Elder Financial Exploitation – Three Prominent Issues and Recommendations

Maria Dodson, CAMS

Elder financial exploitation is a despicable crime, which will occur more frequently as the elderly population grows. Financial institutions are on the frontlines to help those most vulnerable to this issue and could mean the difference between an elderly person losing his or her entire life savings. This requires a more proactive approach on the part of banks in dealing with this egregious crime problem. Financial institutions that simply meet state and federal reporting requirements could do more to detect and prevent elderly customers from being victims of exploitation.

Some have called elder financial exploitation, the “Crime of the 21st Century.” Financial institutions are on the front line. Often times they are in the best position to detect and report these cases. This is why a more proactive response by financial institutions is warranted. Currently, the issue of elder financial exploitation is under-addressed and with the number of elderly people increasing globally, the issue will certainly become more prevalent. Financial institutions that investigate cases of suspected elder financial exploitation will face various challenges. For those banks that have dedicated financial crimes investigations teams or branch personnel with experience investigating elder fraud, some cases are clear, such as sweepstakes scams, phone scams and grandparent scams. Recent guidance from the Financial Crimes Enforcement Network (FinCEN) and the Consumer Financial Protection Bureau (CFPB), provide financial institutions with red flags and recommended steps to identify, prevent and report these types of cases. Equally important, there are other scenarios that can be unclear and challenging for banks to investigate. This paper focuses on three prominent such specific elder financial exploitation scenarios to include: Dealing with a customer with diminished financial capacity and mild cognitive impairment; accepting Power of Attorney (POA) documents; and lack of response from Adult Protective Services (APS) due to confidentiality laws.

Financial institutions have several opportunities to lessen the impact of elder financial exploitation on its customers and the community. For instance, training frontline and back office staff and partnerships with law enforcement and public agencies can significantly strengthen a financial institution’s elder fraud program. As a result, this could diminish the impact of this increasing crime problem.

The goal of this paper is to provide recommendations on how to be more proactive and when to go beyond the minimum reporting requirements, such as when to engage other agencies, such as a local public guardian or law enforcement.

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