/>iFraud of all sorts remains on the rise. The federal regulatory banking agencies seem to be focusing on educating banks in an effort to decrease losses to the bank and customers as a result of these scams, especially those geared toward older adults.
In late 2024, the various regulatory agencies issued an Interagency Statement on Elder Financial Exploitation that provided guidance to banks with the goal of increasing the detection and prevention of elder financial exploitation. FinCEN has also previously issued an Advisory and a Financial Trend Analysis on Elder Financial Exploitation.
The Interagency Statement provides banks with nine areas to consider when implementing steps to decrease elder financial exploitation:
- Governance and oversight
- Employee training
- Transaction holds and disbursement delays
- Use of trusted contacts
- Filing of Suspicious Activity Reports
- Reporting to authorities
- Providing financial records to appropriate authorities
- Engaging with prevention and response networks
- Consumer outreach and awareness resources from government agencies
Of those nine areas, I think it is important to address in this article those of employee training, transaction holds and disbursement delays, and the use of trusted contacts.
In recent years, many states have adopted legislation to allow banks to stop or hold a transaction upon a good faith or reasonable belief that such transaction would result in the financial exploitation of an elderly customer. While each state’s laws may read differently, the typical scenario is that a bank may have a time frame during which the transaction may be held or delayed but it must report the information to its state’s adult protective services department or similar agency or department. Now is a good time to review your state’s laws related to financial elder exploitation to determine what your bank can do to stop this type of fraud. These laws may also address other individuals the bank may alert and what information may be provided in these instances.
Training is also of the utmost importance. While it is typical for a bank’s BSA department to monitor accounts for unusual or suspicious account activity and to detect unusual transactions or account patterns outside of a customer’s norm, often such monitoring is completed after the transactions have been conducted. Every bank should train its frontline staff on the red flags and warning signs of elder financial exploitation. A bank’s frontline staff is more likely to notice behavioral red flags such as unusual interactions with a caregiver, urgency in sending a wire, a lonely elder mentioning a new friend who needs money, etc.
Finally, while it is not yet common practice, banks should consider implementing the use of trusted contacts. In order to establish a trusted contact, the bank would obtain permission from its customer to contact a third party designated by the customer when elder financial exploitation is suspected. This would allow the bank to share information that would otherwise be prohibited by privacy laws and regulations and get additional assistance in protecting its customer.
The Interagency Statement offers a clear road map for banks to enhance their efforts in preventing elder financial exploitation. By focusing on the nine critical areas — from governance and employee education to consumer outreach and collaboration with authorities — financial institutions can build stronger protections and more responsive systems. Prioritizing these steps not only mitigates risk but also affirms a commitment to the well-being and financial security of older adults.
