Kiting or check-kiting is defined as the practice of covering a badcheckfrom one bank account to another. Persons with multiple bank accounts use this advantage because it takes multiple days to process checks. The check that has been deposited increases the fund available. The act of kiting isillegal. To counter kiting activities, manyfinancial institutionshave a waiting period before checks are deposited.In theSixth Circuit, the Court defined check-kiting as drawing checks on an account from one bank and depositing them in an account in the other bank when both bank accounts have insufficient money to cover the amounts drawn; seeU.S. v. Stone. The Court inUnited States v. Flowersdecreed that kiting is anoffensewhere the offender tricks two or more banks into inflating account balances by drawing money from insufficiently funded bank accounts. The Court stated that theoffenderin essence will be giving themselves their own unauthorized, unsecured, and interest-freeloans, put banks at risk for funds, and short the banks’ assets. InUnited States v. Norton, the Court stated that check kiting could violate the federal bank fraud statute,18 U.S.C. §1344if the victim is a federally insured financial institution.
[Last updated in July of 2022 by the Wex Definitions Team]
