I imagine the more sophisticated counterfeiters probably use printing presses and paper that at least looks similar to that used in currency.
At one time not that long ago, U.S. Currency was one of the easiest to counterfeit. My Father brought back some German paper money from WWII. It was worthless and just a souvenir but even bills made in the 1920s had watermarks on them. All you had to do was hold it up to the light.
I have no idea why we resisted such an easy preventative measure so long.