Alert March 01, 2011

FinCEN Issues Advisory Concerning Financial Exploitation of the Elderly

The Financial Crimes Enforcement Network (“FinCEN”) issued an advisory (the “Advisory”) to assist financial institutions in reporting on Suspicious Activity Reports (“SARs”) instances of financial abuse of the elderly.  The Advisory identifies certain “red flags” that can be indicators of financial exploitation of the elderly.  The Advisory notes two general categories of red flags.

The first category of red flags is “Erratic or unusual banking transactions, or changes in banking patterns,” which include the following:

  • frequent large withdrawals from an ATM;
  • uncharacteristic non-payment for services;
  • uncharacteristic attempts to wire large sums of money; and
  • closing certificates of deposit without regard to penalties. 

The second category of red flags is “Interactions with customers or caregivers,” which include the following:

  • a caregiver or other individual shows excessive interest in the elderly person’s finances or assets;
  • the elderly person shows an unusual degree of fear or submissiveness toward a caregiver;
  • the financial institution is unable to speak directly with the elderly person an elderly person’s financial management suddenly changes, such as through a change of power of attorney; and
  • an elderly person lacks knowledge about his financial status or shows a sudden reluctance to discuss financial matters.

With respect to suspicious activity reporting, the Advisory requests that in reporting instances of suspected financial abuse of the elderly, financial institutions first select the appropriate characterization on the SAR form and then include the term “elder financial exploitation” in the narrative section of the SAR.  The Advisory also notes that the potential victim of elder financial exploitation should not be reported as the subject of the SAR, but the victim’s name should be included in the narrative section of the SAR.