09/10/2024

Payments Hot Tip: Addressing Elder Financial Exploitation

A financial institution (FI) is required to file a Suspicious Activity Report (SAR) if it knows, suspects, 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 BSA; lacks a business or apparent lawful purpose; or involves the use of the financial institution to facilitate criminal activity, including Elder Financial Exploitation. All statutorily defined financial institutions may voluntarily report suspicious transactions under the existing suspicious activity reporting safe harbor.

When a financial institution files a SAR, it is required to maintain a copy of the SAR and the original or business record equivalent of any supporting documentation for a period of five years from the date of filing the SAR. Financial institutions must provide any requested SAR and all documentation supporting the filing of a SAR upon request by FinCEN or an appropriate law enforcement or supervisory agency. When requested to provide supporting documentation, financial institutions should take special care to verify that a requestor of information is, in fact, a representative of FinCEN or an appropriate law enforcement or supervisory agency. A financial institution should incorporate procedures for such verification into its BSA compliance or AML/CFT program. These procedures may include, for example, independent employment verification with the requestor’s field office or face-to-face review of the requestor’s credentials.

A few examples of transactional and behavioral red flags for elder financial exploitation are listed below. This is not an all-inclusive list:

Transactional Red Flags:

1. Debit transactions that are inconsistent for an older customer
2. An older customer sends multiple checks or wire transfers with descriptors in the memo line such as “tech support services,” “winnings,” or “taxes”
3. Uncharacteristic attempts to wire large sums of money

Behavioral Red Flags

1. An older customer with known physical, emotional, or cognitive impairment has unexplainable or unusual account activity.
2. An older customer mentions that an online friend or romantic partner is asking them to receive and forward money on their behalf or open a bank account for a “business opportunity.”
3. An older customer is agitated about the need to send money immediately for an emergency of a loved one, but the money would be sent to the account of a seemingly unconnected third-party business or individual.

The Financial Crimes Enforcement Network (FinCEN) provided an Advisory, FIN-2022-A002, as a detailed reminder of Relevant BSA Obligations and Tools for U.S. Financial Institutions: Suspicious Activity Reporting, Other Relevant BSA Reporting, USA PATRIOT ACT Section 314(b) Information Sharing Authority, and Additional Reporting Options. Please visit: https://www.fincen.gov/resources/advisories/fincen-advisory-fin-2022-a002 or SFE’s Member Resources – Elder Financial Exploitation Section (must be logged in to access) for more details.  

For common red flags and reminder of your responsibilities, access our on-demand training, Elder Abuse: Exploitation and Fraud Prevention. (3.6 CEUs)

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