Combatting Elder Financial Exploitation Awareness

By Becky Goodwin and David Clifford

Supervision News Flash

February 2025

Elder Financial Exploitation (EFE) is a growing threat. Here are some things to consider as part of your plans to identify and combat EFE.

On December 5, 2024, the Board of Governors of the Federal Reserve System, the Consumer Financial Protection Bureau (CFPB), the Federal Deposit Insurance Corporation (FDIC), the National Credit Union Administration (NCUA), the Office of the Comptroller of the Currency (OCC), state financial regulators and the Financial Crimes Enforcement Network (FinCEN) collectively issued an Interagency Statement on Elder Financial Exploitation designed to increase awareness and provide strategies to banking organizations for combatting EFE.ⁱ The statement is considered relevant for institutions with $10 billion or less in consolidated assets.

The interagency statement acknowledged that EFE is a growing threat, citing the 2024 National Money Laundering Risk Assessment (NMLRA), which indicated that EFE is an increasing money laundering threat and responsible for $3 billion in financial losses annually. The statement places emphasis on the FinCEN 2022 Elderly Financial Exploitation Advisory, which highlights typologies and red flags since the prior FinCEN 2011 advisory. While the statement is directed at guarding against EFE and provides examples of risk management practices, it’s not intended to set new compliance standards, regulatory requirements or supervisory expectations; but rather to raise awareness and provide strategies for combating elder financial exploitation.

Combatting EFE

There are several methods that a financial institution can take that can effectively aid in the identification, prevention and response to elder financial exploitations, including risk-based policies, internal controls, employee codes of conduct, ongoing transaction monitoring practices and complaint processes. Institutions may find that transaction holds or disbursement delays are effective measures against EFE. Additionally, procedures that allow for trusted contacts designated by account holders who are notified in the event EFE is suspected, may help mitigate EFE.

Policies and procedures related to the following should be developed:

Training requirements and resources
Reporting to appropriate entities and agencies
Compliance with Regulation E
Procedures for sharing account information with third parties
Ongoing collaboration with external stakeholders

An effective training program increases the ability to recognize elder financial exploitation and should be integrated into the regular employee training cycle, including any new employee training.

The training program should include a specific definition of elder financial exploitation, potential indicators such as transaction pattern changes, identity theft and coercion, and behavioral changes. The program should be tailored for different staff roles and include situational examples of preventative measures that staff members can relate to.

Red Flags and Reporting Requirements

Elder financial exploitation may be identified by both behavioral and financial red flags associated with older customers.

Supervision Table Elder Exploitation Awareness

* See the FinCEN 2022 Elderly Financial Exploitation Advisory for a more comprehensive list.

Activity related to elder financial exploitation may meet the requirements under FinCEN’s and federal banking agencies’ laws and regulations for financial institutions to file a Suspicious Activity Report (SAR). Supervised institutions may also file SARs for activity related to elder financial exploitation that does not meet the thresholds for mandatory filings.ⁱⁱ

Financial institutions are encouraged to include any red flags and noted suspected scams in the narrative section of the Suspicious Activity Report (SAR) filing. For information on how to file a SAR related to Elder Financial Exploitation, refer to the FinCen 2022 Advisory.

Other Measures: Reporting to Law Enforcement, Agencies, Adult Protective Services

Like many instances of fraud, the timely reporting of elder financial exploitation increases the likelihood of successfully recovering funds. As noted in a 2013 statement of joint guidance, the privacy provisions within the Graham Leach Bliley Act do not prevent supervised institutions from reporting elder financial exploitation to appropriate agencies.¹ Some state laws require reporting of suspected elder financial exploitation to Adult Protective Services (APS), local law enforcement, and/or regulatory authorities. States within the Fifth District requiring reporting to APS are Maryland, North Carolina and South Carolina. Reporting is voluntary in Virginia and West Virginia. Virginia and South Carolina also allow for temporary holds or delaying the disbursement of funds in situations of suspected elder financial exploitation.² Reporting suspected elder financial exploitation to law enforcement and appropriate agencies does not nullify the responsibility of supervised institutions to comply with SAR requirements.

Please refer to the resources made available within this article and contact your supervisory relationship team with any questions.

ⁱ The CFPB, U.S. Department of the Treasury and FinCEN define elder financial exploitation as the illegal or improper use of an older person’s funds, property or assets. ⁱ Elder financial exploitation falls under the broader category of elder abuse, which affects roughly 10 percent of Americans aged 65 or older.

ⁱⁱ The interagency statement indicates that financial institutions can voluntarily file SARs for suspicious activities related to elder financial exploitation that do not meet the requirements for mandatory filing, such as those involving dollar amounts lower than the regulatory threshold.

¹ Interagency Guidance on Privacy Laws and Reporting Financial Abuse of Older Adults

² Financial Institution Transaction Holds State Overview

Banking Supervision