On August 30, 2017, FinCEN issued a memorandum titled “Memorandum on Financial Institution and Law Enforcement Efforts to Combat Elder Financial Exploitation.” Elder Financial Exploitation is the improper use of an older person’s funds or assets. Assets can also include the older person’s property or belongings. When an older person is being exploited, it often happens by someone they know such as a relative or caregiver. Older persons can also become victims of e‐mail and phone call scams. Older people tend to be easy targets because they may feel isolated, have declining health, memory loss or physical disability, or are in bereavement from possibly losing a spouse or loved one. Once an older person is victimized they may feel financial insecurity, loss of dignity and quality of life. Many times, they don’t want to discuss what has happened to them or they are too embarrassed to confide in someone.
Elder Financial Exploitation is the largest fraud committed against individual persons, although only a small portion of these frauds are detected and reported. FinCEN believes financial institutions can play a role in helping to detect and report such crimes. Almost all states have a mandatory requirement to report elder abuse; however, out of these states only a few require financial institutions to report such abuse. Of the 50 states, only 12 have some form of mandatory reporting requirements for financial institutions. Financial institutions need to check their individual state law requirements regarding reporting elder financial exploitation. Even though only 24% of the states require elder exploitation mandatory reporting, financial institutions can report such activity voluntarily.
What role can financial institutions play?
First and foremost, financial institutions are at the forefront of seeing money change hands and thus are in a position to detect and report this financial exploitation. Frontline staff has a good chance of knowing or identifying when potential red flags are triggered. In 2011, FinCEN issued an “Advisory to Financial Institutions on Filing Suspicious Activity Reports Regarding Elder Financial Exploitation.” It contains red flag indicators; if tripped, FinCEN encourages financial institutions to file a SAR, even if it is not mandatory. By filing a SAR, institutions should also report such suspected abuse to law enforcement agencies and the state or local Adult Protective Services (APS). Filing or reporting includes providing the law enforcement agency or the APS with details regarding why they think the behavior could be possible elder financial exploitation. The details may include the victim’s name, address, sex, age, and condition (dirty or not well‐kept, mentally unstable, scared, etc.); the abuser’s name, sex, age, relationship to the victim, and the condition (mentally stable, drug addict, hostile, etc.); what led to the report; and if the victim is in immediate danger.
What are the Red Flags?
There are many signs a financial institution can look for when conducting business with older customers. FinCEN’s red flags include:
- Cannot spend money the way he/she wants
- Bills aren’t paid on time, even though resources are there to pay them
- Account shows activity the older person would not have done, such as making an ATM withdrawal or signing up for internet banking
- Financial situation suddenly changes
- Bank account shows unusual activity
- Makes change to financial decisions, but doesn’t understand them
- Afraid to speak in front of the caregiver/companion/family member
Many of these red flags can be observed by frontline staff. If anything appears unusual during a transaction or interaction with the customer, FinCEN is encouraging financial institutions to report this behavior.
Timely notification to FinCEN, law enforcement or APS will accelerate engaging entities who may be able to collaborate on investigations and to ensure the victim is taken out of harm’s way. Some financial institutions are hesitant to file or report because they are concerned about offending or violating the elderly person’s privacy. Under the Gramm‐LeachBliley Act, enabling regulations and interagency guidance indicates filing or reporting does, in general, violate the privacy rules.
According to the Advisory, there are multi‐disciplinary networks around the country that address elderly financial exploitation. These networks provide education, training and individual case review. FinCEN encourages financial institutions to participate in these local networks. To find out whether a network exists in a specific area, contact the local APS agency, Area Agency on Aging (AAA) or a senior information and assistance hotline. The U.S. Department of Health and Human Services website, www.eldercare.gov, allows users to search for their local APS or AAA agencies.
A financial institution may wonder what a law enforcement agency does with the Suspicious Activity Report filed on Elder Financial Exploitation. The SAR form includes a specific check box to indicate suspected elder financial exploitation. A financial institution should include essential facts about the suspicious activity, including dates, location, and transaction amounts. The narrative should include detailed information on the situation and why the financial institution considers the behavior suspicious. The more narrative information that is provided can increase the likelihood law enforcement can protect the victim. Law enforcement agencies use SARs to trigger an investigation, support an ongoing investigation or identify previously unknown subjects and entities. Since a financial institution does not know if there is an ongoing elderly abuse investigation, the filing of a SAR could provide law enforcement with the details they are missing regarding an investigation or case they are currently working.
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