What you might see as creative accounting or simple desperate measures to keep your household or business afloat short-term could actually be bank fraud. Check kiting occurs when someone uses more than one bank account, writing checks and depositing them in a circular fashion to make it look like funds are present when they are not. This is possible when someone uses the bank float system to their advantage, and it is illegal.
Here's a basic example of how check kiting works. Someone who has fallen on hard times might need to pay their mortgage, which is $1,000. That same person knows they won't have the $1,000 for two weeks, but they can't wait that long to make the payment because they believe it will cause their loan to default. So, they write a check to the mortgage company from bank A. They then write a check to themselves from bank B and deposit it into bank A.
The check written from bank B won't clear for a day or two, so they return to bank B the next day, writing a check from bank A and depositing it. Using the float system -- the fact that it takes a few days for checks to clear -- the person just deposits checks back and forth between the accounts until the $1,000 pay comes in two weeks later.
It might seem like an innocent act to make ends meet, but it's actually considered bank fraud. If one of the banks catches on, they can close the account and cause the $1,000 to become an NSF payment at the other bank. If you are facing check kiting charges, regardless of your intent, consider reaching out to a criminal law attorney immediately for help with your defense.
Source: Bankrate, "Anatomy of check-kiting fraud," Laura Bruce, accessed March 10, 2017