Would this activity be considered check kiting? If a bank employee cashes checks everyday at a local club (i.e. Elks, Moose), deposits the cash into their account knowing the club won't be depositing those checks for a week or more.

Anyone ever encounter this situation?

That's not really "kiting". It would be more often called "playing the float" with the float being the term it takes for the lodge to deposit the checks. When someone at the lodge deposits early, they'll learn their lesson.

If they work at the "lodge" I'd be concerned about this at a deeper level.

We always called that a 'cash kite'. Not so dangerous to the bank, but can be bad for the person holding all the checks. When I worked at a supermarket branch, I would often see bank customer use the 'check cashing' privledge at the grocery store, then they'd walk straight into the bank and deposit the cash. I'd be suspicous because this type of behaviour can evolve into a true kite very quickly and is indiciative of other problems.

I'm going to cast my vote the other way. I would call this a kite, albeit a simple one. There was a similar discussion recently which I will try to locate for you.

By the way, how was this discovered?

Here's the other discussion I mentioned.

It's also fraud. They are fraudulently inflating their balance with the bank by essentially kiting checks by cashing them at the club and redepositing those funds with the bank on which the checks are drawn...getting double credit for the same money, against which other checks are drawn. Bank employees in particular should not be doing this; I have worked at banks where you got fired for doing this (after a warning of course.)

This is "kiting" pure and simple. No one ever said that there had to be other banks involved to have a kiting situation. It's the artifical creation of a balance in the account without actual funds.

We encountered a similar situation last year with 2 employees. They were cashing checks and then turning right around and depositing them. Needless to say we got rid of them. Their history showed deposits going up each month and then they started getting National Cash Advance checks and using credit card advances more often. It started out small but over the two years they were depositing around $15,000 per month. It only was a pattern for disaster, maybe not for us but the employees. We felt the only action was dismissal, which was decided by the Audit Committe and approved by the board. We didn't feel we could trust them in their positions as bank employees anymore. We considered this pattern fraud as they admitted they were inflating their balances to cover checks they had written. Although we didn't lose anything we felt we stopped this before something would have happened.

At the least, you should ask this employee to stop this practice. I think it presents a reputational risk to the bank.

My bad, I was tired and didn't read the "depositing the cash into their accounts" section. I was more focused on how they knew the checks will be held til the end of the week at the "lodge". Still have duct tape on the brain I guess

I hope this employee is getting some counseling. They're headed down a difficult path...