WEBVTT NOTE This file was generated by Descript 00:00:00.460 --> 00:00:02.380 Samantha: Hello, this is Samantha Shares. 00:00:03.060 --> 00:00:07.550 This episode covers the Interagency Statement on Elder Financial Exploitation 00:00:08.208 --> 00:00:10.768 The following is an audio version of that statement. 00:00:11.278 --> 00:00:14.468 This podcast is educational and is not legal advice. 00:00:14.918 --> 00:00:18.898 We are sponsored by Credit Union Exam Solutions Incorporated, whose 00:00:18.898 --> 00:00:21.948 team has over two hundred and Forty years of National Credit 00:00:21.948 --> 00:00:23.818 Union Administration experience. 00:00:24.338 --> 00:00:27.978 We assist our clients with N C U A so they save time and money. 00:00:28.368 --> 00:00:32.348 If you are worried about a recent, upcoming or in process N C U A 00:00:32.348 --> 00:00:36.648 examination, reach out to learn how they can assist at Mark Treichel DOT COM. 00:00:37.038 --> 00:00:41.388 Also check out our other podcast called With Flying Colors where we provide tips 00:00:41.388 --> 00:00:43.928 on how to achieve success with N C U A. 00:00:44.705 --> 00:00:45.685 And now the statement. 00:00:46.427 --> 00:00:49.577 Interagency Statement on Elder Financial Exploitation 00:00:50.304 --> 00:00:54.064 The Board of Governors of the Federal Reserve System (F R B), Consumer 00:00:54.064 --> 00:00:58.714 Financial Protection Bureau (C F P B), Federal Deposit Insurance Corporation 00:00:58.714 --> 00:01:03.714 (F D I C), Financial Crimes Enforcement Network (FinCEN), National Credit Union 00:01:03.714 --> 00:01:08.644 Administration (N C U A), Office of the Comptroller of the Currency (O C C), and 00:01:08.644 --> 00:01:12.924 state financial regulators (collectively, “the agencies”), are issuing this 00:01:12.924 --> 00:01:17.134 statement to provide institutions supervised by the agencies (“supervised 00:01:17.134 --> 00:01:21.544 institutions”) examples of risk management and other practices that can be effective 00:01:21.544 --> 00:01:25.934 in identifying, preventing, and responding to elder financial exploitation. 00:01:26.627 --> 00:01:30.717 This statement does not replace previous guidance on this subject issued by any 00:01:30.717 --> 00:01:35.517 of the agencies, does not interpret or establish a compliance standard, and does 00:01:35.517 --> 00:01:40.507 not impose new regulatory requirements or establish new supervisory expectations. 00:01:40.987 --> 00:01:44.667 It is intended to raise awareness and provide strategies to supervised 00:01:44.667 --> 00:01:48.737 institutions for combating elder financial exploitation, consistent 00:01:48.737 --> 00:01:50.687 with applicable legal requirements. 00:01:51.371 --> 00:01:52.021 Background 00:01:52.740 --> 00:01:56.550 Elder financial exploitation is the illegal use of an older adult’s 00:01:56.550 --> 00:02:00.440 funds or other resources for the benefit of an unauthorized recipient. 00:02:01.020 --> 00:02:05.070 Elder financial exploitation can deprive older adults of their life savings 00:02:05.070 --> 00:02:09.770 in whole or in part, devastate their financial security, and cause other harm. 00:02:10.503 --> 00:02:13.193 A recent study estimates annual losses from U.S. 00:02:13.193 --> 00:02:16.503 older adults as a result of elder financial exploitation 00:02:16.503 --> 00:02:18.783 at 28.3 billion dollars. 00:02:19.353 --> 00:02:19.673 The U.S. 00:02:19.673 --> 00:02:24.353 Department of the Treasury’s 2024 National Money Laundering Risk Assessment described 00:02:24.403 --> 00:02:28.863 elder financial exploitation as a growing money laundering threat, which has been 00:02:28.863 --> 00:02:33.083 linked to more than 3 billion dollars in reported financial losses annually. 