The Financial Crimes Enforcement Network (FinCEN) has issued an advisory to assist the financial industry in reporting instances of financial exploitation of the elderly. Financial exploitation of the elderly is considered elder abuse and is typically defined at the state level. This new guidance by the Financial Crimes Enforcement Network is found at FIN-2011-A003. In Indiana, the Department of Family and Social Services (FSSA) is often charged with the care of adults placed in protective care. See, Indiana Code §12-10-3-1, et al. Kentucky has similar regulations for reporting adult abuse, neglect or exploitation. See, Kentucky Revised Statutes Annotated, §209.030.

The role of financial institutions in alerting appropriate authorities to suspected financial exploitation has received increased attention at the state level. This focus is consistent with an upward trend at the federal level in suspicious activity reports (SARs) describing instances of suspected elder financial exploitation.

The advisory issued by the Financial Crimes Enforcement Network contains examples of “red flags” based on activity identified by various state and federal agencies to provide a common narrative term that will assist law enforcement in better identifying the suspected cases of financial exploitation of the elderly that are reported in SARs.

The red flags identified in the advisory included the following:

Erratic or unusual banking transactions or changes in banking patterns, such as:

  • frequent large withdrawals;
  • sudden non-sufficient fund activity;
  • uncharacteristic non-payment for services;
  • debt transactions that are inconsistent for the elder;
  • uncharacteristic attempts to wire large sums of money;
  • closing of CDs or accounts without regard to penalties.

Interaction with customers or caregivers:

  • individual shows excessive interest in the elder’s finances;
  • the elder shows an unusual degree of fear or submissiveness;
  • the financial institution is unable to speak directly with the elder;
  • a new caretaker, relative or friend suddenly appears and begins to conduct financial transactions;
  • the customer moves away from existing relationships and toward new associations;
  • the elderly individual’s financial management changes suddenly, such as through a change of Power of Attorney to a different family member or a new individual;
  • the elder customer lacks knowledge about his or her financial status or shows a sudden reluctance to discuss financial matters.

SARs continue to be a valuable avenue for financial institutions to report elder financial exploitation. As previously noted, however, elder abuse is generally reported and investigated at the local level.