Financial Crimes Enforcement Network: Financial Trend Analysis: Elder Financial Exploitation

Financial Crimes Enforcement Network: Financial Trend Analysis: Elder Financial Exploitation

NASCUS Legislative and Regulatory Affairs Department
May 15, 2024

FinCEN issued a Financial Trend Analysis focusing on patterns and trends identified in Bank Secrecy Act (BSA) data linked to Elder Financial Exploitation (EFE). In developing this analysis FinCEN examined BSA reports filed between June 15, 2022, and June 15, 2023, using the key term referenced in FinCEN’s June 2022 EFE Advisory or checking “elder financial exploitation” as a suspicious activity type. This amounted to 155,415 filings, indicating roughly $27 billion in EFE-related suspicious activity.

Summary

In this latest trend analysis, FinCEN identified two predominant categories of victimization across EFE-related BSA filings:

  1. Elder scams where the victim does not know the perpetrator and;
  2. Elder theft, where the victim knows the perpetrator.

The report also identified that banks filed 72% of all EFE-related BSA filings. Two banks reported 33 percent, or 50,670 BSA filings, of the filings in the dataset obtained.  Credit unions accounted for 8 percent of filings.

  • Financial institutions filed more elder scam-related BSA filings than elder theft-related
  • Account takeover was the most frequently cited EFE typology with the majority of elder scam-related filings also referenced account takeover activity.
  • Adult children were identified as the most frequent elder theft-related perpetrators.
  • Perpetrators in elder theft relied on mostly unsophisticated means to steal funds that minimized direct contact with financial institution employees.

In instances of elder theft, filers reported an average suspicious activity amount of $98,863 and a median amount of $23,762. For elder scams, filers reported an average suspicious activity amount of $129,483 and a median amount of $33,499.

The report notes the methods of elder theft varied, but generally relied on cash withdrawals, card transactions, online bill pay, and funds transfers. Furthermore, the analysis details that in elder scams, money was most commonly transmitted through checks and domestic wires.

FinCEN’s manual review of each filing indicated perpetrators used the following scams:

  • Impersonation – 8%
  • Romance scams – 9%
  • Tech support – 10%
  • Account takeover – 22%
  • Scam unidentified – 23%
  • 41 Other scam types – 28%

Reporting

FinCEN recommends that if a credit union suspects EFE with a member it should file a Suspicious Activity Report (“SAR”) as well as refer customers who may be victims of EFE to the Department of Justice’s National Elder Fraud Hotline at 833-FRAUD-11 or 833-372-8311 for assistance with reporting suspected fraud to the appropriate government agencies.

In addition to FinCEN’s recommendations, credit unions should review individual state laws and associated reporting requirements.

Takeaways

This report shines a light on EFE as a growing problem and one that is showing no signs of slowing down. Financial institutions should develop internal protocols and controls similar to the following steps to protect against EFE.

  • Offering age-friendly services to older consumers, including protective opt-in account features such as withdrawal limitations, alerts, and transaction restrictions for merchant categories; and
  • Ask detailed questions when the elder account holder requests account transactions that are unusual for the account (i.e., wire transfers and large cash withdrawals) and monitor account activity to help prevent and detect scams and theft.

Further, FIs must train their employees to prevent, detect, and respond to EFE. The training should include descriptions of indicators of potential EFE and preventative measures and action steps for responding to and reporting Elder Financial Exploitation.