Mangled and mutilated: Ottawa's banknote rescue service

The Bank of Canada operates its own money-laundering operation

Millions of dollars arrive each year at the Bank of Canada in the form of bank notes that are melted, ripped, tainted with human blood, contaminated with mouse droppings and stained by red dye.

Through a kind of sanctioned money-laundering, they’re inspected, verified and returned in digital form to customers’ bank accounts at full face value.

Welcome to the Bank of Canada’s bank note redemption service, which processed more than $7 million in mostly mangled and dirty money in 2022, the latest year for which figures are available.

The central bank won’t accept just any dirty currency sent to its Ottawa facility. The service requires claimants to clean their own banknotes if the cash has come into contact with toxic materials, such as “mould, drugs or unknown substances.”

Statistics on the redemption service, obtained under the Access to Information Act, show about half of the notes received are torn. Just less than a quarter are melted, a relatively new hazard as Canada’s currency moved from paper to plastic in 2011.

Less common, amounting to about 10 per cent of the value of all redemptions, is damage resulting from chemicals and water.

In 2022, there were 1,806 individual claims, more than two-thirds from the public. The rest were from banks, other financial institutions, police forces and armoured-car carriers such as Brinks.

The bank verified each batch, rejecting only two, then deposited an average of $1,100 in the accounts of ordinary citizens and $11,500 on average for all other claimants, such as credit unions.

A spokesperson said in an email that the few bundles arriving with “human contamination” – typically three per cent of the total – have blood on them. She provided no further details.

“Animal contamination usually involves bank notes that have been eaten by pets, or contaminated by rodents,” said Amelie Ferron-Craig. These are usually less than one per cent of the total.

Some of the mutilated money arrives stained after a red-dye pack discharges, a banking security feature intended to thwart thieves.

“Dye packs (are) devices used by financial institutions to dye or mark stolen cash, often used in ATMs and branch teller machines,” Ferron-Craig said. “In many cases, bank notes have been stained with dye as a result of ATM servicing.”

Redemptions for ATM mishaps can be large. “A submission for an ATM cassette with mouse droppings or an exploded dye pack can range from $20K to $250K,” she said.

Other mutilation categories comprise a tiny fraction, including “burnt,” “buried” and “altered.”

Some of the problem money received is no longer in circulation, but retains its face value by law and is reimbursed in full. This older cash represented just less than 10 per cent of the value of bills submitted last year, and is typically not damaged, just outdated. Consumers can also redeem these obsolete notes at banks and other financial institutions.

The amount reimbursed by the Bank of Canada’s service rose to $7 million in 2022 from $5.8 million in 2021.

In a test of the system, I submitted a $5 bank note that suffered a close encounter with a clothes dryer. Accidentally shredded, it also had some melting.

The disfigured cash had to be submitted in a sealable, leak-proof bag, along with a claim form. The bank digitally credited the amount to my bank account two weeks after receiving the corrupt bill – a quick laundering of a badly laundered $5 note.

Consumers with mutilated money (no coins, Canadian currency only) can access forms and instructions online at: https://www.bankofcanada.ca/banknotes/bank-note-redemption-service/