An overview of check kiting
The whole idea behind check kiting basically revolves around the fact that this is an act of fraud whereby
the conspirators take advantage of their individual skills and brilliance in executing their theft. It’s
more or less what you would call a modern day type of con where a lot of skill is needed. What the
conspirators basically do is try to take advantage of the float so as to make use of non existent funds in a particular bank account. Some forensic experts have classified this as being a form of check fraud as they are more or less similar.
The process of check kiting involves a process of writing a check that has a higher value than the exact
account balance in that particular account. The same thing is done with a separate bank account which
also has insufficient funds. Any financial expert will agree that the purpose of doing so it to falsely inflate the current balance of a checking account. This is actually a very brilliant act of trickery as it will enable the written checks to clear, as opposed to bouncing which they would normally do. The practice also requires a lot of confidence as not many people would be able to accomplish such a task all the way to the end without chickening out.
How check kiting is done
As earlier mentioned, check kiting involves a process where you will write two separate checks on two
separate bank accounts that all have insufficient funds. In order for this to be effective, it is advisable to write the separate checks on accounts from separate bank accounts which should all have insufficient funds. Remember that you’re trying to trick the bank into inflating the bank balance of the account so as to allow written checks that would otherwise bounce to clear.
There are quite a number of categories of check kiting, all of which are performed at different levels and
at different magnitudes. The categories include retail based kiting, circular kiting and corporate kiting.
The most common out of these is retail based kiting which involves the use of a separate entity other
than the bank in order to provide lacking funds in an account which will thereafter enable a check to
clear. This is usually done unknowingly to the separate entity whose funds are being used to con the
bank. Circular kiting and corporate kiting are usually executed at a much higher level and involve the use
of millions as the players as sometimes inside men.
The laws and consequences of check kiting
Those who are usually involved in check kiting need to be aware of the repercussions that they’re likely
to face as this is something that the government takes seriously. The first and most important thing to
note is that check kiting is illegal in most, if not all countries. The United States prosecutes culprits of check kiting under quite a number of existing laws set against bank fraud, misapplication and required
entries. The charges can draw a fine of up to a million dollars, imprisonment of up to thirty years or even both in some cases.