00:02:33.423 --> 00:02:38.023 Furthermore, a FinCEN review of Bank Secrecy Act (B S A) report data found 00:02:38.023 --> 00:02:43.733 that financial institutions filed 155,415 reports related to elder financial 00:02:43.733 --> 00:02:50.233 exploitation between June 15, 2022, and June 15, 2023, associated with more 00:02:50.233 --> 00:02:54.913 than 27 billion dollars in reported suspicious activity, which may include 00:02:54.913 --> 00:02:57.223 both actual and attempted transactions. 00:02:57.913 --> 00:03:01.823 In addition to financial losses, elder financial exploitation can also 00:03:01.823 --> 00:03:05.683 result in increased reputational, operational, compliance, and other 00:03:05.683 --> 00:03:07.843 risks for supervised institutions. 00:03:08.548 --> 00:03:12.608 Federal and state government agencies have raised awareness of elder financial 00:03:12.608 --> 00:03:16.958 exploitation and worked to educate supervised institutions and consumers 00:03:16.958 --> 00:03:19.158 about prevention and response strategies. 00:03:19.838 --> 00:03:23.318 In this statement, the agencies provide examples of risk management 00:03:23.468 --> 00:03:27.338 and other practices that supervised institutions could consider adopting. 00:03:27.848 --> 00:03:32.188 Additionally, Appendix A to this Statement provides a list of resources issued by 00:03:32.188 --> 00:03:34.648 federal and state agencies on this topic. 00:03:35.348 --> 00:03:36.168 Section 1. 00:03:36.728 --> 00:03:38.008 Governance and Oversight 00:03:38.787 --> 00:03:42.957 A number of laws and regulations related to consumer protection and safety and 00:03:42.957 --> 00:03:47.257 soundness may be applicable to instances of elder financial exploitation. 00:03:47.687 --> 00:03:51.807 Consistent with such laws and regulations, a supervised institution’s 00:03:51.807 --> 00:03:55.347 oversight strategies may include policies and practices to better 00:03:55.347 --> 00:03:59.317 protect account holders and the supervised institution from the impacts 00:03:59.317 --> 00:04:01.267 of elder financial exploitation. 00:04:01.933 --> 00:04:06.553 Supervised institutions may consider enhancing or creating risk-based policies, 00:04:06.703 --> 00:04:11.353 internal controls, employee codes of conduct, ongoing transaction monitoring 00:04:11.353 --> 00:04:16.393 practices, and complaint processes to identify, measure, control, and mitigate 00:04:16.393 --> 00:04:20.903 elder financial exploitation, provided such policies do not result in age 00:04:20.903 --> 00:04:25.443 discrimination that is impermissible under the Equal Credit Opportunity Act (ECOA). 00:04:26.205 --> 00:04:30.045 Effective actions aimed at guarding against elder financial exploitation 00:04:30.085 --> 00:04:34.445 include open lines of communication among supervised institutions’ departments 00:04:34.445 --> 00:04:38.515 responsible for researching and responding to unusual account activity, for 00:04:38.515 --> 00:04:43.385 example, across functions such as BSA compliance, fraud prevention, and consumer 00:04:43.385 --> 00:04:45.535 protection, including fair lending. 00:04:46.155 --> 00:04:50.525 Compliance with applicable privacy or other legal requirements is necessary to 00:04:50.525 --> 00:04:54.725 ensure that the information of account holders remains confidential and secure. 00:04:55.399 --> 00:04:56.269 Section 2. 00:04:56.799 --> 00:04:57.749 Employee Training 00:04:58.419 --> 00:05:02.059 Supervised institutions may find it beneficial to provide clear, 00:05:02.159 --> 00:05:05.219 comprehensive, and recurring training for their employees on 00:05:05.219 --> 00:05:08.589 recognizing and responding to elder financial exploitation. 00:05:09.039 --> 00:05:13.339 Well-trained employees can increase a supervised institution’s ability to detect 00:05:13.379 --> 00:05:15.759 and report elder financial exploitation. 