Samantha: Hello, this is Samantha Shares.
This episode covers the Interagency Statement on Elder Financial Exploitation
The following is an audio version of that statement.
This podcast is educational and is not legal advice.
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And now the statement.
Interagency Statement on Elder Financial Exploitation
The Board of Governors of the Federal Reserve System (F R B), Consumer
Financial Protection Bureau (C F P B), Federal Deposit Insurance Corporation
(F D I C), Financial Crimes Enforcement Network (FinCEN), National Credit Union
Administration (N C U A), Office of the Comptroller of the Currency (O C C), and
state financial regulators (collectively, âthe agenciesâ), are issuing this
statement to provide institutions supervised by the agencies (âsupervised
institutionsâ) examples of risk management and other practices that can be effective
in identifying, preventing, and responding to elder financial exploitation.
This statement does not replace previous guidance on this subject issued by any
of the agencies, does not interpret or establish a compliance standard, and does
not impose new regulatory requirements or establish new supervisory expectations.
It is intended to raise awareness and provide strategies to supervised
institutions for combating elder financial exploitation, consistent
with applicable legal requirements.
Background
Elder financial exploitation is the illegal use of an older adultâs
funds or other resources for the benefit of an unauthorized recipient.
Elder financial exploitation can deprive older adults of their life savings
in whole or in part, devastate their financial security, and cause other harm.
A recent study estimates annual losses from U.S.
older adults as a result of elder financial exploitation
at 28.3 billion dollars.
The U.S.
Department of the Treasuryâs 2024 National Money Laundering Risk Assessment described
elder financial exploitation as a growing money laundering threat, which has been
linked to more than 3 billion dollars in reported financial losses annually.
Furthermore, a FinCEN review of Bank Secrecy Act (B S A) report data found
that financial institutions filed 155,415 reports related to elder financial
exploitation between June 15, 2022, and June 15, 2023, associated with more
than 27 billion dollars in reported suspicious activity, which may include
both actual and attempted transactions.
In addition to financial losses, elder financial exploitation can also
result in increased reputational, operational, compliance, and other
risks for supervised institutions.
Federal and state government agencies have raised awareness of elder financial
exploitation and worked to educate supervised institutions and consumers
about prevention and response strategies.
In this statement, the agencies provide examples of risk management
and other practices that supervised institutions could consider adopting.
Additionally, Appendix A to this Statement provides a list of resources issued by
federal and state agencies on this topic.
Section 1.
Governance and Oversight
A number of laws and regulations related to consumer protection and safety and
soundness may be applicable to instances of elder financial exploitation.
Consistent with such laws and regulations, a supervised institutionâs
oversight strategies may include policies and practices to better
protect account holders and the supervised institution from the impacts
of elder financial exploitation.
Supervised institutions may consider enhancing or creating risk-based policies,
internal controls, employee codes of conduct, ongoing transaction monitoring
practices, and complaint processes to identify, measure, control, and mitigate
elder financial exploitation, provided such policies do not result in age
discrimination that is impermissible under the Equal Credit Opportunity Act (ECOA).
Effective actions aimed at guarding against elder financial exploitation
include open lines of communication among supervised institutionsâ departments
responsible for researching and responding to unusual account activity, for
example, across functions such as BSA compliance, fraud prevention, and consumer
protection, including fair lending.
Compliance with applicable privacy or other legal requirements is necessary to
ensure that the information of account holders remains confidential and secure.
Section 2.
Employee Training
Supervised institutions may find it beneficial to provide clear,
comprehensive, and recurring training for their employees on
recognizing and responding to elder financial exploitation.
Well-trained employees can increase a supervised institutionâs ability to detect
and report elder financial exploitation.
Employee training may include identifying red flags for different types of
financial exploitation, providing proactive approaches to detecting and
preventing elder financial exploitation, and detailing actions for employees
to take when they have concerns.
Customer-facing employees may be trained to identify transactional and
behavioral red flags when conducting transactions for older adults, including
via powers of attorney or other agents.
