A banknote identifying machine and method for testing a banknote for genuineness stably without being affected by a sensor or contamination on the banknote. Transmission photosensors 61 are moved over a banknote to be tested to scan the banknote with a light beam along reading lines L to obtain patterns of an amount of transmitted light through the banknote (FIGS. 3(b) and 3(c)). Patterns (1a, 1b) of an amount of transmitted light corresponding to watermark portions are evaluated with maximum values (11, 12) of patterns of an amount of transmitted light corresponding to ordinary design portions other than the watermarks to determine whether or not there is any watermark in the banknote and to authenticate it.