Analyse the following situation. An individual, for his own personal gain or on behalf of a company, can hide the theft of cash using a check-kiting scheme. In check kiting, cash is created using the lag between the time a check is deposited and the time it clears the bank. Suppose an individual or a company ooens accounts in banks A, B, and C. The perpetrator “creates” cash by depositing a $1,000 check from bank B in bank C and withdrawing the funds. If it takes two days for the checks to clear bank B, he has created $1,000 for two days. After two days, the perpetrator deposits a $1,000 check from bank A in bank B to cover the created $1,000 for two more days. At the appropriate time, $1,000 is deposited from bank C in bank A. The scheme continues - writing checks and making deposits as needed to keep the checks from bouncing - until the person us caught or he deposits money to cover the created and stolen cash.
Analyse the following situation.
An individual, for his own personal gain or on behalf of a company, can hide the theft of cash using a check-kiting scheme. In check kiting, cash is created using the lag between the time a check is deposited and the time it clears the bank. Suppose an individual or a company ooens accounts in banks A, B, and C. The perpetrator “creates” cash by depositing a $1,000 check from bank B in bank C and withdrawing the funds. If it takes two days for the checks to clear bank B, he has created $1,000 for two days. After two days, the perpetrator deposits a $1,000 check from bank A in bank B to cover the created $1,000 for two more days. At the appropriate time, $1,000 is deposited from bank C in bank A. The scheme continues - writing checks and making deposits as needed to keep the checks from bouncing - until the person us caught or he deposits money to cover the created and stolen cash.
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