Employees may also benefit from detailed escalation processes and
written procedures that promote timely action for events they are most
likely to encounter in their roles.
Federal law provides that a financial institution and certain employees are
not liable in any civil or administrative proceeding for disclosing suspected
elder financial exploitation to covered agencies if the financial institution
has timely trained its employees on identifying elder financial exploitation.
Section 3.
Using Transaction Holds and Disbursement Delays
Supervised institutions have used transaction holds and disbursement
delays to prevent consumer losses and respond to various situations that may
involve elder financial exploitation.
These practices should be used appropriately and in compliance with
applicable laws and regulations.
Some state laws permit supervised institutions to temporarily hold a
transaction or delay a disbursement of funds when they suspect any type of
financial exploitation, including elder fraud.14 These statutes generally provide
timelines for transaction holds, and some provide immunity for institutions and
employees who meet specific requirements.
Supervised institutions may benefit from establishing and implementing
policies and procedures based on applicable laws and regulations.
It may be helpful for supervised institutions to consider various factors,
such as the account holderâs explanation of the purpose of the transaction, the
requirements to provide disclosures, and the prohibitions against unfair,
deceptive, or abusive acts or practices.
Supervised institutions may also consider procedures for older adult account holders
and their designated representatives to establish the legitimacy of a
potentially suspicious transaction.
Section 4.
Using Trusted Contacts
Supervised institutions may establish policies and procedures that enable
account holders to designate one or more trusted contacts that
employees can contact when elder financial exploitation is suspected.
For example, an account holder might identify one or more family members,
attorneys, accountants, or other trusted individuals and authorize
the supervised institution to contact them if the supervised institution
cannot reach the account holder or suspects that the account holder may
be at risk of financial exploitation.
Unless separately authorized by the account holder, a third-party
trusted contact typically would not have authority to view account
information or execute transactions.
If a supervised institution establishes a trusted contact designation
process for account holders, it may be beneficial to develop clear and
effective procedures for when and how to disclose to the account holder
and trusted contact that one or more transactions have indicated that elder
financial exploitation may be occurring.
Any disclosures to account holders or trusted contacts must comply
with applicable privacy laws and legal prohibitions, including
the confidential nature of SARs.
Section 5.
Filing SARs Involving Suspected Elder Financial Exploitation
In certain circumstances, financial institutions are required under
FinCENâs, the NCUAâs, and the federal banking agenciesâ laws and regulations
to file SARs related to suspicious activity and suspected violations of
law or regulation, which may include fraud and elder financial exploitation.
Additionally, supervised institutions can voluntarily file SARs for suspicious
activities related to elder financial exploitation that do not meet the
requirements for mandatory filing, such as those involving dollar amounts
lower than the regulatory threshold.
Supervised institutions can consider how to detect and identify possible red flag
indicators of suspected elder financial exploitation, such as unusual behavior
of an older adult or their caregiver or an unexpected, large wire transfer out
of an account from which the account holder has no history of similar activity.
FinCENâs 2022 Advisory on Elder Financial Exploitation provides examples of
financial and behavioral red flags.
Supervised institutions can include any observed red flags of financial
exploitation in the narrative section of the SAR to describe the reasons
why the activity is suspicious.
FinCENâs 2022 Advisory also requests that financial institutions mark the
elder financial exploitation checkbox (SAR Field 38(d)) and include âEFE
FIN-2022-A002â in SAR Field 2 (Filing Institution Note to FinCEN) and in the
narrative to indicate when elder financial exploitation is suspected.23 This approach
provides potentially useful information to law enforcement and supports
accurate elder financial exploitation SAR data analysis and trend tracking.
Supervised institutions are reminded of the confidential nature of SARs
and the prohibition on disclosing a SAR and any information that would
reveal the existence of a SAR, except in authorized circumstances.
