Definition - What does Check Kiting mean?
Check kiting is an illegal practice where a person with two bank accounts, both of which have insufficient funds, writes checks between the two accounts to exploit the banks’ check-clearing time.
Check kiting essentially yields the check kiter an illegal, interest-free loan, and is now aggressively prosecuted by law enforcement agencies.
Justipedia explains Check Kiting
Check kiting is achieved when the kiter first writes a check on Account 1, which has insufficient funds, and then deposits it into Account 2. The bank, where Account 2 exists, relies on the amount listed on the check from Account 1 to honor a check that the kiter writes from Account 2 and deposits into Account 1. The banks are vulnerable because there is a lag time between a check being recorded and the money promised by the checks actually being cleared between the banks.