Elder Financial Abuse Epidemic

I have lectured, taught, and written extensively about elder financial abuse. Two articles I've published can be downloaded here and here. It amazes me still that there is just so much of it and the problem continues to metastasize. 

The mortgage community has a unique role in ensuring that appropriate policies are in place to prevent elder financial abuse. Financial institutions, including banks, credit unions, brokerages, and money services businesses (MSBs) are typically required to file SARs when they know or suspect that illegal activity is occurring in their transactions.

Recently, FinCEN released a new strategic analysis of its BSA reporting. Frankly, the report is not particularly encouraging. The report found that the elderly face an increased threat to their financial security by both domestic and foreign actors.

This is not some cursory study. It is somewhat monumental in scope. The report is a six-year study that shows elder financial exploitation in Suspicious Activity Report filings increased significantly. The SARs went from roughly 2,000 filings per month in 2013 to a peak of about 7,500 filings per month in August 2019. Furthermore, the annual dollar amount of suspicious activity reported for elder financial exploitation also increased.

This is what FinCEN Director Kenneth A. Blanco said:

“The SARs that financial institutions file with us are used to protect our nation and its people from harm. They provide unique and valuable information on crime and other threats happening in the U.S. and around the world impacting our families and communities” … “These SARs are also important to filer banks and MSBs because they show trends and patterns in criminal activity. Every financial institution wants to protect its customers, and SAR reporting helps them do that. Awareness of these reporting trends and potential exploitation methods can also help consumers protect themselves.”

Many of the SARs filed by MSBs showed that seniors were victims of scams in which they sent money overseas.

Of course, there were other major scams, such as “romance scams,” in which scammers establish a romantic relationship with their victims and then ask for money for “hardships” they experience, or to “visit” the victim (but fail to do so); “emergency/person-in-need scams,” where the criminals prey on victims’ emotional vulnerability by purporting to be a loved one who needs money in a hurry to help with an emergency; and, the criminals' all-time favorite “prize/lottery scams,” run by scammers who coerce their victims into sending an “import tax” or “fee” so that they can get the money they have supposedly won in a lottery.

However, many depository institution and brokerage firm SARs identified theft from the elderly. When a senior is the victim of theft from a bank or brokerage account, according to SAR reporting, family members and non-family member caregivers are most often part of the crime.

Let me state that again: family members and non-family member caregivers are most often part of the crime.

Reporting also frequently identified theft victims as suffering from some type of incapacitation, like a cognitive decline. The SARs stated that the average amounts reported for theft were more than double that for scams.

FinCEN does collaborate with other governmental agencies and financial institutions to identify, prevent, and combat elder financial exploitation.

The Department of Justice has announced a concentrated effort across the U.S. and around the world to thwart “money mule” activity. What is a “money mule,” you might ask? Money mules assist fraud schemes by receiving money from victims – in many instances, elderly individuals – and forwarding proceeds to foreign-based perpetrators. 

During a two-month initiative, U.S. law enforcement disrupted mule networks operating from Hawaii to Florida and from Alaska to Maine. Efforts were made to stop the conduct of over 600 domestic money mules. The Justice Department also tripled the number of criminal prosecutions brought against money mules as compared to last year’s initiative.

FinCEN also collaborates directly with the Consumer Financial Protection Bureau, Federal Trade Commission, and other federal and state partners, to educate seniors and other individuals, along with financial institutions, and to ensure the appropriate use of SARs to identify and pursue those victimizing the senior population.

So, what is your financial institution doing to combat elder financial abuse?

The answer reflects your organization’s commitment to preventing such attacks.