If we suspect a kite is going on and place a hold on the customer' s account for the amount of any uncollected funds, do we need to send a Hold notice to the customer (I would guess this would come under exception hold for reason to doubt collectibility?)
I believe the answer is yes....I have always been under the impression that when you place a hold on the account.....always send a hold notice....no matter whether done in person at teller station, or the operations department places the hold for some other reason. Right???

Right. Send the notice - resonable cause to doubt collectability. You don't have to give them the $100 availability but you must state the reason for the doubt.

Raymond is right - Reasonable Cause to Doubt Collectibility (RCDC) exception hold would be applicable, no $100 next day availability required, notice to depositor is required. For the RCDC exception, the notice does have to specify why there is reasonable cause, but one available option is to indicate that the bank has confidential information that leads it to have doubts about the collectibility. On the customer's copy of the notice, you do not need to specify what that confidential information is, but on the bank copy (which you must retain for 2 years), you are required to detail what specific confidential information led you to doubt the collectibility (in this case, the fact that the customer was suspected of check kiting because...). You don't need to specifically tip of the customer that you suspect them of check kiting, though.

Thank Raymond and MagicBanker.......exactly the confirmation I was looking for.....what a great avenue to receive such! So, thanks to you BankersOnline!!!!!

If the customer has been repeatedly overdrawn, we also have an option to provide a one-time notice covering a six-month period.

That only works on non-consumer accounts - 12 CFR 229.13(g)(2)