KITED CHECKS Meaning and
Definition
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Kited checks refer to a fraudulent practice in the banking industry where an individual or business intentionally writes and deposits checks without having sufficient funds in their account to cover the amount. This process involves taking advantage of the time it takes for checks to clear and the delay in communication between banks.
The term "kite" is derived from the act of flying a kite, where the check writer uses the time gap between writing the check and clearing it to temporarily increase their bank account balance. This illicit practice is typically carried out by repeatedly depositing checks from one account to another, creating a cycle of writing checks from the second account to cover the deficiency in the first account, thus providing the appearance of funds.
Kited checks rely on the delay in the banking system to manipulate account balances and create the illusion of a positive cash flow. However, this method is inherently fraudulent as it involves knowingly engaging in financial transactions with insufficient funds.
Banks and financial institutions have implemented various measures to combat check kiting, including electronic check clearings, improved communication networks, and stricter regulations. Engaging in kited checks is illegal in most jurisdictions and perpetrators can face severe legal consequences, including imprisonment and financial penalties.
In summary, kited checks involve the intentional act of writing and depositing checks without sufficient funds in order to take advantage of the time delay in check clearing to create a false appearance of funds in a bank account.
Common Misspellings for KITED CHECKS
- jited checks
- mited checks
- lited checks
- oited checks
- iited checks
- kuted checks
- kjted checks
- kkted checks
- koted checks
- k9ted checks
- k8ted checks
- kired checks
- kifed checks
- kiged checks
- kiyed checks
- ki6ed checks
- ki5ed checks
- kitwd checks
- kitsd checks
Etymology of KITED CHECKS
The word "kited checks" is derived from the term "kiting", which originates from the concept of flying a kite in the air. Kiting refers to a fraudulent practice involving writing a check with insufficient funds in one bank account and depositing it into another account. By constantly transferring funds between different accounts, the hope is to create a temporary balance to cover the initial check. This process resembles the way a kite is kept aloft by the wind, as funds are shifted back and forth in an attempt to extend the fraudulent transaction.
