Elder financial exploitation (EFE), the illegal or improper use of an elderly person’s funds, property or assets, has emerged as one of the most common forms of elder abuse in the United States. Despite its growing prominence, only a small fraction of incidents are detected and reported to the proper authorities. Financial institutions can play a key role in identifying, responding to, and preventing EFE, as they are well-positioned to detect when older account holders have been targeted or victimized. 1
Under the federal Bank Secrecy Act (BSA), financial institutions such as banks, brokers or dealers, and insurance companies, are required to report suspicious activity that might indicate money laundering, tax evasion, or other criminal activities to the federal government. These financial institutions must file Suspicious Activity Reports (“SARs”) with the Financial Crimes Enforcement Network (“FinCEN”) if the suspicious transaction involves at least $5,000 in funds or assets. In February 2011, FinCEN issued an Advisory noting that SARs are a valuable avenue for financial institutions to report elder financial exploitation.2 Further, in April 2013, FinCEN introduced electronic SAR filing with a designated category for “elder financial exploitation.” FinCEN instructs filers to include a “clear, complete, and concise” description of the suspicious activity in the SAR narrative field.3
The Consumer Financial Protection Bureau (“CFPB”) recently published a report analyzing the issues and trends of EFE SAR filings by financial institutions. The study’s key findings are as follows:
- Financial institutions reported over 180,000 suspicious activities targeting older adults since 2013, totaling over $6 billion ($1.7 billion in 2017);
- Nearly 80% of EFE SARs involved a monetary loss to the elderly and/or to the financial institution filing the SAR;
- One third of the individuals who lost money were 80 or older;
- Monetary losses were more common and greater when the older adult knew the suspect. The average loss per person was about $50,000 when the older adult knew the suspect and $17,000 when the suspect was a stranger;
- More than half of EFE SARs involved a money transfer, while 44% involved either a checking or savings account;
- The suspicious activity reported in a SAR took place, on average, over a four-month period; and
- Fewer than one-third of EFE SARs indicated that the filer reported the suspicious activity to a local, state or federal authority.4
As the CFPB report illustrates, the financial exploitation of the elderly is a growing problem. EFE SAR filings quadrupled from 2013 to 2017. In 2017 alone, 63,500 EFE SARs were filed, totaling $1.7 billion in suspicious activity. The CFPB notes that it is likely that many incidents go unreported, meaning this number represents only a small fraction of actual EFE. Further, there are over 57 million citizens age 62 or older in United States today. The U.S. Census Bureau predicts that, by 2050, this number will reach nearly 90 million, meaning that an increasing number of older Americans will be the targets of EFE.
Financial institutions need to address EFE proactively. If a passive plan of prevention is in place, financial institutions are at risk of not only permitting the exploitation of their elderly customers, but violating federal law. As a reminder, Bressler, Amery & Ross, P.C. provides training and supervisory programs to avoid regulatory and litigation risk involving Senior and Vulnerable Investor Groups. For more information, please contact Kerry Zinn at 954.430.7817 or firstname.lastname@example.org or Tim McHale at 973.937.6806 or email@example.com.
2 FinCEN, FIN-2011-A003, Advisory to Financial Institutions on Filing Suspicious Activity Reports on Elder Financial Exploitation (Feb. 22, 2011), available at https://www.fincen.gov/resources/advisories/fincen-advisory-fin-2011-a003 (Referred to as FIN-2011-A003, Advisory to Financial Institutions).
3FinCEN, FinCEN Suspicious Activity Report (FinCEN SAR) Electronic Filing Instructions (Oct. 2012), available at https://www.fincen.gov/sites/default/files/shared/FinCEN%20SAR%20ElectronicFilingInstructions-%20Stand%20Alone%20doc.pdf.