You Can Help Prevent Elder Financial Abuse!
by Amy Kleinschmit
Chief Compliance Officer

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In March 2016, the Consumer Financial Protection Bureau (CFPB) issued this press release that started with this troubling statistic – One in Five Older Americans Report Being Victims of Financial Exploitation.” Financial exploitation has been called “the crime of the 21st century” with one study suggesting that older Americans lost at least $2.9 billion to financial exploitation in 2010 by a broad spectrum of perpetrators, including persons they know and trust, as well as strangers.

What can a credit unions do? At the time of the above press release, the CFPB also issued an advisory and report with recommendations for banks and credit unions on how to prevent, recognize, report and respond to financial exploitations of older Americans. It is important that credit unions review this information so they can help prevent elder financial abuse all year round.

In its report at the above link, the CFPB explains that, “Financial institutions play a vital role in preventing and responding to elder financial abuse. Banks and credit unions are uniquely positioned to do so because:

  • They know their customers and members;
  • They often have the opportunity for face-to-face interaction with older consumers who make transactions;
  • They are uniquely positioned to detect that an elder account holder has been targeted or victimized ;
  • FinCEN states that Suspicious Activity Reports (SARs) are useful for spotting elder financial exploitation and are required when the dollar threshold and other Bank Secrecy Act requirements are met.

The CFPB report also included examples of case scenarios that illustrate how some situations of elder financial abuse is occurring.

  • A Minnesota pastor persuaded a man suffering from Alzheimer’s and Parkinson’s diseases to allow him to manage his finances. The pastor made over 130 withdrawals from the older man’s bank account and was later convicted of stealing about $25,000.
  • Prosecutors charged an Indiana home care worker with nine felonies after she took more than $150,000 from a 79-year-old woman with dementia. The caregiver stole the funds through transactions on multiple credit cards, checks drawn on a savings account and cashed certificates of deposit. A bank fraud analyst was the first to detect the unusually large credit card charges, and the analyst called Indiana Adult Protective Services.
  • An Oklahoma woman received mail and phone calls telling her that she had won a sweepstakes and would get prizes if she sent money to collect her winnings. She sent as many as 90 checks a month, in response to requests for payments of $50 to $2,000. A bank employee discovered the losses when the victim asked how she could send a large amount of cash through the mail.

In 2011, the Financial Crimes Enforcement Network (FinCEN) issued an advisory to Financial Institutions on filing Suspicious Activity Reports (SARs) regarding elder financial exploitation which can be found here. Staff preparing SARs should be familiar with this advisory as it offers guidance on properly completing the SAR to assist law enforcement in its efforts to target instances of financial exploitation/abuse of the elderly. Remember, “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.”

Red flags. Both the CFPB Report and the FinCEN advisory offer examples of red flags that can be helpful in detecting (and therefore preventing and reporting) elder financial abuse.

The below list comes from the FinCEN 2011 advisory. Remember, “red flags” identifies only possible signs of illicit activity. Credit unions need to evaluate indicators of potential financial exploitation in combination with other red flags and expected transaction activity being conducted by or on behalf of the member. Additional investigation and analysis may be necessary to determine if the activity is suspicious.

Erratic or unusual banking transactions, or changes in banking patterns:

  • Frequent large withdrawals, including daily maximum currency withdrawals from an ATM;
  • Sudden Non-Sufficient Fund activity;
  • Uncharacteristic nonpayment for services, which may indicate a loss of funds or access to funds;
  • Debit transactions that are inconsistent for the elder;
  • Uncharacteristic attempts to wire large sums of money;
  • Closing of CDs or accounts without regard to penalties.

Interactions with customers or caregivers:

  • A caregiver or other individual shows excessive interest in the elder’s finances or assets, does not allow the elder to speak for himself, or is reluctant to leave the elder’s side during conversations;
  • The elder shows an unusual degree of fear or submissiveness toward a caregiver, or expresses a fear of eviction or nursing home placement if money is not given to a caretaker;
  • The financial institution is unable to speak directly with the elder, despite repeated attempts to contact him or her;
  • A new caretaker, relative, or friend suddenly begins conducting financial transactions on behalf of the elder without proper documentation;
  • The customer moves away from existing relationships and toward new associations with other “friends” or strangers;
  • The elderly individual’s financial management changes suddenly, such as through a change of power of attorney to a different family member or a new individual;
  • The elderly customer lacks knowledge about his or her financial status, or shows a sudden reluctance to discuss financial matters.

More resources for credit unions. 

CU Policy Pro includes model policy 2245: Protection the Elderly and Vulnerable from Fraud. Remember every credit union has unlimited access to this product as a due supported service. With regard to this particular policy, the credit union may need to tailor at least the first paragraph to incorporate specific state law definitions in your particular state for elder and vulnerable adults.

InfoSight includes a summary on elder financial exploitation in addition to links to related resources, such as the BITS Fraud Protection toolkit and presentation and NCUA elder abuse guidance.

MyCreditUnion.Gov includes many resources for preventing elder financial abuse.

Money Smart for Older Adults is an instructor-led curriculum that is used by professional and trained volunteers to raise awareness of elder financial exploitation and provide resources for reporting the abuse. The instructor guide, accompanying slides, and resource guide were updated with new information to broaden awareness of scams targeting older Americans.

Financial Education Placements were originally designed by the CFPB's Office for Older Americans to be used by meal delivery programs. They can also be used by community or faith-based organizations, financial institutions, or other groups in a variety of ways. 



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