00:05:16.496 --> 00:05:20.296 Employee training may include identifying red flags for different types of 00:05:20.296 --> 00:05:24.436 financial exploitation, providing proactive approaches to detecting and 00:05:24.436 --> 00:05:28.866 preventing elder financial exploitation, and detailing actions for employees 00:05:28.866 --> 00:05:30.466 to take when they have concerns. 00:05:31.046 --> 00:05:34.836 Customer-facing employees may be trained to identify transactional and 00:05:34.836 --> 00:05:39.516 behavioral red flags when conducting transactions for older adults, including 00:05:39.516 --> 00:05:41.926 via powers of attorney or other agents. 00:05:42.236 --> 00:05:46.146 Employees may also benefit from detailed escalation processes and 00:05:46.146 --> 00:05:49.826 written procedures that promote timely action for events they are most 00:05:49.826 --> 00:05:51.606 likely to encounter in their roles. 00:05:52.320 --> 00:05:56.350 Federal law provides that a financial institution and certain employees are 00:05:56.350 --> 00:06:00.770 not liable in any civil or administrative proceeding for disclosing suspected 00:06:00.830 --> 00:06:05.250 elder financial exploitation to covered agencies if the financial institution 00:06:05.250 --> 00:06:09.580 has timely trained its employees on identifying elder financial exploitation. 00:06:10.305 --> 00:06:11.175 Section 3. 00:06:11.865 --> 00:06:14.615 Using Transaction Holds and Disbursement Delays 00:06:15.276 --> 00:06:19.026 Supervised institutions have used transaction holds and disbursement 00:06:19.026 --> 00:06:23.516 delays to prevent consumer losses and respond to various situations that may 00:06:23.516 --> 00:06:25.776 involve elder financial exploitation. 00:06:26.236 --> 00:06:29.676 These practices should be used appropriately and in compliance with 00:06:29.676 --> 00:06:31.596 applicable laws and regulations. 00:06:32.284 --> 00:06:36.214 Some state laws permit supervised institutions to temporarily hold a 00:06:36.214 --> 00:06:40.324 transaction or delay a disbursement of funds when they suspect any type of 00:06:40.324 --> 00:06:45.954 financial exploitation, including elder fraud.14 These statutes generally provide 00:06:45.954 --> 00:06:50.554 timelines for transaction holds, and some provide immunity for institutions and 00:06:50.554 --> 00:06:53.054 employees who meet specific requirements. 00:06:53.637 --> 00:06:57.457 Supervised institutions may benefit from establishing and implementing 00:06:57.457 --> 00:07:01.237 policies and procedures based on applicable laws and regulations. 00:07:01.777 --> 00:07:05.807 It may be helpful for supervised institutions to consider various factors, 00:07:06.107 --> 00:07:10.247 such as the account holder’s explanation of the purpose of the transaction, the 00:07:10.247 --> 00:07:14.357 requirements to provide disclosures, and the prohibitions against unfair, 00:07:14.387 --> 00:07:17.087 deceptive, or abusive acts or practices. 00:07:17.417 --> 00:07:22.257 Supervised institutions may also consider procedures for older adult account holders 00:07:22.517 --> 00:07:26.037 and their designated representatives to establish the legitimacy of a 00:07:26.037 --> 00:07:28.097 potentially suspicious transaction. 00:07:28.802 --> 00:07:29.642 Section 4. 00:07:30.152 --> 00:07:31.672 Using Trusted Contacts 00:07:32.331 --> 00:07:36.491 Supervised institutions may establish policies and procedures that enable 00:07:36.491 --> 00:07:39.871 account holders to designate one or more trusted contacts that 00:07:39.871 --> 00:07:43.851 employees can contact when elder financial exploitation is suspected. 00:07:44.331 --> 00:07:48.221 For example, an account holder might identify one or more family members, 00:07:48.311 --> 00:07:51.991 attorneys, accountants, or other trusted individuals and authorize 00:07:51.991 --> 00:07:56.051 the supervised institution to contact them if the supervised institution 00:07:56.051 --> 00:07:59.681 cannot reach the account holder or suspects that the account holder may 00:07:59.681 --> 00:08:01.861 be at risk of financial exploitation. 