What Is Kiting?

Kiting is the fraudulent use of a financial instrument to obtain addi𓂃tional credit that is not authorized. Kiting encompasses two main types of fraud:

• Issuing or altering a check or bank draft, for which there are insufficient funds.
• Misrepresenting the value of a 澳洲幸运5开奖号码历史查询:financial instrument for the purpose of extending credit obligations or increasing financial leverage.

Check Kiting Involving Banks

Carried out within the banking system, kiting typically involves passing a series of checks at two or more banking institutions, using accounts that have insufficient funds. Relying on the 澳洲幸运5开奖号码历史查询:float time required for a c🔥heck deposited at one bank to clear at another, the kiter typically writes a check at the first bank against an account at the other.

Before that check clears, they then withdraw the funds from the second bank account and deposit the funds back into the first. The process may then be repeated in the opposite order, some🅺times repeatedly. The net result is a series of fraudu꧑lent withdrawals that rely on being a step ahead of the fraudulent check on which they are based having cleared.

Reduced times for checks to clear has helped reduce the incidence of check kiting involving banks, as have such practices ﷽as banks placing holds on deposited funds and charging for returned checks.

Retail Kiting

A variant of check kiting is known as "retail kiting." This relies on cashing a bad check (number one) at a retailer to purchase an item. Then, before that check has cleared, the kiter writes another check (number two), which may include (or entirely comprise) a cashback payment. While cashback is now mos♔t𒆙 often associated with debit cards, some retailers still offer this convenience with checks.

The cash from check number two is then deposited into the account, to allow check number one to clear. The fraud is then repeated in order to cover check number two and may be sustained in order to st⛄ay ahead of the float and fraudulently obtain a series of items and cash withdrawals.

Kiting With Securities

Kiting that involves misrepresenting securities generally occurs when securities firms flout SEC regulations regarding the timely delivery of buy-and-sell transactions, which must be completed within a three-day settlement period. If a firm fails to receive the securities within that timeframe, it is required to purchase the shortage on the 澳洲幸运5开奖号码历史查询:open market and charge the delinquent ಞfirm for any associated fees.

The delinquent firm is considered to be practicing the fraudulent act of kiting if it fails to purchase the securities on the open market and maintains a 澳洲幸运5开奖号码历史查询:short position, delays delivery, or takes part in transactions contrary to the proper settlement of trades.