FinCEN warns against financial abuse of seniors

On June 15, FinCEN published a Elder Financial Abuse Advice (“Notice”) to alert financial institutions to the growing trend of financial abuse of older persons (“EFE”), which FinCEN defines as “the illegal or improper use of funds, property, or assets of an elderly person, and which is often perpetrated either by theft or defraud. related notice published in 2011. It also offers guidance on Suspicious Activity Report (“SAR”) filings and describes other resources available to combat EFE.

Background

According to the advisory, older adults — defined by FinCEN as anyone 60 years of age or older — are targets of financial exploitation because of their accumulated lifetime income and savings, in addition to they may face declining cognitive or physical abilities, isolation from family and friends, lack of familiarity or comfort with technology, and dependence on others. All of these risks have been exacerbated by the COVID-19 pandemic. The advisory states that although EFE is the most common form of elder abuse, the majority of incidents go unidentified and unreported, as victims may choose not to come forward out of fear, embarrassment or lack of resources.

The notice provides statistics on the ubiquity of EFE and notes that financial institutions deposited 72,000 SARs related to EFE in 2021, an increase of 10,000 SARs from deposits in 2020. In addition, the Consumer Financial Protection Bureau estimates that the dollar value of suspicious EFE-related transactions rose from $2.6 billion in 2019 to $3.4 billion in 2020. Similarly, the Federal Trade Commission reports that seniors represent 35% of victims associated with fraud reports filed when a consumer has provided an age.

Thefts and scams

The advisory divides EFE schemes into two basic types: thefts and scams.

Elder theft is usually committed by known and trusted older people, such as family members and non-family caregivers who abuse their relationship and position of trust, or neighbours, friends, financial service providers, other business associates or close relatives of the victims. According to the review:

  • Senior theft cases often follow a similar methodology in which trusted individuals may use deception, intimidation, and coercion against seniors in order to access, control, and control their finances. misuse.
  • Criminals frequently exploit victims’ reliance on support and services and will take advantage of any cognitive and physical disabilities, or environmental factors such as social isolation, to establish control over accounts, assets or money. identity of the victims. This can take many forms, including the exploitation of legal guardianships and power of attorney agreements, or the use of fraudulent investments such as Ponzi schemes to defraud older people of their income and retirement savings.
  • These relationships allow trusted individuals to repeatedly abuse victims by liquidating savings and retirement accounts, stealing Social Security benefit checks and other income, transferring property and other assets or maxing out credit cards in victims’ names until most of their assets are stolen. .

On the other hand, senior citizen scams typically involve fraudsters with no known relationship to their victims and often located outside of the United States, tricking victims into sending payments and divulging personally-identifying information ( “IPI”) under false pretenses or for a benefit promised or otherwise that the victims will never receive. Scammers will contact seniors in a fictional persona via phone call, robocall, SMS, email, mail, in-person communication, online dating apps and websites or media platforms social. In order to appear legitimate and build trust, scammers often impersonate government officials, law enforcement, technical and customer support representatives, social media connections, or family. , friends and other trusted people. They often create high pressure situations and then ask victims to make payments through wire transfers to money service businesses, prepaid access cards, gift cards, money orders, cash tracked delivery through the US Postal Service , ATM deposits, cash withdrawals from victims, and virtual currency

Worse still, an elderly victim of scams can serve as “silver mule“: The scammer convinces the victim to set up a bank account or a limited liability company in the victim’s name to receive, withdraw, deposit or transfer several third-party payments from other elderly victims to accounts controlled by the scammer under the illusion of a “business opportunity”.

The advisory identifies five common typologies of senior citizen scams: scams by government imposters; romance scams; emergency/people in need scams; lottery and sweepstakes scams; and technology and customer service scams.

Red flags

The advisory identifies 12 “behavioural” and 12 “financial” red flags to help financial institutions detect, prevent and report suspicious EFE-related activity. An example of a “behavioral” red flag is when “an older customer’s account shows sudden and unusual changes in contact information or new logins to emails, phone numbers, or accounts that may come from abroad. An example of a “financial” red flag is when “inactive accounts with large balances begin to show constant withdrawals”.

The advisory explains that since “no red flag is determinative of illicit or suspicious activity, financial institutions should consider surrounding facts and circumstances, such as a customer’s historical financial activity , determine whether transactions are in line with current business practices and whether the client exhibits multiple red flags, before determining whether any behavior or transaction is suspicious or otherwise indicative of EFE. Further, and in accordance with an approach based on risks to comply with the Bank Secrecy Act, FinCEN encourages financial institutions to perform additional due diligence where appropriate.

SAR and other awareness activities to combat EFE

The notice provides that SARs filed on suspected EFE schemes must reference the notice and check the Financial Abuse of Seniors box in the SAR 38(d) field. The advisory also offers non-regulatory advice for drafting DAS, such as:

  • Provide details of the reporting entity’s response, for example, whether accounts were closed, whether the person was warned that transactions appear to involve fraud, whether the person was not authorized to make further transactions , etc.
  • Reference supporting documents, including photos or video footage, in the story.
  • Report the circumstances leading to the filing of DAS EFE directly to local law enforcement if there is any indication that a) a crime may have been committed and/or b) the older person may still be at risk of being victimized by the alleged abuser.

Beyond filing SARs, FinCEN also recommends that financial institutions refer customers who may be victims of EFE to the Department of Justice’s National Elder Fraud Hotline for assistance. assistance in reporting suspected fraud to the appropriate government agencies. The advisory observes that financial institutions may be required under state law to report suspected cases of EFE to law enforcement and/or adult protective services. Finally, financial institutions can share information with each other under Section 314(b) of the Patriot Actand can turn to FinCEN Rapid Response Programwhich aims to help victims and their financial institutions recover stolen funds due to certain financial cybercrime schemes including EFE Cybercriminals.

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