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A Complicated Crime

The Reality of Fighting Elder Financial Exploitation Inside Financial Institutions

July 4, 2024 by Nasdaq Verafin

Financial crime is a global epidemic – more than $3 trillion in illicit funds and money laundering activity flowed through the financial system in 2023. Predicate crimes are driving much of this activity with fraud being one of the eight predicate crime typologies identified in FinCEN’s AML/CFT National Priorities. In 2023, fraud losses totaled $485.6 billion globally, including elder financial fraud (EFE) which was estimated to account for over $77 billion.

In a recent discussion between Nasdaq Verafin and two financial industry experts, Allie Suazo, Poppy Bank, and Dan Castro, Ventura County Credit Union, we learned valuable insights on the complexities and realities of managing EFE within institutions and why a multi-faceted approach is essential.

Organized Crime – Combating Criminal Organizations

“They are definitely organized – they don’t have regulations and governance, they can talk to a group in another country pertaining to what’s happening.”

–  Dan Castro, Director of ​Fraud and Compliance​, Ventura County Credit Union​

Fraud scams, such as elder financial exploitation, are often linked to money laundering and organized crime. Elderly victims are popular targets for crime rings due to many factors including their accumulated wealth, their reliance on others and lack of technical expertise. These elements put them at higher risk for attacks from criminal organizations who target seniors with sophisticated schemes such as tech and investment scams. A recent FinCEN report found 80% of BSA reports filed in 2023 in the U.S. related to elder scams. Scams involve “the transfer of money to a stranger or imposter for a promised benefit or good that the older adult did not receive” as opposed to elder theft which involves “the theft of an older adult’s assets, funds, or income by a trusted person.”

The Integral Role of Financial Institutions

“Financial institutions are uniquely situated to detect possible financial exploitation through their relationships with older customers.”

FinCEN Advisory

The reality is, monitoring for potential money laundering linked to predicate crimes, such as EFE, is increasingly difficult for financial institutions. Investigation teams are inundated with false positives and substantial time and effort is often required to identify any suspicious activity. Frontline employees play a critical role as they know their customers personally and are familiar with their financial behavior, making it easier to detect unusual banking activity.

Frontline employees can also educate and inform customers of red flags that are indicative of fraud. Employees can try to intervene if they suspect a customer is being scammed or is acting as an unwitting money mule, but if the customer is unwilling to listen, the next step is to reach out to external collaborators.

Collaboration is Key

“[I am] hopeful that we will be able to make a difference if we all work together. And I think the collaboration is essential.”

– Allie Suazo, VP, Fraud and BSA Officer​, Poppy Bank

Both Castro and Suazo emphasized three key points to help protect their customers from EFE:

  • External Help – Working with external partners such as Adult Protection Services, local law enforcement agencies or other financial institutions can serve as another means to convince elderly victims of fraudulent activity.
  • Encourage Reporting – Often, fraud victims are reluctant to report because they are embarrassed. Timely reporting of suspected EFE is critical to prevent further criminal behavior, to ensure help is available, and to engage law enforcement as quickly as possible.
  • Information Sharing – Participation in 314(b) information sharing is vital as EFE scams increase, and criminal networks become more sophisticated and connected.

A Targeted Solution

Although criminal organizations are well coordinated, financial institutions are in a unique position to detect potentially suspicious activity and provide actionable intelligence to law enforcement. An effective, targeted approach to detection, underpinned by advanced AI and consortium data, can enable financial institutions to zero in on potential EFE with precision.

Nasdaq Verafin’s Targeted Typology Analytics analyze a range of behavioral, transactional, third-party and consortium insights for more effective detection of specific predicate crimes, such as EFE, with fewer false positives and low alert to SAR ratios. By taking a targeted approach to detecting and disrupting predicate crimes such as EFE, financial institutions can achieve a step change in predicate crime detection and prevention.

To learn more about Nasdaq Verafin’s Targeted Typology Analytics, download our Feature Sheet.

Nasdaq Verafin provides cloud-based Financial Crime Management Technology solutions for Fraud Detection, AML/CFT Compliance, High-Risk Customer Management, Sanctions Screening and Management, and Information Sharing. More than 2,500 financial institutions globally, representing more than $8T in collective assets, use Nasdaq Verafin to prevent fraud and strengthen AML/CFT efforts. Leveraging our unique consortium data approach in targeted analytics with artificial intelligence and machine learning, Nasdaq Verafin significantly reduces false positive alerts and delivers context-rich insights to fight financial crime more efficiently and effectively. To learn how Nasdaq Verafin can help your institution fight fraud and money laundering, call 1-877-368-9986.