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Bank of Canada Governor Mark Carney walks past a poster of the bank's new circulating $100 bill, Canada's first polymer bank note, in Toronto on Nov. 14, 2011. (Nathan Denette/The Canadian Press/Nathan Denette/The Canadian Press)
Bank of Canada Governor Mark Carney walks past a poster of the bank's new circulating $100 bill, Canada's first polymer bank note, in Toronto on Nov. 14, 2011. (Nathan Denette/The Canadian Press/Nathan Denette/The Canadian Press)

Funny money: How counterfeiting led to a major overhaul of Canada's money Add to ...

In the fall of 2004, a Brinks truck loaded with cash was rumbling down highway 416 south of Ottawa, picking up bank deposits from stores and restaurants along the way, when the driver noticed something troubling in his rearview mirror. It was a grey Hyundai.

As the Brinks driver glanced behind him, he couldn’t help but notice it was the same car he and his partner had seen at the last two gas stations. And the Tim Horton’s before that. And the McDonald’s before that. Something wasn’t right.

When police stopped the car several minutes later, they expected to find an armed robber. What they discovered instead was just as unsettling – stacks of near-perfect counterfeits of the Canadian $20 bill. Better forgeries than had ever been seen before.

The two men inside the car were on a mission of their own that day, and hadn't noticed the Brinks truck on their route. At each stop along the highway, they used the counterfeit cash to buy small items – a coffee, a package of gum – and pocketed legitimate money as change, amassing a small fortune as they went. This is how counterfeit money is typically laundered.

What police didn’t know at the time was that they weren’t just looking at a pair of small-time forgers. They were getting their first glimpse of the largest counterfeiting ring this country has ever seen, a group responsible for passing more than $11-million worth of known fake $20 bills, and many more that were never discovered and are still circulating in wallets and cash registers across the country.

It was a dream bust for police. But it led to a disturbing revelation inside the Bank of Canada: The central bank was losing the war on counterfeiting.

Canada’s paper money, with its rainbow of colours and picturesque drawings, had become one of the most forged currencies in the G20, a group of the world’s biggest economies – ranking behind countries such as Brazil, Argentina, Mexico, Italy, France and Spain for the number of counterfeit notes detected in circulation. For every one million legitimate banknotes out there, Canada was finding 470 counterfeits.

While that figure seems small – representing less than 1 per cent of bills in circulation – it was almost 10 times what countries in the G20 consider acceptable, since small amounts of counterfeits are typically symptomatic of a much bigger problem.

That grey Hyundai set in motion a chain of events that would ultimately lead Canada to undertake one of the most dramatic overhauls of its physical currency in decades.

It is a revamp of Canadian money that begins now and will last for the next two years, as the country’s first polymer banknotes – made of thin pieces of plastic rather than paper – are put into circulation. The first denomination to get the makeover is the $100 bill, which began circulating a few weeks ago, followed by the $50 note in March and smaller denominations in 2013.

The effort to replace Canada’s paper money with polymer notes is rooted in a theory that has been around as long as currency itself: If you can limit access to the material the banknotes are made out of – known as the substrate – you can choke off counterfeiting. To ensure the integrity of its new banknotes, the plastic material for Canada’s revamped money will come from a tightly controlled recipe for polymer developed in Australia.

The $100 bill is a fitting place to start, since it has been targeted so consistently by counterfeiters over the past decade. Businesses such as the Wendy’s hamburger chain and several national gas stations now post signs saying they no longer accept that denomination.

This threat to hard currency comes at a time when electronic payments such as credit and debit cards are eating away at the need to carry cash. But even as digital transactions proliferate, more than half of all retail transactions in Canada are still conducted with paper money, suggesting cash won’t be rendered extinct any time soon.

The remake of Canada’s money, at a cost of nearly $300-million, will be the biggest and most expensive change to the national currency since multicoloured bills replaced monotone banknotes in 1969.

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