Usage of the phrase "We have been made."

I was watching a TV show in which they showed this two friends who were hiding in disguise to escape from bounty hunters. Then one friend upon realizing that the bounty hunters have recognized them says to the other "We have been made.".

I can understand the meaning of this phrase from the context but I would like to know more about its usage. Being a non-native speaker i find this phrase quite odd and elegant at the same time. Is this a common phrase used in that context? Is this considered proper English or a slang? Is it considered American English?

Answer

This usage of "made" is considered slang, specifically as used by criminals, police, spies, etc., but I would say that it is very well known to native speakers. The Oxford English Dictionary notes that it is originally American, but I believe that it is now also used outside the US. This usage has been common in American movies and television shows for a long time, so perhaps it spread that way?

Here's what the OED says:

52. trans. ... f. Criminals' slang and Police slang (orig. U.S.). To recognize or identify (a person, etc.). Cf. make n.2 10.

The oldest example given is from 1906. The reference to "make n.2 10" is to a similar noun form, meaning an identification or profile.