Kite definition12/27/2023 ![]() The purpose of retail kiting is to receive cash that is immediately available and whose deposits clear faster than checks do in exchange for a check. This process can be repeated over and over again with increasing amounts of money involved, as in a Ponzi scheme.The person then takes the cash and deposits it, so the account now has $150, which is sufficient for the first check to clear, however, there will be no sufficient funds for the second kited check to clear.More likely, the person will purchase an item and write a check for $100 more than that amount. Next, the person goes into a retail establishment or grocery store and writes another check for $100 and cashes it.This individual is now insolvent, as they owe $100, but they only have $50 in the bank. The person uses the bad check to purchase the item. First, the person writes a bad check for $100.These actions are repeated until legitimate funds can be deposited into the bank account.įor example, suppose an individual has $50 in a bank account and no cash but wants to buy an item costing $100. In cases like these, a kiter writes a check to one or more retailers, like supermarkets, that offer cash back in addition to the amount of purchase.Īfter the transaction, the kiter deposits the cash received back from the transaction into their bank account on the same day in order to provide sufficient funds for other checks to clear, while the check written on that day will clear one or more business days later. Retail-based kiting involves a party other than a bank who unknowingly provides temporary funds to an account holder who lacks the funds needed for a check to clear. Banks are less likely to waive the limit of funds made available in these cases. Some kiting rings involve offenders posing as businesses, which masks their activity as normal business transactions. Sometimes, groups of individuals will write checks circularly, thereby making detection more difficult. ![]() More complex versions of this scheme involve two separate people, each with an account at a different bank, constantly writing checks back and forth to each other. This cycle continues until the offender is caught or until the offender deposits legitimate funds. The next day, the kiter writes a check on their Bank 2 account to themselves and deposits it into the account at Bank 1 in order to provide artificial funds, allowing the check they wrote the previous day to clear. A kiter who has two or more accounts at different banks writes a check to themselves from Bank 1 to Bank 2 so that funds become available at Bank 2 that same day. Circular kiting describes kiting which involves one or more additional banks serving as the location of float, and the use of multiple accounts at different banks.
0 Comments
Leave a Reply.AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |