Law enforcement officers in Canada explained how a ring of counterfeit money producers created the fake money and eventually passed it in to circulation. The methods are generally applicable to all types of currency.
First, the counterfeit money manufacturer would make the fake bills and sell it in bulk for 20 to 30 cents on the dollar. So if the manufacturer was selling $1 Million in fake hundred dollar bills, he would sell that batch for between $200,000 to $300,000.
The bulk buyer would then break up the counterfeit bills in to smaller batches and sell those batches to runners at 40 cents to the dollars. That person would then sell the fake bills to the shopper, who purchases the counterfeit currency at 50 cents to the dollar.
The last person who purchased the bills would then use it at retail stores.The would attempt to pass the fake money while buying a small item, such as a cup of coffee. By using a large denomination, the shopper would be able to pocket the genuine money that is given as change as his profit.
Source: Grant Robertson, “Funny money: How counterfeiting led to a major overhaul of Canada’s money,” Globe and Mail, December 3, 2011.