Pub. 6 2018 Issue 4

15 Winter 2018 The Community Banker O n August 30, 2017, the Consumer Financial Protection Bureau (CFPB), United States Department of the Treasury, and the Financial Crimes Enforcement Network (FinCEN) issued a joint memorandum to encourage coordination among financial institu- tions, law enforcement, and adult protective service (APS) agencies to protect older adults from elder financial exploitation. What is Elder Financial Exploitation (EFE)? EFE is the illegal or improper use of an older person’s funds, proper- ty, or assets. It is the most common form of elder abuse in the United States. However, only a small fraction of incidents are detected and reported. Why are older adults attractive targets? Due to factors such as isolation, cognitive decline, physical disabil- ity, health problems, and bereavement, older people are particularly vulnerable. Their ability to protect themselves from individuals seeking to exploit themmay be limited. Once victimized, they often experience not only financial insecurity, but also loss of dignity and quality of life. What is the role of financial institutions? Financial institutions are well-positioned to detect when older account holders have been targeted or victimized and, therefore, can play a key role in detecting, responding to, and preventing EFE. In March 2016, the CFPB issued an advisory and recommendations for financial institutions on preventing and responding to elder finan- cial exploitation. For your reference and review, the CFPB advisory and recommendations documents are available at files.consumerfinance.gov/f/201603_cfpb_advisory-for-financial-in- stitutions-on-preventing-and-responding-to-elder-financial-exploita- tion.pdf and files.consumerfinance.gov/f/201603_cfpb_recommenda- tions-and-report-for-financial-institutions-on-preventing-and-re- sponding-to-elder-financial-exploitation.pdf In addition, FinCEN issued an advisory (February 22, 2011) to financial institutions on filing suspicious activity reports (SAR) re- garding elder financial exploitation. The advisory provided potential “red flag” indicators and instructions on how to report EFE activity through SARs. For your reference and review, the FinCEN advisory is available at www.fincen.gov/resources/advisories/fincen-adviso- ry-fin-2011-a003. What action should a financial institution take? Once EFE threats have been detected, a financial institution should report to law enforcement and the state or local APS agency. Timely reporting of suspicious EFE activity, regardless of whether reporting is mandatory or voluntary under state or federal law, is critical in engaging entities that may have complementary information on the victimor the perpetrator fromother sources andmay be well positioned to collaborate on investigations. Reporting suspected financial abuse of older adults to appropriate authorities does not generally violate the privacy provisions of the Gramm-Leach-Bliley Act, as implemented by Regulation P. What is APS? Adult protective services are social services programs provided by state and local governments nationwide, serving older adults and adults with disabilities who are in need of assistance. APS frequently serves as first responders in cases of abuse, neglect, or exploitation. APS is not necessarily the name of the agency in each state. The Na- tional Adult Protective Services Association (NAPSA) website provides contact information for reporting suspected abuse to APS in every state. For your reference and review, see What is Adult Protective Services? at www.napsa-now.org/get-help/how-aps-helps/. How can financial institutions collaborate with law enforce- ment and APS? In various locations around the country, key stakeholders convene as multidisciplinary networks to successfully address the problem of elder abuse including financial exploitation. These networks engage in activities such as education, training, and individual case review. Financial institutions are encouraged to participate in these local networks and can identify such networks in their area by contacting their local APS agency. Prevention and response to EFE is improved when financial insti- tutions, law enforcement, and APS develop collaborative relation- ships. These entities can share information about each organization’s policies and procedures for detecting, assessing, and reporting EFE. Such relationships can facilitate timely response to reports and ensure that staff at each stakeholder organization has appropriate points of contact when questions or challenges arise. Financial institutions may also provide a list of these points of contact and sources of informa- tion to their older account holders and to caregivers. How are SARs used to combat EFE? FinCEN’s February 22, 2011 advisory highlighted the issue of EFE to SAR filers. Additionally, FinCEN’s new electronic filing form launched in 2013 includes a specific check box indicating that the filer suspects elder financial exploitation, thereby providing a streamlined process for law enforcement agencies to access SARs filed on this type of suspicious activity. A financial institution may be required to file a SAR if it knows, sus- pects, or has reason to suspect a transaction conducted or attempted by, at, or through the financial institution: • Involves funds derived from illegal activity or attempts to disguise funds derived from illegal activity • Is designed to evade regulations promulgated under the Bank Secrecy Act (BSA) • Lacks a business or apparent lawful purpose, or • Involves the use of the financial institution to facilitate criminal activity SARs can play an important role in the fight against EFE by provid- ing information and references to any supporting documentation that can trigger an investigation, support an ongoing investigation, or identify previously unknown subjects and entities. Combating Elder Financial Exploitation By Dale Neiss, CRCM, Consultant