FinCEN issues advisory following significant rise in financial exploitation of the elderly

The Financial Crimes Enforcement Network (FinCEN) has issued an advisory to financial institutions warning them about the rising trend of elder financial exploitation (EFE).

Older adults have often accumulated life-long savings, this, combined with declining mental and physical health, isolation from family and friends and difficulty using technology makes them hugely vulnerable to financial abuse.

Throughout the COVID-19 pandemic - where many older people became even further isolated and forced to manage their finances remotely - these vulnerabilities were exacerbated. As a result cases of EFE have risen significantly; in 2020, there were 62,000 Suspicious Activity Reports (SARs) related to EFE, by 2021 this number had risen by 16% to 72,000. And according to the Consumer Financial Protection Bureau (CFPB), the value of suspicious transactions linked to EFE have increased substantially too, from $2.6 billion in 2019 to $3.4 billion in 2020.

EFE schemes usually involve either thefts or scams. Elder theft is where someone in a trusted position abuses that trust to steal from the older person. Sadly, almost half (46%) of elder theft is perpetrated by a family member; this often means that the crime is not reported, meaning true levels of elder theft could be significantly higher.

An elder scam describes where an older person is conned into sending payments under false pretences. Unlike elder theft, elder scams usually do not involve people known to the victim; instead the perpetrator claims to be from a legitimate organisation - often the victims’ bank or a US government agency - but other techniques include setting up fake lotteries and sweepstakes and pretending to be from tech or customer support.  Last year also saw a record level of romance scams, where fraudsters start a relationship with the victim in order to swindle them out of their money - usually by asking for help covering medical expenses or legal fees. Again, many cases are not reported or identified, meaning the extent of the problem is likely much worse that current estimates.

Financial institutions are the first line of defence in elderly theft or scam cases, and to help them detect, prevent, and report suspicious activity connected to EFE, FinCEN has identified 12 “behavioural” and 12 “financial” red flags to be aware of.

Examples of “behavioural” red flags include sudden or unusual changes in contact information, or unusual account activity – especially in an older customer with known physical, emotional or cognitive impairment. Financial red flags include constant withdrawals from previously dormant accounts and attempts to ‘wire’ large sums of money.

Collette Allen, Chief Operating Officer at anti-money laundering experts SmartSearch said: “This huge rise in EFE is really shocking; especially given so many of the perpetrators are trusted family members. When older people are at risk from those who are supposed to be caring for them, financial institutions really are the first line of defence here and they have a responsibility to do everything they can to protect elderly customers.

“It is therefore absolutely key that they have robust due diligence and Know Your Customer processes in place to ensure they know their customers well and can therefore identify suspicious behaviour.”

To find out more about SmartSearch’s advanced platform that can identify, verify screen and monitor individuals and businesses, visit www.smartsearch.com

To find out more about EFE, and how to report suspicious activity, visit https://www.fincen.gov/sites/default/files/advisory/2022-06-15/FinCEN%20Advisory%20Elder%20Financial%20Exploitation%20FINAL%20508.pdf