Roland DG's commercial-grade printers are the workhorses of the printing business. By the standards of the industry they are considered affordable and powerful. For about $70,000 you can buy a machine capable of printing virtually any colour on any substrate, including clear film. The $50 note is the most popular target for counterfeiters. Credit:AFP On a winter's day in 2009, three such Roland DG printers – two rentals and one owned outright – were wheeled down a paved driveway at the Water's Edge Resort at Kurnell, a budget motel on the northern edge of Bonna Point which offers simple cabins starting at $170 a night. The printers were paid for by a man calling himself John Peters, who told Roland he was working for the Australian government. But Peter's actual name was Agapitos Megaloudis, a former bikie, known as "Fat Pete". In early 2010, Megaloudis swapped the two rental printers for a second fully-owned printer. When the rentals were returned, Roland noted that they were in "very poor" condition.

By March, Roland DG received a call to say one of "Peter's" printers wasn't working. David Edwards, a field service engineer was sent out for repairs. As he worked away he noticed the printer was loaded with a clear polymer film. Megaloudis was part of a sophisticated counterfeiting ring printing $50 notes. The operation came undone after Megaloudis' brother, Nicholas, handed two of the notes to a burger chain worker, after which point they found their way to police Detectives tracked the notes back to Megaloudis and his brother, eventually discovering enough polymer to make notes with a face value of more than $40 million. At trial, District Court judge Ross Letherbarrow, SC, said he was "unable to tell them apart from real currency". A fistful of dollars Thirty years ago when the first Australian polymer bank note was introduced, the idea they could be faked with off-the-shelf printers and materials was unthinkable.

There are now about 1.5 billion Australian bank notes in circulation, worth almost $73 billion. And despite some heralding the end of cash, "paper" still accounts for 37 per cent of transactions. The most widely circulated – and counterfeited – note is the $50 bill which makes up about 47 per cent of all bills in circulation and more than 80 per cent of all counterfeits. The $50 note offers the best profit for a counterfeiter looking to make a lot of money with minimal risk. "If you are going to spend several hours counterfeiting a bank note, you want to get the biggest return," said Michael Andersen, head of note issue at the Reserve Bank of Australia. "Hundred-dollar bills are not as common in circulation, you don't often see them and counterfeiters want less scrutiny."

The rate of counterfeiting in Australia is low. A person would have to go through 50,000 notes in a year to come across a counterfeit. But the rates are rising. In 2003-04, the rate was around 5 notes per million. Today it's 17 notes per million. And in 2015 Australia was one of only four countries, alongside New Zealand, Norway and Sweden, that saw counterfeiting rates rise. Authorities know that the forgers are finally catching up. This year saw the release of two new bank notes – the $10 and $5 bills. Those in the business know they need to constantly outsmart the forgers. After all, they've been left with egg on their face in the past, in an episode which proved so embarrassing, it forced authorities to rethink their bank notes and led to the creation of the polymer money we have today.

The Times Bakery counterfeit It was October 1966 and just as the Christmas-shopping season was gathering steam, forgers decided to act. In cafes, hotels shops and horse-racing tracks 10-dollar notes began to change hands, near identical to the real article, but also subtly different for those who bothered to check. For months, no one batted an eyelid. But on one rainy summer morning in December a man walking to work stumbled upon 43 sodden 10-dollar notes on a nature strip in Melbourne. There was something odd about these bills. The paper felt too waxy, and the "10" was noticeably blurred. Holding it up to the light also revealed the metal security thread running down the middle of the bill was indistinct. Police soon discovered the bills had been circulating for months. The timing couldn't be worse, two days before Christmas when every supermarket was flogging its prize ham and Christmas turkey.

It was an embarrassing find, with decimal currency in Australia just eight months old, supposedly with near-impenetrable security features. "The printing and distribution of the notes was probably the best planned operation ever carried out in Australian criminal history," detectives told The Canberra Times that year. It came to be known as the "Times Bakery counterfeit" because the horizontal lines on a depiction of the Times Bakery were, on inspection, not quite flush with the vertical edge of the building. Police begun hunting down suspects. Initial raids led to the seizure of around $1.6 million worth of notes. Police even tried to chase down a car en route to Sydney, believed to be carrying $150,000 in cash, but without success. By January, police had still failed to find the masterminds or printing equipment.