00:08:02.321 --> 00:08:05.961 Unless separately authorized by the account holder, a third-party 00:08:05.961 --> 00:08:09.291 trusted contact typically would not have authority to view account 00:08:09.291 --> 00:08:11.571 information or execute transactions. 00:08:12.266 --> 00:08:16.336 If a supervised institution establishes a trusted contact designation 00:08:16.336 --> 00:08:20.366 process for account holders, it may be beneficial to develop clear and 00:08:20.366 --> 00:08:24.006 effective procedures for when and how to disclose to the account holder 00:08:24.006 --> 00:08:28.046 and trusted contact that one or more transactions have indicated that elder 00:08:28.046 --> 00:08:30.256 financial exploitation may be occurring. 00:08:30.836 --> 00:08:34.636 Any disclosures to account holders or trusted contacts must comply 00:08:34.636 --> 00:08:38.366 with applicable privacy laws and legal prohibitions, including 00:08:38.366 --> 00:08:40.176 the confidential nature of SARs. 00:08:40.865 --> 00:08:41.805 Section 5. 00:08:42.495 --> 00:08:46.355 Filing SARs Involving Suspected Elder Financial Exploitation 00:08:47.023 --> 00:08:50.593 In certain circumstances, financial institutions are required under 00:08:50.593 --> 00:08:55.243 FinCEN’s, the NCUA’s, and the federal banking agencies’ laws and regulations 00:08:55.243 --> 00:08:59.643 to file SARs related to suspicious activity and suspected violations of 00:08:59.643 --> 00:09:04.443 law or regulation, which may include fraud and elder financial exploitation. 00:09:04.893 --> 00:09:09.493 Additionally, supervised institutions can voluntarily file SARs for suspicious 00:09:09.493 --> 00:09:13.413 activities related to elder financial exploitation that do not meet the 00:09:13.413 --> 00:09:17.653 requirements for mandatory filing, such as those involving dollar amounts 00:09:17.653 --> 00:09:19.563 lower than the regulatory threshold. 00:09:20.304 --> 00:09:25.154 Supervised institutions can consider how to detect and identify possible red flag 00:09:25.154 --> 00:09:30.054 indicators of suspected elder financial exploitation, such as unusual behavior 00:09:30.054 --> 00:09:34.824 of an older adult or their caregiver or an unexpected, large wire transfer out 00:09:34.824 --> 00:09:38.854 of an account from which the account holder has no history of similar activity. 00:09:39.424 --> 00:09:44.254 FinCEN’s 2022 Advisory on Elder Financial Exploitation provides examples of 00:09:44.254 --> 00:09:46.494 financial and behavioral red flags. 00:09:46.754 --> 00:09:51.034 Supervised institutions can include any observed red flags of financial 00:09:51.034 --> 00:09:54.894 exploitation in the narrative section of the SAR to describe the reasons 00:09:54.894 --> 00:09:56.834 why the activity is suspicious. 00:09:57.464 --> 00:10:02.124 FinCEN’s 2022 Advisory also requests that financial institutions mark the 00:10:02.124 --> 00:10:07.794 elder financial exploitation checkbox (SAR Field 38(d)) and include “EFE 00:10:07.794 --> 00:10:12.404 FIN-2022-A002” in SAR Field 2 (Filing Institution Note to FinCEN) and in the 00:10:12.404 --> 00:10:17.824 narrative to indicate when elder financial exploitation is suspected.23 This approach 00:10:17.824 --> 00:10:21.694 provides potentially useful information to law enforcement and supports 00:10:21.694 --> 00:10:26.294 accurate elder financial exploitation SAR data analysis and trend tracking. 00:10:26.924 --> 00:10:30.874 Supervised institutions are reminded of the confidential nature of SARs 00:10:30.874 --> 00:10:34.384 and the prohibition on disclosing a SAR and any information that would 00:10:34.384 --> 00:10:38.444 reveal the existence of a SAR, except in authorized circumstances. 