Elder Financial Exploitation (Abuse) Reporting Requirements

Elder Financial Exploitation (Abuse) Reporting Requirements

Elder financial exploitation is one of the fastest growing crimes in the world, with the emphasis on crime.  Elder financial exploitation (abuse) involves the wrongful act of taking money or property and can be committed through scams, fraud or other means (embezzlement, identity theft, etc.) The perpetrators may include family members, caretakers, online or telephone fraudsters, financial managers, social contacts or service providers.

While most of society respects the need and desire of senior citizens to maintain independence, there are those individuals among us that lay in wait for the opportunity to take advantage of them. Sadly, many of our senior citizens have fallen victim to these unscrupulous individuals and the result can be financially devastating, not to mention taking a mental and/or physical toll on the victims.

Senior citizens deserve the care and concern of other people, especially in the busy, fast paced world we live in today.

Reports of Elder Financial Abuse

Reports of suspected elder financial abuse are reportedly on the rise in the United States, and around the world.  A study completed by the National Committee for the Prevention of Elder Abuse and Metlife in June 2011 revealed the annual financial loss by victims of elder financial abuse to be an estimated $2.9 Billion dollars, which increased from $2.6 billion in 2008. The study found victims are most likely to be women living alone, between the ages of 80 and 89. Over half of the perpetrators were males between the ages of 30 to 59 with female perpetrators for the most part between 30 and 49.

Recognizing the key role banks and other financial institutions might play in addressing  elder financial abuse (exploitation), the Financial Crimes Enforcement Network (“FinCEN”), in February 2011, released financial advisory FIN-2011-A003, Advisory to Financial Institutions on Filing Suspicious Activity Reports Regarding Elder Financial Exploitation providing information to financial institutions on how to identify “Elder Financial Exploitation”. The advisory specifically requested financial institutions to make certain when filing suspicious activity reports (“SARs”) on activities involving suspected elder financial abuse to use the term “Elder Financial Exploitation” in the narrative portion of the SAR. Use of this specific term provides greater assistance to the various investigative units in identifying possible illicit activity more quickly.

State Reporting Requirements

Abuse and exploitation of the elderly is statutorily defined at the state level. The National Center on Elder Abuse defines exploitation as a type of elder abuse: “the illegal taking, misuse, or concealment of funds, property, or assets of a vulnerable elder.” (FinCEN- FIN-2011-A003).    As a result of the increase in reported cases of elder financial exploitation, forty-nine states, several territories, and the District of Columbia have either mandatory or voluntary reporting requirements. Many states have broadened the scope of reporting requirements to include financial abuse of a “dependent” adult. (A dependent adult is sometimes defined as a person between the ages of 18 and 64 who has physical or mental limitations that restrict their ability to carry out normal activities, or to protect their rights.)  Statutes are state specific and should be considered when writing policies and procedures to encompass this nationally recognized problem.

Certain states require financial institutions to offer eligible account holders and/or all account holders the option to voluntarily sign a prior consent form to be placed in the account holder’s records when: the financial institution establishes a customer relationship with an eligible account holder; and annually during the relationship. By signing the prior consent form, the account holder waives the confidentiality limitations related to their financial records for the “limited purpose” of allowing the financial institution to alert and/or notify the applicable county department and local law enforcement of known or suspected financial exploitation.

Mandatory Reporting Requirements

States and territories such as:  Arkansas; California, District of Columbia; Guam; Florida, Georgia, Hawaii; Kansas; and Mississippi require financial service providers (“FSPs”) to report suspected financial exploitation[1].

Other states require “any person” or “any individual” to report Elder Financial Exploitation: Rhode Island; South Carolina; Tennessee; Texas; Utah; Wyoming; Indiana; Kentucky; Louisiana; Mississippi; Nevada; New Hampshire; New Jersey; New Mexico; North Carolina; Ohio; Oklahoma; and Delaware.

And several states do not provide for mandatory reporting specific to financial service providers, however some of the laws “strongly urge” FSPs to report any suspicions : Colorado; New Jersey; New York; North Dakota; and Wisconsin, while other states are silent or do not specify reporting requirements for FSPs.

Numerous states require Elder Financial Exploitation training for employees and officers of financial institutions and training programs should be implemented to provide guidance on how to identify red flags, who is responsible for reporting, what forms should be used, and how to keep elder customers advised of preventative measures they can take.

Red Flags of Elder Financial Exploitation

Elder financial abuse often decimates incomes whether great or small, and while the loss of income may seem to be enough of a concern, other losses are also of significant impact such as a loss of dignity and, in some cases, human rights.

The United States government was made more acutely aware of elder financial abuse when Hollywood star Mickey Rooney testified about his own financial exploitation at the hands of his step children on March 2, 2011 before a U.S. Senate Committee investigating elder  abuse.  Shortly after Mr. Rooney’s testimony, the Elder Abuse Victims Act, S.462 was introduced and if passed, would enhance the capacity of law enforcement to prosecute cases of elder financial abuse. , elder financial abuse remains often goes unreported by most victims. Elder financial abuse continues to be under reported by the victims themselves for a variety of reasons such as: fear of reprisal; feelings of shame; disbelief; loss of control; and loss of independence.

Congressional Response

For many years, advocates of elder financial abuse have worked hard to bring attention to elder financial abuse and finally, on March 23, 2010, the Elder Justice Act became law increasing the national focus on elder abuse and concurrently, elder financial abuse. More notable results are: the authorization of $757 million to establish a more comprehensive federal response to fighting elder abuse; establishment of an Elder Justice Coordinating Council; and, among other things, dedicated funding for Adult Protective Services (“APS”).  The Elder Justice Coordinating Council was established to make recommendations to the Secretary of Health and Human Services on how to coordinate activities of federal, state, local, private agencies, and entities relating to elder abuse, neglect, and exploitation with a report containing the recommendation due out two years after the council was formed.

Also passed in 2010 is a new law establishing an “Office of Financial Protection for Older Americans: in the Financial Regulatory Reform bill. The Office of Financial Protection for Older Americans is slated to be dedicated solely to addressing the growing threat of elder financial exploitation. No doubt financial institutions will be interested to watch what requirements will be made specific to protecting older Americans, and some states have already started to takes steps to protect customers from Elder Financial Exploitation…..are your policies and procedures ready?

For more information on what you state requires regarding Elder Financial Exploitation, please contact Daniel Weiss at daneilweiss@chartwellcompliance.com.


[1] www.americanbar.org



Please wait...

Subscribe to our Technical Publication!

Want to be notified when Compass is published? Enter your email address and name below and sign up to our mailing list!
Please wait...

Download the PDF File