Good morning,

I have a customer that was suspected of check kiting, he has since slowed down on the writing checks back and forth but now I've noticed he's set up automated drafts from his external account to credit his account with us. Then turns around and writes the check back to the external bank. Problem is I have no account number of the external bank to tie it too but I know where the funds are going and being used for. He's still suspected of fraud just taking a different route. So my question is his incoming ACH Credits from his external checking and writing checks from his internal back to the external consider to be a form of fraud.

FYI...He's up for his 90 day SAR review.

Thank you

I have a customer that was suspected of check kiting

I only have one question. Why are they still a customer of yours?

As is usually the case, Randy is asking the appropriate question.

Tell the people you work for that you have a proven idea for cutting costs: Closing the account.

I have communication issues with some of my lenders. I get responses like they bring in a lot of revenue, prominent customer and all around nice guy. He has other business/personal accounts with us that are not suspected of fraud.

So are you saying that the incoming ACH Credits can be considered fraud?

enough to cover:

Over the time period covered by the FBI’s detailed computer analysis, October 2005 through December 2005, Woodard was responsible for kiting resulting in an actual loss of approximately $1.6 million.
?

https://www.fbi.gov/sanantonio/press-releases/2010/sa020110.htm

This is not an individual lender decision. Your senior management should already have zero tolerance policy on even a sniff of kiting. It is the "best" customers that cause the biggest losses. And yes, ACH credits can be used to create fraud depending on the funding requirements that are imposed on them from the other bank. They are probably their "best" customer also. If this is such a good customer, why do they need accounts at other banks???

Point taken rlcarey.

Thank you

Fraud? not in the sense one thinks of fraud as it pertains to ACH and Reg E, as he is the originator and receiver of the transaction.

illegal? Now, that certainly is the question to be asking.

I'm with Randy, why still a customer after the kiting suspicion to begin with.