Taiwan is probably the source of the fake 100 yuan (US$14.6) bank notes in circulation on China's mainland with serial numbers starting with "HD," said Su Yu-qi, a former investigator with the island's special task force.

Overseas counterfeiting gangs have trafficked about 300 million yuan in fake notes to the mainland within five years, Insight China magazine quoted police as saying.

Taiwan police raided a gang manufacturing counterfeit yuan bills on October 8. They seized six suspects as well as more than 100 million yuan in fake notes.

The island now has an estimated 100 billion yuan in genuine notes in circulation.

An insider told the magazine most of the fake notes were made in Taiwan, Hong Kong or overseas with advanced printing technology and then smuggled to the mainland on fishing boats. As producers of fake notes on the mainland can face the death penalty, counterfeiting gangs chose to print the bills overseas, according to the insider.

It was confirmed by Su, who said counterfeiting gangs in Taichung and Tainan in Taiwan usually delivered the products to Pingtung on the island before loading the bills on fishing boats and smuggling them to the provinces of Guangdong or Fujian.

Counterfeiting plants in Taiwan owned the most advanced equipment and technology as well as networks for transporting and vending, Su added.

Mainland gangs may collaborate with bank clerks to put the fake bills in circulation or via money laundering at illegal casinos, said the insider.

A fake notes vender, who was identified as Liu Xiaohui, told the magazine that fake notes from Taiwan first arrived in either Fujian or Guangdong. They were then sent to Zhejiang Province before spreading throughout the country, Liu said.

Fake notes were transferred by land or water once on the mainland, according to Liu.

(Shanghai Daily March 3, 2009)