Three years ago, the FDIC and CFPB began a journey to protecting our elderly by launching a financial resource, Money Smart for Older Adults. The tool was designed to aid not only the elderly and their caregivers on how to prevent, identify and respond to elder financial exploitation, plan for a secure financial future, and make informed financial decisions, it also included awareness training for financial institution staff on this growing issue. Yesterday, the CFPB’s Office of Older Americans issued the Report and Recommendations: Fighting Elder Financial Exploitation through Community Networks. The report reveals the success that hundreds of counties around the country have developed coordinated community-based efforts to prevent, detect, and respond to elder financial exploitation. But the report also tells of the staggering amount of financial losses due to elder financial exploitation -- in the billions annually. Moreover, recent studies show that about 17 percent of seniors reported that they have been victims of financial exploitation, with few ever coming to the attention of protective services. With more than 60 million Americans over the age of 60, that’s more than 10 million older Americans falling prey each year.
To aid in mitigating this atrocity to our seniors, the CFPB compiled a Guide and Best Practices to Help Communities Create Protection Partnerships for Seniors (the “Resource Guide”). Through its research, the CFPB identified recommendations for existing networks and key stakeholders to develop and enhance their community’s collaborative efforts to fight financial exploitation. The Resource Guide addresses the steps involved with starting a network, sources of funds and how networks in the CFPB study sustained themselves. In addition, it provides information on the traits of successful network coordinators, organizing effective meetings, and existing resources that may facilitate network activities such as education and case review.
As our population of seniors continues to grow, financial institutions must have heightened awareness of the risks. Did mom and dad really “volunteer” to offer their home as collateral on that loan? Did grandma actually authorize Suzi to use her debit card? Is that new found love of Mr. Jones’ in love with Mr. Jones or his bank account?
Training and education of all staff and board members on the perils of financial exploitation is a first step. Make copies of the Money Smart for Older Adultseasily available for elders to pick up is a simple yet effective way for elders to get educated at their own pace. (After all, with that title, who would think that it also includes insight as to whether or not the elder may be being taken advantage of? But, it does.) Next, institutions should lever the Resource Guide and collaborate with organizations in the communities it services to develop partnerships to address and mitigate the financial exploitation of the elderly.
Under the Bank Secrecy Act rules, if a financial institution knows, suspects, or has reason to suspect that a transaction has no business or apparent lawful purpose or is not the sort in which the particular customer would normally be expected to engage, and the financial institution knows of no reasonable explanation for the transaction after examining the available facts, including the background and possible purpose of the transaction, the financial institution should then file a suspicious activity report (“SAR”). Moreover, financial institutions must file with FinCEN to the extent and in the manner required a report of any suspicious transaction relevant to a possible violation of law or regulation. As such, all staff should be trained in red flags of financial exploitation of the elderly.
For example, staff should know how to detect any erratic or unusual transactions or changes in banking patterns. Signs include frequent large withdrawals, including daily maximum currency withdrawals from an ATM; sudden non-sufficient fund activity; uncharacteristic attempts to wire large amounts of money; and closing of time deposits or other accounts without regard to penalties. Another red flag is elderly customers who appear to be under the dominance of another person, such as not being allowed to communicate with the teller or loan officer; someone else always speaking on his/her behalf. Remember, financial exploitation of the elderly is not just a deposit issue; lending and trust services are also opportunities to strip an elder of their savings or home.