The Crime of Forgery
| Published date | 01 April 2002 |
| DOI | https://doi.org/10.1108/eb026035 |
| Date | 01 April 2002 |
| Pages | 355-359 |
| Author | Mohammed B. Hemraj |
| Subject Matter | Accounting & finance |
The Crime of Forgery
Mohammed B. Hemraj
Journal of Financial Crime — Vol. 9 No. 4
Forgery is not an oft-discussed subject. Detailed
discussion of forgery by banks and other financial
institutions all over the world is a taboo, 'for fear of
sowing the seeds of fraudulent schemes in other
ingenious heads'. This is obvious. For once a
loophole is identified and discussed, it has to be
permanently plugged and sealed, which the bankers
perhaps find an arduous task as it costs money and
leads to the necessity of cumbersome and time-
consuming procedures being adopted. This paper
will analyse the offence of forgery, the definition
and the modus operandi of forgery and a sample of
forgery cases in the UK and the USA.
THE OFFENCE OF FORGERY
In ancient society disturbance through war frequently
upset legal ownership. Increasing use of written
records brought about the need to substitute
unwritten 'customary' title into written documents,
and this led to the forgery of documents on a vast
scale." Forgeries were committed intentionally and
because of dishonesty. Although forgeries of docu-
ments in general were considered felony, the offence
of felony was applied only when the titles to the
property, wills or works of art were forged.
During the 18th century forgery was, in England
for instance, associated mainly with falsification of
royal seals. The earliest English Act on forgery was
passed in 1870 to deal with the forgery of stock
certificates. The growth of the banking system led
to the expansion of legislation against forgery. For-
ging documents and issuing false documents were
designated as an offence primarily to safeguard confi-
dence in the genuineness of documents and writings.
This was necessary, as the functioning of society
depended upon them.
Forgery today is everywhere a big business. Edgar
G. Hoover,4 head of the United States Federal
Bureau of Investigation, estimated in 1963 that the
annual loss in the USA from forged cheques alone
amounted to over USS500m and that the amount
was steadily rising. In England in 1984 alone, loss to
the banks by cheque frauds was £20m and £25.8m
in cases involving credit card frauds,5 and this is
steadily rising. These losses included a substantial
amount that was due to forgery.
At times, well-known professionals and clever
people, who operate in organised gangs, perpetrate
forgery. Organised crime is not a recent phenom-
enon. Group activities of bandits, brigands, pirates
and smugglers took place in the 18th century. The
only difference is the sophistication of techniques
and methods used in perpetuating crime.
Criminals use modern scientific methods to perpe-
trate forgery of cheques. Cheques involving large
amounts are intercepted and by use of chemicals,
the genuine payee's name is removed and a fictitious
payee substituted. To counteract this, banks in the
USA and UK started using chemically sensitive
cheques and ultra-violet rays to detect not only the
forgery of the payee's name but also the amount
and the drawer's signature. At the present time the
cheques bear 'anti-forgery devices including water
sensitive background inks, "rain-bow" pattern,
fluorescent inks and magnetic and optical encoding',
and three-dimensional images.6 Introducing anti-
forgery devices comes at a price and in the case of
cheques and banknotes the cost is exorbitant. To
cite an example of the cost involved in making
anti-forgery devices used in banknotes, in 1983, the
Bank of England had to incur a total cost of
£42.5m to print and distribute such banknotes
worth £l,623m. The printing cost alone stood at
25 per cent of the total amount.7
In the UK, at present, the financial institutions issue
cheques already crossed. This 'account payee only'
causes inconvenience to some recipients as such che-
ques cannot be negotiated and are to be paid direct
into the payee's account. The banks justify such a
practice by reference to customers' protection but
the intention is to relieve the banks from being
vigilant in the event that endorsements are forged;
in such cases an account holder could make a claim
against them if they paid against an altered cheque
and debited the account.
What constitutes forgery?
The word forgery is derived from the word forge (a
metaphorical expression borrowed from the occupa-
tion of a blacksmith). It means, properly speaking, no
Journal of Financial Crime
Vol 9,
No.
4,
2002,
pp 355-359
C Henry Stewart Publications
ISSN 1359-0790
Page 355
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