I am needing information, a reg, or any rules on kiting, customers suspected of kiting, and any procedures to follow. Please help. Thanks,

Do you have a situation that you would like to outline? I take things on a case-by-case basis, so I don't know that I would be too much help without more specifics. I can tell you that when kiting happens, I do contact the other bank(s) involved once I've covered my own bank's potential losses.

Yes, we recently had a situation in which we suspected kiting. A customer was writing checks on us and depositing them into another fiancial institution, and depositing checks on that financial institution into our bank, and as kiting always does.......it caught up with them. The checks they deposited into their account with us, drawn on the other financial institution began coming back NSF. I would like to know procedures, or process of pulling the plug on the kiting, when we have to deal with a situation like this next time. Right now, we are putting a hold on any checks they deposit with us drawn on the other financial institution.

That will pretty much pull the plug. The float disappears when one side of the "bridge" is destroyed. Beyond that, if you have not yet taken a loss, I'd look seriously into closing this customer's account(s). Where there is kiting, there is always a danger for a loss. Use your judgment, though, as not all kiting is done with malicious intent. Once explained to the customer, sometimes the customer turns out to be okay.

Also don't forget if the amount of the checks involved in the kite exceed $5,000 you will need to file a SAR.

Folks always consider closing an account for kiting remember your Position(blanket)Bond has an exclusion for kiting.

Kiting is a violation of 18USC1344 Bank Fraud. Whenever you suspect kiting, immediately alert the account to be certain extended holds are placed and no inclearing checks are paid against uncollected funds. Pull the statement and obtain copies of all deposited items. You may also advise the customer that only cash or ACH deposits will be accepted. Sit down with the customer and review the account activity requesting an explanation. As stated before, if the aggregate amount exceeds $5,000, file an SAR.

Piror thread.

Folks:

Most states have enacted specific "theft by check" and "theft by electronic device" statutes in the past few years. See what your state has to offer in its criminal codes -- it's much easier to use state law to get action.