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Kiting is a term used to describe a dishonest financial activity in which a person or business inflates their account balances by using the time it takes for checks to clear between two banks.Â
In order to accomplish this, a check must be written from one bank account to another and deposited into the recipient's account even when there is insufficient money in the account from which the check was written to cover it.Â
The beneficiary can then make a withdrawal before the check is returned for lack of cash, which can take a few days. This effectively gives the recipient's account the appearance of having a greater balance, enabling them to spend money they don't actually have.
It is against the law to kite, and doing so can have dire repercussions. In addition to criminal charges, they may also be subject to civil penalties, such as having to repay any cash that was obtained fraudulently and maybe losing access to banks. Kiting may also have detrimental effects on other people or organizations that depend on the stability and integrity of the banking system. It can result in market manipulation and erode client confidence in the financial system, which can have a cascading effect on the overall economy.
It is against the law to kite, and doing so can have dire repercussions. In addition to criminal charges, they may also be subject to civil penalties, such as having to repay any cash that was obtained fraudulently and maybe losing access to banks. Kiting may also have detrimental effects on other people or organizations that depend on the stability and integrity of the banking system. It can result in market manipulation and erode client confidence in the financial system, which can have a cascading effect on the overall economy.