"The forgeries could continue to turn up for years unless the plates and the masterminds behind the swindle are discovered," Senior Detective Page said at the time. The criminal operation was so successful police continued to discover forgeries for months afterwards at a rate of around three a day. Beyond paper The Reserve Bank of Australia was at a loss. By the standards of the mid-'60s its bills were considered state of the art. After the fiasco, it established a think tank with scientists from the Commonwealth Scientific and Industrial Research Organisation tasked with identifying innovative approaches to creating more secure bank notes. They suggested a plastic-based substrate be used as the basis for a new generation of bills. It was the beginning of Australia's polymer bills. In 1988 the bank released its first polymer bill – a commemorative $10 bank note.

The public were told the note was a special issue to commemorate the anniversary of Captain Cook's arrival in Australia, but it was also a discreet test of the polymer note. Some notes were quietly collected by the RBA after a period in circulation. They found that the public were harder on the note than expected. "There was a feature on one of the windows and at the time the public damaged it quite a bit," Andersen said. By 1996, all Australian notes were on polymer. The first recorded polymer counterfeits occurred the next year, but authorities were not worried. The manufacturing techniques were labour-intensive and non-viable. Counterfeiting rates plummeted. In 1994 Detective Sergeant Dennis Carr from the AFP's Currency Squad remarked in an internal police publication that due to the sophistication of bank notes, "it could be argued that the squad will cease to have a role to perform in the future."

Within 10 years the forgers were at it again. In May 2006, in the South American country of Colombia, police detectives supported by Interpol swooped on a printing facility as they hunted down a suspect involved in the manufacture of €319,000 in counterfeit bank notes. What they found was a stash of printing presses, computers, materials, partially completed notes, including Australian $100 bank notes with a face value of around $5 million. Disturbingly, the counterfeits contained high-quality reproductions including the distinctive clear window with its white pattern – the main security feature of Australian notes. The polymer note was now vulnerable. 'Really good fake money'

In May 2015, Kasey McFarlane walked into the Clayton branch of the National Australia Bank to exchange some American dollars. The bank, which had four people checking money before it went into their stock, handed her three $50 notes. When she went to a local supermarket and pulled out one to pay for groceries the teenager at the checkout identified it as a fake. "If you look at them and compare them, you're like, 'there's something not right,'" she told Fairfax Media at the time. "But if you were just handed them you wouldn't pick them up."

Stories like these sounded the death knell for the $50 dollar bill. Next year, the RBA will release a new $50 note, the culmination of 12 years of research and testing at a cost of around $37 million. "The whole program is a recognition counterfeits are getting better," Mr Andersen said. A lot has to be taken into account when creating a new bill. Bank notes have many distinctive features which many of us would recognise, but never consciously consider. The crunching sound a note makes when scrunched, its weight, the waxy texture, the light shellacked feel on the glossy windows of the slightly raised embossed foil images. "The first point of contact for a bank note is person to person so overt features have to meet two key objectives – firstly, they need to be difficult to replicate, secondly they need to be identifiable," Andersen says. There are stiff penalties for counterfeiting – up to 14 years – and it's illegal to fail to report a counterfeit note.

But counterfeiting is unusual among crimes. By reporting a counterfeit and handing it over, individuals are also forfeiting the value it represents. Like a note stuck together by sticky tape, there's a temptation to pass it on and make it someone else's problem. Federal Agent Mark Weber is the Australian Federal Police's Counterfeit Currency Liaison Officer. "If they [the public] do believe they are in position where they have come across some counterfeit notes they should let us know and submit them so we can have a look at them. If they are found to be genuine, they will be returned," he said. He said passing them on is a crime. "With the severity of the penalties involved that you open yourself up to, there is some consideration as to what is the easier option," he said.

Andersen said the public should see it for what it is – stealing. "When you receive a counterfeit you have been the victim of a crime in the same way as when someone steals your wallet," he said. "The difference is, you get a receipt."