Elder financial exploitation (EFE) is a heinous crime, capitalizing on the vulnerabilities of older adults with limited technological knowledge and readily available liquid assets. In a recent Interagency Statement, FinCEN and other agencies are urging financial institutions to take action to protect elderly customers, underlining the importance of efficient and effective prevention and detection.
Building on part one, this second installment in our blog series highlights how anti-financial crime technology solutions can help financial institutions stop fraudulent payments, collaborate with other institutions, and ensure actionable intelligence is shared with law enforcement to protect elderly customers from the threat of financial exploitation.
Effective Detection: Embracing Targeted Approaches
Fraud, including elder financial exploitation, is one of several predicate crimes linked to money laundering and organized criminal networks. As a result, it is included among FinCEN’s Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) National Priorities, with a recent NPRM stating that “[financial institutions’ AML/CFT programs] be effective, risk-based, and reasonably designed.” Solutions that can detect elder financial exploitation and other predicate crimes with precision and fewer false positives are becoming essential as financial institutions seek to protect their customers while adhering to regulatory requirements.
As false positives from conventional transaction monitoring systems place increasing demands on AML/CFT investigators, a targeted approach enhanced with artificial intelligence (AI) can improve detection while saving time and resources. Financial institutions should seek solutions that provide evidence-rich alerts for investigators and efficiently identify warning signs for elder financial exploitation — such as the use of uncharacteristic transaction channels, sudden account balance drops, or new relationship additions to an account. With this added precision in detection, financial institutions can refocus their efforts on furthering the investigation, such as by collaborating with other institutions.
Collaborating to Strengthen Prevention: The Value of Information Sharing
FinCEN has indicated that “information sharing among financial institutions is critical to identifying, reporting, and preventing EFE, among other illicit activity.” By working together, financial institutions can expose complex crimes spanning multiple institutions. This includes illicit activity that may be linked to broader money laundering schemes or seniors being exploited as unknowing money mules. In a recent case, two men were convicted of defrauding elderly victims across several states and moving tens of millions of dollars in illicit funds as part of complex multinational money laundering scheme. According to the U.S. Attorney’s Office, Northern District of Ohio, “the U.S. based money laundering infrastructure allowed funds illegally taken from victims to be distributed throughout the world.”
Financial institutions must collaborate to uncover and disrupt such complex and expansive illicit activities. Technology that enables secure information sharing between 314(b) registered institutions allows investigators to easily send, receive, and respond to requests for information to uncover hidden criminal activity, expedite decision making and enhance reporting to law enforcement.
Robust Reporting to Law Enforcement
Ultimately, the ability of law enforcement to combat financial crimes, such as elder financial exploitation, depends on the quality of reporting and delivery of actionable intelligence through Suspicious Activity Reports (SARs), with timely reporting increasing the likelihood of successful recovery of funds.
Providing law enforcement with a robust investigative narrative is critical to spur decisive action that may prevent initial or further exploitation of elderly victims – and reporting elder financial exploitation to the appropriate authorities is required by law in many states. Targeted solutions offering superior detection, greater context, and the ability to examine all sides of a transaction across multiple institutions is key to the provision of actionable intelligence to law enforcement through high-quality SARs.
Protecting Seniors: Educate, Collaborate, Innovate
“Financial institutions serve on the frontlines in protecting their older customers’ finances, and can play a critical role in helping to identify, prevent, and report suspected elder financial exploitation.”
The effective detection, prevention, and reporting of elder financial exploitation can help safeguard the financial wellbeing of vulnerable clients. By educating customers and employees about current trends, innovating to meet emerging threats, and collaborating to leave criminals with nowhere to hide, financial institutions can create a united front to protect society’s seniors from the damaging consequences of elder financial exploitation.
