Capital Briefs: OCC Issues Alert on Check-Kiting Schemes

Bankers should be on the lookout for check-kiting schemes, according to the Comptroller's Office.

In a letter to chief executives, the OCC said national banks should require officers - rather than tellers - to approve overdrafts, withdrawals against uncollected funds, and wire transfers.

In addition, the letter said, bankers should regularly report these types of transactions to their boards. Banks also should periodically hire independent auditors to review the internal controls used to catch check- kiters, who fraudulently cover overdrafts in one bank with a check drawn from another account with insufficient funds.

The Aug. 12 advisory outlined a number of warning signs of check fraud, including:

* The existence of multiple accounts owned or controlled by the same individual.

*Regular or excessive withdrawals against uncollected funds.

*Frequent overdrafts.

*Large credits or debits that are inconsistent with the customer's business.

Banks that suspect check kiting should file a suspicious-activity report with the OCC, the agency said.