Circular Letter No. CC/2019/00000066

Circular Letter No. CC/2019/00000066
Sent to:
Credit Institutions and Financial Companies.
Form. 99999924/T – 01/14
Subject: Specific rules for the use of intelligent banknote neutralization systems (IBNS).

The Banco de Portugal establishes, through the Instruction on the Use of intelligent banknote neutralization systems (IBNS) and exchange of damaged euro banknotes resulting from the operation of these systems, the conditions under which banknotes altered as a result of the use of intelligent banknote neutralization systems may be deposited or exchanged, subject to confirmation, as well as the general rules for the use of IBNS by credit institutions and other entities that professionally handle cash.

Regarding the specific usage rules for each type of IBNS, these were, in accordance with point 2.3 of Instruction No. 1/2011, defined and published through Circular Letter No. 1/2011/DET of January 18, 2011.

Taking into account the technological evolution recorded in recent years, particularly regarding the technologies available for banknote neutralization, it is necessary to review the rules applicable to these systems, revoking the current circular letter and publishing new usage rules for each class of intelligent banknote neutralization systems (IBNS).

I. Classification of IBNS
IBNS systems are currently subdivided into two classes: Class 1 IBNS and Class 2 IBNS.

Class 1 IBNS use neutralization processes involving the irreversible destruction of parts of the banknote (e.g., by chemical or pyrotechnic action) or, without destroying the banknotes, make access to an individual banknote impossible without causing physical damage to it (e.g., by gluing).

Class 2 IBNS are all systems that use the banknote neutralization process with ink, irreversibly marking the surface of the banknotes. Banknotes neutralized by these equipment are usually referred to as inked banknotes.

For the purpose of completing the acceptance form/receipt for the exchange of a damaged banknote by IBNS, as defined in the Instruction on the Use of intelligent banknote neutralization systems (IBNS) and exchange of damaged euro banknotes resulting from the operation of these systems, the mention “Class 1” or “Class 2” must be entered in the field relating to the Type of IBNS.

II. Class 1 IBNS
In neutralization systems with physical destruction, it is stipulated that, in minimum, 20% of the total surface of each banknote must be destroyed.

Manufacturers using glue or other processes to bind individual banknotes must ensure that the banknotes are joined in a lasting manner and that any attempt to remove individual banknotes results in significant physical damage and does not allow return to circulation. Additionally, it will be necessary to ensure the possibility of safely counting and authenticating the neutralized banknotes.

Headquarters: Rua do Comércio, 148 • 1100-150 Lisbon • Portugal T +351 213 130 000 • www.bportugal.pt Taxpayer No. 500792771 • Share Capital: € 1,000,000 • Registration at the Lisbon Commercial Registry, No. 51 Form. 99999924/T – 01/14

III. Class 2 IBNS
In neutralization systems with ink, it is stipulated that, in minimum, 10% of the total surface of each side of the banknote must be inked, if packaged in security bags. In any other case, it is stipulated that, in minimum, 20% of the total surface of each side of the banknote must be inked.

The color of the neutralization ink should be clearly visible to the human eye, i.e., it should be distinct from stains and dirt normally present on banknotes in circulation. Manufacturers of these systems must also ensure that the ink has absorbent properties in the wavelength range of infrared (IR) radiation and that it does not contain any substance that poses a risk to health and safety in case of inhalation or skin contact.