Does anyone use a letter for possible check kiters, stating something to the effect that "funds need to be available when writing checks from one account to another"? Someone once referred to this as a "knock it off" letter....

I use a phone call to assess the situation. Depending on feedback from the customer, I make a decision as to the future of our relationship with the customer. When we use a letter in this situation, it is an "intent to close" letter.

I do not believe there is such a thing as a "possible" check kiter. They either are or are not kiting. If they are kiting you must take the appropriate steps to protect yopur bank by shutting down the activity and getting the account closed. Don't forget your SAR.

Fraudman, the question probably is, are these customers intentionally using float to obtain use of funds? There are plenty of customers that move money between banks without any malevolent intent. That said, the ones I identify as "kiters", I don't have any question about.

kiting, paying on uncollected funds, etc....Whether they intend to do it or not they are still doing it. If they say they did not mean to do it and the other bank catches it before you do, try to explain it to management why you did not close the account and terminate the relationship and now you have suffered a loss.

I don't nkow Jokerman. A kite is a kite is a kite. If it flies like a kite it usually is one. What other reason is there for this type of activity. Especially when all the elemnts of the kite are there. I just finished with a cash kite in which the amount went from about $200 in mid-December to over $10k in early February. There is too much exposure not to take action.

Remember, when fighting kiters...the last one out gets the rotten egg. I would handle kiters carefully. I have addressed the activities with "potential" kiters. If they gunuinely don't know what they are doing, or some excuse similar, I have found that if you alert them to it diplomatically they will stop right away. that begs two arguments

1. They really were innocent and appreciated the call.
or
2. They now know you are on to them and are getting out or switching banks.

Either way you win.

BeaconPaul made my point for me.

Jokerman, you do have a point. Before getting into banking, I had no idea what kiting was. If I had done it,it was out of ignorance that it was illegal or even frowned upon. There are quite a few customers out there who, when told about the severity of the situation, will cease the practice immediately. How many of your customers write a check for groceries the day before payday because of float time. To them, it's no different.

Assess the situation before you call your customer a criminal. Stop the activity as soon as you can, but give the customer the benefit of the doubt....and cover yourself just to make sure.

Pup, I would not call wrting that check to the grocery store kiting. And I also agree with you under the circumstances you described Jokerman.

But a kite is a kite and where there is intent to commit fraud from the kite you must take action immediately. Elements of a kite include the syphoning cash, daily deposit that escalate and deposits/withdrawals of like or near lilke amounts. When these elements are present you have a kite.

Writing that check to the grocery store is "float" not "kiting", you're correct. My point was that a good number of customer don't know the difference. So many of our new retail bankers don't know what "kiting" is until I explain it to them. So, it seems to me that we need to assess the situation and show whether an intent to defraud was displayed before we call it "kiting" and falsely accuse someone of criminal intent. I think that we (at least I) have a habit, on occasion, to immediately think the worst.

That said, most of us, within about 5 minutes of investigation, will be able to show an intent to defraud, so I don't think we have to walk that thin line very long in each case. It's usually obvious what is going on.

We are in agreement!

Do you think "float" and "kiting" will disappear from our banker lingo one of these days. It would seem the electronic clearing is going to make those terms obsolete by the time our kids are bankers.

Probably not in our lifetime (at my age anyway). And if they do, the fraudsters will find something else to provide us with job security.

Greg,
Check 21, in theory, will end float time. The catch is that not all banks are taking advantage of electronic clearing...we're not yet. I won't go into Check 21 here because there's a forum for that, but I will say that it will be a good 5-10 years before we get widespread participation, I'm sure.

Yes, Fraudman, there will always be something that can be exploited to keep us employed and on our toes.

A customer writes checks drawn on their account and either cashes them at another bank or at retail outlets. This creates float. The next day they make a cash deposit and write more checks which are cashed in the same fashion. Another cash deposit is made. They are always a day ahead of the float and the amount of the kite continues to rise. You can usually determine the amount of the kite by taking the daily amount of checks presented against the account minus the amount of the cash deposit or pull their monthly statement and compare the difference between the two amounts.

Funny subject I was just a very large bank, depositing a check from me, to me. The teller in drive through said "Ma'am, we have to hold this check". I asked why, since a quick review of the account would show three regular deposits, two from me and one from the sweetie, always in the same amount. She said "checks written from yourself to yourself at another bank is called kiting Ma'am"

I had to walk her down average collected balance, account history, etc, then finally mentioned she shoudl check client history before she hushed up (the sweetie is a private banking client). Then I explained that household accounts are fairly common, and are used quite often. Many times this will involve seperate banks.

Lesson learned...I came back to our bank and tried the same thing, only to hear a similar question from a teller. Kiting training is SO Important!!! WHat they recognize as "kiting" and what really is can be miles away. Fortunately I was patient, but another client might be really peeved off.

I then asked her for the CRA file (the other bank) which she totally flopped on I did kind of feel that for the training, the bank owed me at least one mistake more

One check does not make a kite. If one reviews the daily uncollected/unavailable funds report, there will be a pattern of daily deposits and withdrawals of like and increasing amounts. You only need to look at where the despoists are coming from and where the checks are being cashed to establish a kiting pattern.

SHe literally went with that last line though Fraud From me to me, so it must be a kite. Silly teller kiting is for kid...oh nevermind LOL