Suspected Kiting, Returned Deposits, and Holds
Answer by Sam King and David Dickinson
Question: I work at a bank and we are discussing the availability of funds on an account. If a customer has consistent Return Deposits and in addition is check kiting, how long can we place a hold in order to prevent further loss on recent deposits?
Answer by Sam King:
If you have reason to believe that the check would not be paid because of consistent Return Deposits you can place an extended hold on the account for the amount of the item (for a non-local check this can be 5 additional days). Also, if the account has been repeatedly overdrawn in the last six months (more than 6 days), an extended hold could be placed. If you have confirmed that check kiting is taking place on the account you would probably want to take more aggressive action against the account. It should probably be closed and a Suspicious Activity Report should be filed. There are automated systems, such as VECTORsgi's VECTOR:Kite, that will assist in validation that check kiting is occurring.
VECTORsgi's VECTOR:Kite application can automatically identify the customers whose transaction activity could be part of a check kiting operation.
Sam is a Product Marketing Manager with the VECTORsgi VECTOR product line including the Fraud, Returns, and Exceptions Solutions. He is chiefly responsible for comparing the applicability of these solutions to the changing needs of the financial markets and monitoring both regulatory, technological and competitive forces. Sam assists banks in matching needs against the capabilities of the solutions available to the industry.
Sam has been in banking since 1964, when he assisted in the implementation of the first IBM System/360 installed in the Midwest region for banking applications. He also worked in various roles including development, implementation support, pre-sales support and marketing for UCC (now interBiz) SuperMICR. With VECTORsgi, Sam has held implementation support and pre-sales support roles prior to assuming the role of Product Marketing Manager. Sam has consulted with banks for over 15 years on the implementation and effective use of technology solutions.
Sam King can be contacted by telephone at 972.788.2580 or by email at vector.bol@stercomm.com.
You can place a hold for 7 days (for local items) and 11 days (for non-local items) on this customer. Don't forget to file a SAR for the suspect kiting as well.
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