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05.09.2017 01:49 Age: 2 days

US banks urged to use money laundering disclosures to report "elder financial exploitation"

A memo issued by the US Treasury Department's Financial Crimes Enforcement Network (FinCEN) urges financial institutions to file suspicious activity reports where they suspect a transaction may be linked to the financial abuse of an elderly person.

It says that "elder financial exploitation" (EFE, the illegal or improper use of an older person's funds, property or assets) has emerged as one of the most significant frauds against individuals in the US. Only a small fraction of incidents are uncovered and reported, but FinCEN says financial institutions are often well positioned to detect when older account holders have been targeted or victimised.

The figures indicate that this exploitation will be a growing problem if there is no crackdown. The number of US residents aged 65 and older is projected to grow from 41 to 86 million by 2050, and according to the 2010 report, "Prevalence and Correlates of Emotional, Physical, Sexual, and Financial Abuse and Potential Neglect in the United States: The National Elder Mistreatment Study" , around one in ten seniors have suffered abuse - with financial exploitation occurring most frequently.

A report by the Consumer Financial Protection Bureau (CFPB) revealed that the estimated annual losses from elder financial abuse range from USD2.9 billion to USD36.48 billion.

Last year the CFPB issued advice to banks and credit unions on taking action to prevent this abuse, in the report "Recommendations and Report for Financial Institutions on Preventing and Responding to Elder Financial Exploitation" . Measures included:

  • Coordinating efforts to better educate older customers and other stakeholders about the problem;
  • Using technology to flag and to identify warning signs of abuse;
  • Reporting suspected abuse to the authorities and developing a relationship with the state adult protective services agency; and
  • Protecting account holders; for example, by extending the time period under Regulation E to report unauthorized transactions when a customer has extenuating circumstances, such as hospitalization.

The most recent FinCEN memo outlines how financial institutions can go about detecting, assessing and reporting EFE, while the 2011 "Advisory to Financial Institutions on Filing Suspicious Activity Reports Regarding Elder Financial Exploitation" provides some "red flags" that may suggest suspicious activity.


US banks urged to use money laundering disclosures to report "elder financial exploitation"