Money laundering has been a persistent issue in the world of finance and law enforcement for decades. Criminals seek to disguise the illicit origin of funds, obtained through illegal activities such as drug trafficking, fraud and corruption, by introducing the money into the legitimate financial system. There is a heightened risk when trying to place the cash into the financial system, especially if the cash is contaminated through security ink or 'smart water'.

Cash contaminated with security ink, also known as Intelligent Banknote Neutralisation Systems (IBNSs), or "smart water" refers to a security measure used by law enforcement agencies or financial institutions to track and identify stolen or illicit cash. This method is part of a larger security system, an additional layer of security, which may include other measures such as surveillance cameras, alarms, and other anti-theft technologies.

Smart water is a unique solution, a type of forensic marking system that when applied to cash dries and leaves a residue on the surface of the currency, which contains a unique chemical signature that can be linked to a specific owner or location. Smart water is also used in other applications, such as marking valuable assets like electronics, jewellery, or artwork to deter theft and aid in recovery if stolen. The solution is typically invisible or difficult to detect with the naked eye, thus making it difficult for thieves to identify if cash has been marked with it. The solution can become visible and traceable only under ultraviolet (UV) light or other specific detection methods.

Another type of cash tracking system involves the use of special inks that are visible under normal light but are difficult to remove or wash off. These inks are often brightly coloured and can stain the cash, making it obvious that the bills have been tampered with. The security ink is typically applied to banknotes using a specialised cash protection system, which can be installed in cash registers, ATMs, or other cash-handling devices. The system is triggered by various events such as unauthorised access, a break-in, or an attempted theft. When the system is activated, the ink is released and coats the banknotes with a coloured ink. It can also be designed to contain other security features such as unique colour or pattern, serial numbers, barcodes or holograms which further enhance the traceability of the contaminated cash. This makes it difficult for thieves to use the stolen cash without being caught, as the stained money can be easily detected by banks, businesses, or law enforcement officials and link the cash back to the crime scene.


Nevertheless, according to the European Central Bank, "not all ink-stained banknotes are stolen. If there are very light stains or a couple of small marks on the banknote and the edges are intact, then the marks are most likely accidental, caused for example by a pen dripping ink". More on this and the guidance offered by the European Central Bank as to this can be seen here.


It is worth noting that the specific details of how contaminated cash with security ink or smart water is implemented may vary depending on the organization or jurisdiction using it as it is typically a part of a larger security strategy. Different types of ink packs or capsules may be used, and activation methods can vary, including remote activation through GPS tracking or manual activation by the victim or a third party. Additionally, the laws and regulations regarding the use of contaminated cash may vary by jurisdiction, so it is important to consult local laws and regulations if you are considering using or dealing with contaminated cash.

The European Central Bank advises that in case one is handed an ink-stained banknote clearly stained by an anti-theft device:

  • Don't accept it and ask for another one. You cannot be sure that the person offering you the banknote is the rightful owner.
  • Refuse bleached or discoloured banknotes, as criminals have most likely tried to remove IBNS ink stains by washing or bleaching the notes.
  • If you have accepted an ink-stained banknote, you should bring it to your bank or a national central bank, letting them know how you got it. The national central bank will check if the ink stains are from an IBNS and may involve the police, who can use the banknotes as evidence to convict the criminals responsible.
  • If the investigations reveal that the ink stains are from an IBNS, you may not be entitled to a reimbursement. National central banks can exchange euro banknotes stained by anti-theft devices only at the request of the original banknote owner who was the victim of the criminal activity that led to the staining of the banknotes.
  • If the investigations confirm that the ink stains are not from an IBNS and the banknote has just been accidentally marked, you will receive a new banknote or a fund transfer into your bank account.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.