It's never been sanctioned but it is tracked. Every single time cash (the physical printed bills) flows through a federal reserve branch or even some mainline banks the serial is noted and reported to a database. They do this in case money known to be tainted (stolen, counterfeit etc.) shows up. So if a bill with a flagged serial number comes up that info is forwarded to the FBI/Secret service. That doesn't mean they'll come knocking on your door if you deposit a single tainted note, it just tells them that the note somehow made it to your locality. But if you deposited a ton of them all at once? Yes you'd probably get a visit and some very pointed questions on where you got them and how. This has happened a few times when people found cash from robberies (the D.B cooper case being one). https://en.wikipedia.org/wiki/D._B._Cooper#Recovered_ransom_...

Most people have probably deposited a counterfeit bill and never known it too. Again singular bills are not a problem. They just tell the secret service to keep an eye on that locality and potentially contact businesses that saw the counterfeits come in assuming those businesses didn't flag it themselves.