00:10:38.904 --> 00:10:43.734 No financial institution and no current or former director, officer, employee, 00:10:43.844 --> 00:10:47.904 or agent of a financial institution that reports a suspicious transaction, 00:10:48.174 --> 00:10:52.084 may notify any person involved in the transaction that the transaction has 00:10:52.084 --> 00:10:55.864 been reported or otherwise reveal any information that would reveal that 00:10:55.864 --> 00:10:57.654 the transaction has been reported. 00:10:58.350 --> 00:10:59.300 Section 6. 00:10:59.960 --> 00:11:03.970 Reporting to Law Enforcement, Adult Protective Services (APS), and/or 00:11:03.970 --> 00:11:05.760 Other Entities, as Appropriate 00:11:06.527 --> 00:11:10.717 Timely reporting of elder financial exploitation increases the likelihood 00:11:10.717 --> 00:11:12.597 of successful recovery of funds. 00:11:12.947 --> 00:11:18.907 In 2013, the C F P B, the Commodity Futures Trading Commission (C F T C), F 00:11:18.907 --> 00:11:25.357 D I C, F R B, Federal Trade Commission (F T C), N C U A, O C C, and Securities 00:11:25.357 --> 00:11:29.727 and Exchange Commission (S E C) issued joint guidance to confirm that the privacy 00:11:29.727 --> 00:11:33.787 provisions of the Gramm-Leach-Bliley Act generally do not prevent financial 00:11:33.787 --> 00:11:37.717 institutions from reporting elder financial exploitation to appropriate 00:11:37.717 --> 00:11:40.087 local, state, or federal agencies. 00:11:40.798 --> 00:11:44.738 Some state laws require certain supervised institutions to report 00:11:44.738 --> 00:11:48.938 suspected elder financial exploitation to APS, local law enforcement, 00:11:49.058 --> 00:11:50.738 and/or regulatory authorities. 00:11:51.278 --> 00:11:55.218 In states without mandatory reporting, there may be avenues for supervised 00:11:55.218 --> 00:11:59.638 institutions to voluntarily report suspected elder financial exploitation 00:11:59.638 --> 00:12:01.858 to relevant state or local authorities. 00:12:02.348 --> 00:12:06.468 Voluntarily notifying law enforcement directly of suspected elder financial 00:12:06.468 --> 00:12:11.068 exploitation and the underlying facts may expedite and assist law enforcement 00:12:11.068 --> 00:12:12.938 investigation and prosecution. 00:12:13.691 --> 00:12:18.071 In addition to filing various reports, supervised institutions can consider 00:12:18.071 --> 00:12:22.221 establishing procedures for referring individuals who may be victims of elder 00:12:22.221 --> 00:12:24.051 financial exploitation to the U.S. 00:12:24.051 --> 00:12:31.201 Department of Justice (D O J)’s National Elder Fraud Hotline (833.372.8311) 00:12:31.201 --> 00:12:34.591 for assistance with reporting to the appropriate government agencies. 00:12:34.991 --> 00:12:38.951 Supervised institutions may also consider informing older adults about 00:12:38.951 --> 00:12:43.201 the options for reporting elder financial exploitation to local law enforcement, 00:12:43.301 --> 00:12:48.151 F T C, the F B I’s Internet Crime Complaint Center (I C 3), the U.S. 00:12:48.151 --> 00:12:53.901 Postal Inspection Service (U S P I S), the Social Security Administration (S S A), or 00:12:53.901 --> 00:12:56.481 other federal, state, or local agencies.31 00:12:58.293 --> 00:13:02.683 Some agencies or programs may be able to help victims recover stolen funds. 00:13:03.213 --> 00:13:07.873 For example, the I C 3 Recovery Asset Team is a domestic program designed 00:13:07.873 --> 00:13:12.313 to “streamline communication between financial institutions and assist FBI 00:13:12.313 --> 00:13:16.403 field offices with the freezing of funds for those who made transfers to fraudulent 00:13:16.403 --> 00:13:21.623 accounts under false pretenses.” Another example is FinCEN’s international Rapid 00:13:21.623 --> 00:13:25.953 Response Program that “helps victims and their financial institutions recover 00:13:25.953 --> 00:13:30.533 funds stolen as the result of certain cyber-enabled financial crime schemes, 00:13:30.783 --> 00:13:33.103 including business e-mail compromise.” 