KITED CHECK Meaning and
Definition
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A kited check refers to a fraudulent practice in the banking system where an individual or entity intentionally attempts to create an artificial balance in their accounts by taking advantage of the time delay in check processing.
Typically, this scheme involves two or more bank accounts held by the same individual or entity across different banks or branches. The individual writes a check from one account to another account, knowing that the funds are insufficient to cover the payment. However, since it takes a certain amount of time for the check to clear, they take advantage of this delay to deposit the same check into the account it was written from before it is processed. This essentially creates an artificial balance in the account, making it seem like there are funds available.
The person engaging in kiting will continue this practice of writing checks from one account to another, increasing the artificial balance in each account, thereby gaining access to funds they do not actually possess. In essence, they are "floating" the checks between accounts to give the appearance of a healthy balance, while taking advantage of the time lag to exploit the banking system.
Ultimately, this deceptive practice is illegal and defrauds financial institutions, which may incur financial losses when the kiter writes checks that cannot be honored due to insufficient funds. Banks and regulatory agencies have implemented measures to detect and prevent kited checks, such as monitoring check clearing times and suspicious account activities.
Common Misspellings for KITED CHECK
- jited check
- mited check
- lited check
- oited check
- iited check
- kuted check
- kjted check
- kkted check
- koted check
- k9ted check
- k8ted check
- kired check
- kifed check
- kiged check
- kiyed check
- ki6ed check
- ki5ed check
- kitwd check
- kitsd check
- kitdd check
Etymology of KITED CHECK
The term "kited check" originates from the banking industry. Here's a breakdown of its etymology:
1. Kite: The word "kite" in this context refers to a fraudulent practice known as "check kiting". Check kiting involves taking advantage of the time it takes for a check to clear. It is called "kiting" because just how a kite stays aloft in the air using wind currents, a kiter keeps the illusion of funds in their bank account by writing checks between accounts at different banks.
2. Check: A "check" is a financial instrument used to instruct a bank to pay a specific amount of money from a person's account to another person or organization. In the case of check kiting, a check is written from one account to another to create the illusion of available funds.
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