Elder Financial Exploitation and BSA Compliance: What Your Bank Needs to Know

If you work in compliance at a community or regional bank, elder financial exploitation is one you need on your radar. More of your customer base is reaching retirement age, and that means more attempted fraud, scams, and exploitation aimed at older account holders. Your BSA compliance program has a direct role to play in catching it early.

This is not a niche issue for your bank. It is a mainstream compliance topic, and it is one you should be actively training your staff on.

What Elder Financial Exploitation Actually Is

Elder financial exploitation covers a wide range of activity, and it will not always look the same when it shows up at your bank. Sometimes it is a stranger running a scam over the phone or online. Sometimes it is a caregiver, family member, or someone else your customer trusts, quietly draining an account over time.

At your bank, this usually shows up as unusual account activity. A customer who has banked the same way for years suddenly changes their pattern, and that change does not have an obvious explanation.

What to Watch For

Your tellers and customer service staff are often the first line of defense. They see the customer in person, and they are the ones who will notice when something feels off. Here is what you should have them watching for:

• Large or frequent withdrawals that are out of character for the customer
• A new person accompanying the customer who insists on speaking for them.
• Frequent large gifts to caregivers, new acquaintances, or recently added account signers.
• Caregiver or relative showing excessive interest in the elder's finances or refusing to allow the elder to be contacted directly.
• Wire transfers to unfamiliar recipients, especially overseas
• A customer who seems confused, nervous, or reluctant to answer questions about a transaction
• Sudden changes to a power of attorney, joint account holder, or beneficiary
• Bills going unpaid despite adequate funds in the account

None of these signs alone proves exploitation is happening. But when your staff are trained to notice the pattern, and feel comfortable asking a few extra questions, they catch problems that would otherwise go unnoticed.

What You Can Do About It

Once your staff identify a red flag, your BSA compliance team has a clear role to play. If the activity meets the threshold, you should file a Suspicious Activity Report (SAR). FinCEN has issued specific guidance on identifying and reporting elder financial exploitation in SARs, and using the right terminology and checkbox helps law enforcement and regulators spot the pattern faster.

You should also know that federal and state law generally provide safe harbor protections for your employees when they report suspected elder financial exploitation in good faith. Many states also allow you to notify Adult Protective Services directly, or even place a temporary hold on a suspicious transaction while you review the situation. Make sure your compliance officers know your state's specific rules, since they vary. Law enforcement may need to be contacted depending on the severity of the situation.

Building This Into Your Compliance Program

A strong elder financial exploitation program does not need to be complicated. At minimum, you should have:

• Ongoing frontline staff training that covers red flags in plain language
• A clear, simple internal process for escalating a concern
• A defined point of contact for questions, so your staff are not guessing who to call
• SAR filing procedures that specifically address elder exploitation reporting requirements
• Familiarity with your state's reporting and account hold options

This is training that pays for itself. One teller who asks the right question can stop a loss before it happens.

The Bottom Line

Elder financial exploitation is not going away, and it will not always be obvious when it is happening at your bank. If you build simple, well trained processes into your BSA compliance program, you will be in a much better position to catch it early and protect the customers who need it most.

If you have questions about building or strengthening your elder financial exploitation procedures, reach out. We are happy to help.