be true.  The real outcome is to make Yemeni bonds less valuable by flooding the markets with fakes.  You have to think about this for a minute.  Suppose those Swiss francs the Iranians use to pay for that watch are fake?  Suppose the Iranian rials that pay for international exchanges are fake.  People have to start worrying about this kind of thing when a government becomes a counterfeiter.  How do I know the currency is real when the source is Iran?  Check it.

Counterfeiting is a big business and I have watched bank clerks, without much experience or practice, run money through a machine to check it.  You can buy one of these things for yourself at Staples for less than $200.  I didn’t see one that did Yemeni bank notes, but the vendor could probably have one made up in a day or two.  I don’t know how good they are, but banks can afford to have ones that work.  Eventually, banks get pictures of the people bringing in these fakes and start hunting them down.  Taking money from anyone associated with Iran, business or personal, would good reason to check.  This is what happens when a country becomes a counterfeiter.