BSA 16 - David Reed

Identifying elder financial exploitation

When in doubt, file a Suspicious Activity Report, attorney David Reed advises.

November 16, 2016

When deciding whether to explore and document a potential case of elder abuse, err on the side of taking action, attorney David Reed says.

“This is a group that has been specifically identified as needing extra financial protections,” says Reed, who spoke at the CUNA Bank Secrecy Act Conference.

When in doubt, file a Suspicious Activity Report (SAR) with the Financial Crimes Enforcement Network (FinCEN), he advises: “I don’t think we will ever get backlash…for filing too many of this kind of SAR.”

Generally speaking, financial exploitation of an elder can be defined as an action that “benefits the perpetrator, to the financial detriment of the member.”

Discerning elder abuse has become more difficult, Reed says, due to a rapidly aging population that continues to use financial services heavily.

“We have members that are living longer and working longer. There’s more lending activity with people who are a bit more ‘mature’ in years,” says Reed, of Reed and Jolly LLC, which specializes in credit union matters.

Many older credit union members must recover from bad financial planning, or must finance costly medical procedures, notes Reed, adding that “we also are at a high-water mark with adult children moving back in to their childhood homes.”

That opens the door for more people to get involved in financial dealings, for better and worse. Credit unions should recognize that when looking for signs of elder financial abuse, seeing smoke doesn’t automatically mean there is fire.

“So you need to make sure your credit union—as a machine—is prepared from the newest teller to the most grizzled member of your board” to root out an incidence of abuse and is prepared to report it, Reed says.

Elder financial abuse can take the form of:

  • Taking money or property;
  • Forging signatures;
  • Using coercion to sign legal document;
  • Using property or possessions without permission; and
  • Confidence crimes—i.e., con games.

How do you spot it? Reed advises to look for changes in usual behavior, such as a stranger accompanying the member, a member not speaking on her or his own behalf despite being present for the conversation, or a member appearing fearful.

Suspicious financial activities include:

  • An unusual volume of activity;
  • Large or frequent withdrawals;
  • A change in usual financial habits; and
  • Debit card or ACH activities beyond the person’s capabilities.

Members could have reasonable explanations for all these actions. So Reed cautions credit unions to not be overzealous, but adds, “Don’t ignore your gut.”

CUNA conducts the four-day conference on wide-ranging issues of BSA compliance in partnership with the National Association of State Credit Union Supervisors.

Read more CUNA BSA Conference coverage from CUNA News, and follow the conferece live on Twitter via @NewsNowLiveWire, and using the hashtags #CUNABSA and #BSACompliance.