USD serial numbers cancelled?

[nealeffendi]

Read yesterday in Al Ahram (Egyptian newspaper) a warning against buying notes on the black market. The warning is that the Federal Reserve can cancel serial numbers of any US note making the note not able to be cashed at banks. Supposedly they have this option in case of fraud, money laundering, counterfeiting and crime. The article called them frozen notes.
So is this true that not only can USD serial numbers be cancelled but that banks will have a list of cancelled numbers?
I'm doubtful about this and think it might just be a lie made to discourage people buying or selling on the black market. Currently the official rate is 31 Egyptian pounds to USD and black market 53 and the government is desperate for USD.
Egypt keeps devaluing and another big drop expected soon. I only have to look at my gold Egyptian pound from 125 years ago to see how much the currency has fallen (1 gold pound now worth more than 25,000 paper pounds).

[Sapyx]

In theory, yes. In practice, no.

There are millions of pieces of stolen, lost or otherwise questionable notes that would qualify for such a database. We don't yet have the technology to search such a large database in the tiny fraction of a second that a bank has when it examines a note's serial number via a machine counter. So while the banks and/or government could co-operate and make such a database to help it track physical cash, they have not yet done so.

There's really very little "checking of serial numbers" that goes on in the banks. In terms of the bank or the government tracking where notes are going, there are only two significant exceptions.

If the government is forced to use physical cash to deal with criminals - in paying a ransom, for example, or as part of an anti-organized-crime undercover operation - the serial numbers of the notes used are recorded before being distributed to the criminals. That way, when those criminals are later caught with those specific pieces of cash in their possession, the notes can be used as evidence that that person was involved in that criminal operation.

Secondly, some banks keep a stash of notes where they record the serial numbers of an entire bundle; They give this bundle of "bait money" when a robber demands cash. This way, when the criminal is eventually caught, and those specific notes are found in their possession, the notes can be used as evidence that that person committed the robbery.

In neither case, do the banks all over the country examine every incoming note for a match to the missing serial numbers, to try to catch the criminals when they deposit the money. If the criminals are too quick and pass on their ill-gotten cash before they get caught - or if they never get caught - then the serial number evidence becomes useless.

You may have noticed that in heist movies, Hollywood criminals always ask for their cash takings to be in "new unmarked bills" or some such. This is because in both of the examples presented above, the "bait money" will have been likely sitting around for some time, waiting for criminal activity to occur; the bait notes will be older than most recent freshly printed batch of money. Neither the banks nor the government have the capacity to grab a freshly printed bundle of notes hot off the printing press, add it to the "given to criminals" database, then get it sent immediately to the criminals. And Hollywood knows this. Most real-world criminals don't bother filtering the serial numbers they are given, though - they're planning on neither getting caught, nor on holding on to the cash any longer than necessary.

[gweidion]

Unless they can do it "auto-magically" at every bank branch in the States, it isn't feasible. It would require every note coming into the bank to be checked against the database. They aren't going to do it manually.

[nealeffendi]

Ah Gweidion it would require more than every bank branch in the states but every money changer kiosk and bank branch in the world. If only US branches were told which serial numbers were cancelled then people would take those notes overseas.
So it just sounded doubtful to me but I do wonder if they will have such auto note scanners in the near future.

[Mister T]

Possible but they'd a network on the scale of Visa or Mastercard to be able to do it effectively in real time - something like that would be very expensive to build and maintain.