00:13:33.841 --> 00:13:34.771 Section 7. 00:13:35.351 --> 00:13:38.261 Providing Financial Records to Appropriate Authorities 00:13:38.965 --> 00:13:43.155 In addition to the reporting procedures discussed above, in some instances and 00:13:43.155 --> 00:13:48.135 consistent with applicable law, supervised institutions may expedite documentation 00:13:48.135 --> 00:13:52.745 requests for APS, law enforcement, or other investigatory agencies for active 00:13:52.825 --> 00:13:55.085 elder financial exploitation cases. 00:13:55.877 --> 00:13:59.897 For information on providing supporting documentation for financial records 00:13:59.897 --> 00:14:03.897 that are associated with a SAR filing, please refer to FinCEN’s FAQs. 00:14:04.567 --> 00:14:08.217 “Supporting documentation” refers to all documents or records that 00:14:08.217 --> 00:14:12.207 assisted a supervised institution in making the determination that certain 00:14:12.207 --> 00:14:14.317 activity required a SAR filing. 00:14:14.977 --> 00:14:15.787 Section 8. 00:14:16.427 --> 00:14:19.777 Engaging with Elder Fraud Prevention and Response Networks 00:14:20.400 --> 00:14:24.640 Supervised institutions may also help protect older adults from financial 00:14:24.640 --> 00:14:29.030 exploitation by engaging with elder fraud prevention and response networks 00:14:29.030 --> 00:14:32.630 that include professionals from various agencies and organizations. 00:14:33.030 --> 00:14:36.000 These networks are often cross-disciplinary, collaborative 00:14:36.000 --> 00:14:39.510 efforts to protect older adults from financial exploitation. 00:14:40.200 --> 00:14:43.430 These networks can help improve coordination among supervised 00:14:43.430 --> 00:14:47.340 institutions, law enforcement, A P S, local aging service 00:14:47.340 --> 00:14:49.370 providers, and other key partners. 00:14:49.900 --> 00:14:53.800 Networks can also help supervised institutions engage in professional 00:14:53.830 --> 00:14:58.070 cross-training, multidisciplinary case review and coordination, and 00:14:58.070 --> 00:15:02.050 community education efforts related to elder financial exploitation. 00:15:02.739 --> 00:15:03.599 Section 9. 00:15:04.119 --> 00:15:06.039 Consumer Outreach and Awareness 00:15:06.759 --> 00:15:10.049 When consumers are informed about specific types of scams and 00:15:10.049 --> 00:15:13.949 understand perpetrators’ tactics, they are more likely to recognize a 00:15:13.949 --> 00:15:17.969 scam and are less likely to engage with a perpetrator or lose money. 00:15:18.459 --> 00:15:22.269 Supervised institutions can support their account holders by providing 00:15:22.269 --> 00:15:25.869 timely information about trending scams and ways to avoid them. 00:15:26.527 --> 00:15:30.187 Many federal, state, and local government agencies, as well as 00:15:30.187 --> 00:15:33.857 nonprofit organizations, trade associations, and other groups, 00:15:34.007 --> 00:15:37.887 provide free educational resources for consumers and caregivers about 00:15:37.887 --> 00:15:40.167 preventing elder financial exploitation. 00:15:40.547 --> 00:15:44.617 Supervised institutions are encouraged to share free resources provided by 00:15:44.617 --> 00:15:48.317 government agencies with their account holders or as part of community 00:15:48.317 --> 00:15:50.127 outreach and awareness efforts. 00:15:50.804 --> 00:15:52.184 This concludes the statement. 00:15:52.915 --> 00:15:57.075 If your Credit union could use assistance with your exam, reach out to Mark Treichel 00:15:57.075 --> 00:15:59.825 on LinkedIn, or at mark Treichel dot com. 00:16:00.395 --> 00:16:02.995 This is Samantha Shares and we Thank you for listening.