
New interagency guidance provides practical steps financial institutions can take to protect older adults from exploitation.
Elder financial abuse is a growing concern affecting millions of older adults each year. With the recent interagency guidance issued in December 2024, there’s a renewed focus on combating this pervasive issue.
Explore the significance of thwarting and identifying elder financial abuse including prevention strategies from the updated guidance.
Understanding elder financial abuse
Elder financial abuse occurs when someone illegally or improperly uses an older adult's funds, property, or assets. This exploitation can come from strangers through scams or — more alarmingly — from trusted individuals such as family members or caregivers. Such abuse can be devastating, often resulting in severe emotional and psychological distress and the loss of life savings and financial security.
The scope of the problem
According to a FinCEN Financial Trend Analysis, approximately $27 billion in suspicious activity linked to elder financial exploitation was reported over a one-year period ending in June 2023. This staggering figure underscores the urgent need for effective measures to protect older adults from financial abuse.
Key points from FinCEN's updated guidance
On December 4, 2024, FinCEN — along with five federal financial regulatory agencies and state financial regulators — issued a statement providing examples of risk management and other practices to help combat elder financial exploitation. Here are some of the key recommendations:
- Effective governance and oversight — Financial institutions are encouraged to develop robust policies and practices to protect account holders and the institution itself from elder financial abuse.
- Employee training — Training employees to recognize and respond to signs of elder financial exploitation is crucial. This includes understanding common scams and knowing how to report suspicious activities.
- Transaction holds and disbursement delays — Implementing transaction holds and disbursement delays — where appropriate and consistent with applicable laws — can help prevent unauthorized withdrawals and transfers.
- Trusted contact designation — Establishing a process for account holders to designate a trusted contact can provide an additional layer of security, providing someone trustworthy to be notified of suspicious activities.
- Timely reporting — Financial institutions should file suspicious activity reports to FinCEN promptly and report suspected elder financial exploitation to law enforcement and adult protective services.
- Consumer outreach — Increasing awareness through consumer outreach programs can educate older adults and their families about the risks of financial exploitation and the steps they can take to protect themselves.
The role of financial institutions
Banks, credit unions, and other financial institutions play a critical role in preventing elder financial abuse. By implementing the practices outlined in the recently updated guidance, these institutions can help safeguard their customers' financial well-being. Additionally, financial institutions can collaborate with elder fraud prevention networks to stay informed about emerging threats and recommended practices.
Taking action
Preventing elder financial abuse requires a collective effort from financial institutions, regulatory bodies, and the community. Here are some steps individuals can take to protect themselves and their loved ones:
- Monitor financial accounts — Regularly review bank statements and account activity for any unusual transactions.
- Educate seniors — Inform older adults about common scams and the importance of safeguarding personal information.
- Establish legal protections — Set up power of attorney and trusted contact designations to so a reliable person can manage financial affairs if necessary.
- Report suspicious activity — If you suspect elder financial abuse, report it immediately to local authorities, financial institutions, and adult protective services.
How CLA can help financial institutions prevent elder financial abuse
Elder financial abuse is a serious issue requiring ongoing vigilance and proactive measures. The updated interagency guidance provides valuable insights and practical steps financial institutions can take to protect older adults from exploitation. If you would like to find out more on how your institution can improve in this area, please reach out to Tim Dively for a complimentary session on what CLA is seeing in the industry to proactively combat this threat.
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