With tourists arriving in record numbers, more counterfeit U.S. currency is entering the country.
In October, more than 160 counterfeit $100 bills were found to have changed hands at currency exchange counters in Tokyo.
That figure stands in contrast to National Police Agency figures that show 57 and 26 bogus $100 bills were found in 2016 and 2014, respectively.
Counterfeit experts who have seen the fake $100 bills say they are poorly produced and easily recognizable. Additionally, the feel of the bills differs from that of the real thing. The holograms also do not work, one expert said, adding that they resemble “toy money.”
However, because special ink that reacts to ultraviolet light was used in the printing process, the forged bills can pass certain detection methods.
The bogus bills were used at stores where employees are unfamiliar with U.S. currency and merely put the bills through the detection machines, the chief of a private counterfeit detection center said. The official stressed the need for visual and other over-the-counter verification methods.
Bogus bills have also been used at cash voucher stores and brought to currency exchange bureaus, and forged U.S. currency was apparently found in Osaka in December.
“International crime syndicates can readily convert counterfeit U.S. bills to cash in Japan,” warned Takashi Kubota, a professor at Waseda University familiar with the issue.
Japan revised its foreign exchange law in 1998, enabling anyone to set up a currency exchange service. Currently, more than 400 companies each exchange currencies worth more than ¥1 million per month, according to the Finance Ministry.
Financial regulators, meanwhile, tend to focus on large-scale illegal remittance and other transactions. They only conduct about 20 on-the-spot inspections of money exchangers annually.
Due to strict crack downs on counterfeit money overseas, experts on money laundering warn that members of organized crime may be entering Japan as tourists to convert counterfeit bills to yen. As an anti-counterfeit measure, major banks do not reuse U.S. dollar bills they receive, offering only new bills.
Masataka Hanaki, an associate professor at Kindai University and expert on foreign exchange, called for industry-wide rules to prevent an increase in the exchange of bogus bills. The rules would require that currency exchange counters and other involved businesses immediately share information regarding frequent or large-scale currency exchanges.