Check kiting is a serious crime, and is one of the most strictly enforced types of white collar crimes. Even first time offenders can face stiff penalties, sometimes resulting in fines of greater than $500,000, and jail time of more than 20 years.
Is check kiting a federal crime?
But, when kiting involves large amounts or multiple checks, felony criminal charges may come into play. An offender can expect to face both state and federal charges for check kiting, as this fraud is regulated by the federal government.
How do banks prevent check kiting?
The strongest method for deterring or stopping kiting is observant, alert tellers, and the aid of the computer to detail a list of all items presented for payment that are drawn against uncollected funds.
How do you prove check kiting?
Steps to Prove Check Kiting
- The total debit amounts are equal or close to the total credit amounts.
- Frequently using round dollar amounts.
- Unusually high number of credits and debits per day or week with no apparent purpose.
- Deposits and withdrawals are occurring between the same institutions.
Why is check kiting illegal?
Because it takes a few days for the check to be processed, it temporarily appears as though there is more money in the account than is really there. They may see it as giving themselves a temporary loan that will be paid back before a check bounces. However, check kiting is considered fraud, and it is illegal.
What is check kiting example?
An example of check kiting would be as follows: on Monday, a prospective check kiter deposits a $500 check from account A into account B and then shortly thereafter deposits a $500 check from account B into account A. As the kiting process continues, the dollar amount rises as well as the number of accounts.
Is it difficult to detect and prosecute check kiting?
Difficult to detect and prosecute, check kiting schemes have gained popularity in recent years. In response, more banks locus on recognizing the signs of kiting. As a result, check kiting schemes are being discovered and reported more frequently today than ever before.
Why are banks so interested in check kiting?
Law enforcement officials need the cooperation of financial institutions in order to identify and prosecute check kiters. Obviously, banks benefit from early detection. For this reason, most banks have made efforts to discover such schemes before experiencing a loss.
Which is a tell-tale sign of check kiting?
As a result, they often use banks in different cities or regions of the country. Therefore, bank authorities should question excessive or unnecessary use of out-of-town banks. The third indicator, frequent deposits, check writing, and balance inquiries, is perhaps the most telling sign of kiting.
Which is more common deposit fraud or check kiting?
Kiting isn’t the most popular type of deposit fraud. In fact, it happens with far less frequency than typical deposit fraud, but it can be far more devastating to the bank. “Other fraud is like a thunderstorm; kiting is a tornado,” says Sydney Hicks of Sterling Commerce banking systems division.