No financial institution and no current or former director, officer, employee,
or agent of a financial institution that reports a suspicious transaction,
may notify any person involved in the transaction that the transaction has
been reported or otherwise reveal any information that would reveal that
the transaction has been reported.
Section 6.
Reporting to Law Enforcement, Adult Protective Services (APS), and/or
Other Entities, as Appropriate
Timely reporting of elder financial exploitation increases the likelihood
of successful recovery of funds.
In 2013, the C F P B, the Commodity Futures Trading Commission (C F T C), F
D I C, F R B, Federal Trade Commission (F T C), N C U A, O C C, and Securities
and Exchange Commission (S E C) issued joint guidance to confirm that the privacy
provisions of the Gramm-Leach-Bliley Act generally do not prevent financial
institutions from reporting elder financial exploitation to appropriate
local, state, or federal agencies.
Some state laws require certain supervised institutions to report
suspected elder financial exploitation to APS, local law enforcement,
and/or regulatory authorities.
In states without mandatory reporting, there may be avenues for supervised
institutions to voluntarily report suspected elder financial exploitation
to relevant state or local authorities.
Voluntarily notifying law enforcement directly of suspected elder financial
exploitation and the underlying facts may expedite and assist law enforcement
investigation and prosecution.
In addition to filing various reports, supervised institutions can consider
establishing procedures for referring individuals who may be victims of elder
financial exploitation to the U.S.
Department of Justice (D O J)âs National Elder Fraud Hotline (833.372.8311)
for assistance with reporting to the appropriate government agencies.
Supervised institutions may also consider informing older adults about
the options for reporting elder financial exploitation to local law enforcement,
F T C, the F B Iâs Internet Crime Complaint Center (I C 3), the U.S.
Postal Inspection Service (U S P I S), the Social Security Administration (S S A), or
other federal, state, or local agencies.31
Some agencies or programs may be able to help victims recover stolen funds.
For example, the I C 3 Recovery Asset Team is a domestic program designed
to âstreamline communication between financial institutions and assist FBI
field offices with the freezing of funds for those who made transfers to fraudulent
accounts under false pretenses.â Another example is FinCENâs international Rapid
Response Program that âhelps victims and their financial institutions recover
funds stolen as the result of certain cyber-enabled financial crime schemes,
including business e-mail compromise.â
Section 7.
Providing Financial Records to Appropriate Authorities
In addition to the reporting procedures discussed above, in some instances and
consistent with applicable law, supervised institutions may expedite documentation
requests for APS, law enforcement, or other investigatory agencies for active
elder financial exploitation cases.
For information on providing supporting documentation for financial records
that are associated with a SAR filing, please refer to FinCENâs FAQs.
âSupporting documentationâ refers to all documents or records that
assisted a supervised institution in making the determination that certain
activity required a SAR filing.
Section 8.
Engaging with Elder Fraud Prevention and Response Networks
Supervised institutions may also help protect older adults from financial
exploitation by engaging with elder fraud prevention and response networks
that include professionals from various agencies and organizations.
These networks are often cross-disciplinary, collaborative
efforts to protect older adults from financial exploitation.
These networks can help improve coordination among supervised
institutions, law enforcement, A P S, local aging service
providers, and other key partners.
Networks can also help supervised institutions engage in professional
cross-training, multidisciplinary case review and coordination, and
community education efforts related to elder financial exploitation.
Section 9.
Consumer Outreach and Awareness
When consumers are informed about specific types of scams and
understand perpetratorsâ tactics, they are more likely to recognize a
scam and are less likely to engage with a perpetrator or lose money.
Supervised institutions can support their account holders by providing
timely information about trending scams and ways to avoid them.
Many federal, state, and local government agencies, as well as
nonprofit organizations, trade associations, and other groups,
provide free educational resources for consumers and caregivers about
preventing elder financial exploitation.
Supervised institutions are encouraged to share free resources provided by
government agencies with their account holders or as part of community
outreach and awareness efforts.
This concludes the statement.
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This is Samantha Shares and we Thank you for listening.