Regulators remind banks how to fight elder fraud

On Wednesday, six federal agencies and multiple state agencies looking to tamp down on elder financial exploitation issued a letter documenting strategies that banks and credit unions can employ to identify, prevent and respond to elder financial exploitation.

The letter, cosigned by each of the federal bank and credit union regulators, does not introduce any new compliance burdens for banks. Rather, it is designed to raise awareness and provide helpful strategies that financial institutions can use to combat a recent scourge of elder financial exploitation.

These strategies range from establishing policies related to trusted contacts, transaction holds and disbursement delays to reporting instances of elder financial exploitation to law enforcement, adult protective services and other entities as appropriate.

The Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency and the National Credit Union Administration each signed the letter. Together, these agencies supervise virtually every retail bank and credit union in the U.S.

The interagency guidance is the latest in a series of developments that have signaled growing interest by federal regulators in monitoring and reducing elder financial exploitation.

Earlier this year, the Financial Crimes Enforcement Network published an analysis of more than 155,000 reports of elder financial exploitation, collected over a one-year period, that provided insights into how pervasive this type of crime is.

Interest in the subject by federal regulators dates back more than 10 years. In 2013, eight federal agencies issued guidance that implored banks and credit unions to report instances of elder financial exploitation to law enforcement and adult protective services. The interagency guidance specifically said doing so would not violate privacy laws governing how financial institutions handle financial information.

Elder financial exploitation comes in two major forms. The first form of elder financial exploitation is elder scams, which involve an elderly person transferring money to a stranger or imposter for a promised, undelivered benefit. These cases account for roughly 80% of reports, according to Fincen's analysis. The other 20% is elder theft, which is theft by an otherwise trusted person.

The nine strategies that the letter details are as follows:

1. Governance and oversight, such as risk-based policies and ongoing transaction monitoring processes designed to mitigate elder financial exploitation.
2. Employee training focused on identifying red flags of the different types of financial exploitation.
3. Using transaction holds and disbursement delays to prevent consumer losses, as permitted by state laws.
4. Using trusted contacts, which allows account holders to identify one or more family members, attorneys, accountants or others who the bank may contact in cases of suspected fraud.
5. Filing suspicious activity reports, or SARs, involving suspected elder financial exploitation, including flags on the reports that help Fincen analyze such reports in bulk.
6. Reporting to law enforcement, adult protective services and other entities, particularly in states where such reports are legally required when a financial institution suspects elder financial exploitation.
7. Providing financial records to these authorities on an expedited basis, pursuant to interagency guidance clarifying that such reporting is legal.
8. Engaging with local elder fraud prevention and response networks, which can be identified using a map created by the Department of Justice.
9. Consumer outreach and awareness, which can cite any one of a litany of resources listed in the agencies' letter, such as a recent update from the OCC.