Financial institutions hold a significant place in the fight against elder financial exploitation and in providing support to the victims of such crimes. On Wednesday (Nov. 4), federal and state agencies emphasized this crucial role. In a joint statement, five federal financial regulatory agencies, along with the Financial Crimes Enforcement Network (FinCEN) and state financial regulators, presented examples of risk management and other practices that banks, credit unions, and other supervised institutions can adopt to identify, prevent, and respond to elder financial exploitation.

Understanding Elder Financial Exploitation

"Elder financial exploitation refers to the illegal use of an older adult's funds or other resources for the benefit of an unauthorized recipient. This can lead to the deprivation of older adults' life savings in whole or in part, causing significant harm to their financial security," as stated in the joint statement.

FinCEN's Review Findings

A review of Bank Secrecy Act (BSA) data by FinCEN revealed that there was more than $27 billion in reported suspicious activity related to elder financial exploitation during a 12-month period ending in June 2023. This highlights the magnitude of the issue and the need for proactive measures by financial institutions.

Strategies for Combating Elder Financial Exploitation

Financial institutions can contribute to combating this crime by developing effective governance and oversight. Employees should be trained to recognize and respond to elder financial exploitation promptly. Additionally, using transaction holds and disbursement delays when appropriate and in line with applicable law can be effective. Establishing a trusted contact designation process for account holders is also crucial. Institutions should file suspicious activity reports to FinCEN in a timely manner and report suspected elder financial exploitation to the appropriate entities. Providing financial records to the relevant authorities when consistent with the law, engaging with elder fraud prevention and response networks, and increasing awareness through consumer outreach are other suggested practices.

Previous Guidance and Current Awareness

It's important to note that this statement does not replace previous guidance on this subject issued by any of the agencies. It is intended to raise awareness and provide strategies to supervised institutions for combating elder financial exploitation while remaining consistent with applicable legal requirements. In an earlier, separate report, the FBI's Internet Crime Complaint Center (IC3) stated that the number of complaints of elder fraud increased by 14% in 2023, with associated losses rising by 11%. PYMNTS reported in June that fraudsters are taking advantage of the increasing number of baby boomers and seniors going online for banking. This shows the evolving nature of the problem and the need for continuous efforts to protect the elderly from financial exploitation.