WASHINGTON -- A flood of high-quality counterfeit U.S. money from Peru is perplexing federal authorities, who say the shadowy networks responsible are also engaging in other criminal activity that poses a threat to U.S. security.

Over the past year, authorities and banks have recovered at least $7.8 million in fake U.S. notes across the United States that they believe were manufactured in Peru, according to Secret Service statistics. Another $446,280 in fake U.S. cash from Peru was seized before it was spent in the United States during that same period, and more than $18.2 million more during raids in Peru, the Secret Service said.

``And that's just a fraction of the notes that we can ally to Peru,'' worldwide, said John Large, the assistant special agent in charge of the Secret Service's Criminal Division at its headquarters in Washington. ``It's a form of economic terrorism.''

Besides costing U.S. citizens and businesses millions in losses, Large said, the international counterfeiting rings undermine confidence in U.S. currency. That is especially the case in countries in South America and elsewhere that have ``dollarized'' economies, in which U.S. bills are accepted as an official form of currency.

The Secret Service launched a special task force in February in partnership with the Peruvian National Police, and stepped up training for Peruvian officials and bankers in how to go after counterfeiters. The State Department issued a warning to travelers last month, saying that ``counterfeit U.S. currency is a growing and serious problem in Peru.''

A similar crackdown in Colombia in recent years helped authorities sharply reduce the rampant counterfeiting of U.S. currency. As much as 70 percent of the counterfeit U.S. currency passed annually in the United States had been from Colombia, but law enforcement initiatives have dropped that level to about 5 percent domestically, Secret Service statistics show. Counterfeiters in Colombia still print millions in fake U.S. dollars.

Those successes, however, resulted in at least some of the Colombian counterfeiters moving over to Peru, which does not have as robust an anti-fraud force and system of anti-counterfeiting laws in place.

The Secret Service noticed a trickle of fake bills coming out of Peru in 2003. Two years ago, agents began reporting a steady stream of fake currency in Miami, some of it smuggled in by human ``mules'' who hid it on their bodies or in packages and even in greeting cards.

Large and other U.S. and Peruvian officials say some of the Peruvian counterfeiters are also engaged in drug trafficking and making fake passports, visas and other documents. They fear that terrorists could use the documents, and even the fake cash, to make their way to the United States.

In one recent raid in Peru, authorities seized passports from 16 countries.

Large and other authorities say they have made 24 arrests and taken down 17 counterfeiting plants in Peru during the raids that netted the $18.2 million in fake U.S. currency since February.

In one raid in April, U.S. and Peruvian authorities seized $8.4 million in counterfeit $100 bills, eight lithographic printing presses and numerous plates and negatives used in the manufacture of counterfeit U.S. currency. They also arrested five suspects.

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