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As Elder Abuse Awareness Month ends, ACFCS highlights red flags to fight fraud against seniors

Thursday, June 29, 2017   (0 Comments)
Posted by: Brian Monroe
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By Brian Monroe
June 29, 2017

June is Elder Abuse Awareness Month, a designation meant to highlight the criminal tactics targeting one of the most vulnerable populations, and better sensitize financial crime professionals and caregivers about an issue growing in scope.

The issue of how to protect the elderly and spot fraudsters attempting to take advantage of the elderly is also very important to the Association of Certified Financial Crime Specialists (ACFCS). We have extensively covered the dynamics at play in detailed stories, webinars and at our annual conference, this year taking place in October in Boston.

To help compliance teams and investigators better spot transactions tied to crimes against the elderly, ACFCS has culled some guidance and tips from our archives below. While usually available only to members, we've unlocked this content for public access to help spread awareness of this critical topic, and the role all financial crime professionals can play in combating elder financial exploitation.

DOJ, SEC see growing risks of elder fraud

The issue of how best to protect the elderly is a challenging one for federal, state and local investigators, and an emotional one for families who have seen their parents, grandparents and relatives get victimized by fraudsters, unscrupulous caregivers and opportunists. 

What’s more, the problem is only expected to get worse. 

On World Elder Abuse Awareness Day, June 15, The U.S. Department of Justice (DOJ) noted the rising scourge of crimes targeting older Americans. “While many Americans are enjoying longer, healthier lives, far too many older Americans are suffering in the shadows.”

As well, this year the Securities Exchange Commission (SEC), the country’s chief trading regulator, and the Financial Industry Regulatory Authority (Finra), the self-regulatory body charged with examining broker dealers for compliance with anti-money laundering (AML) laws, tackled the issue head on, creating a new rule aimed at protecting elder investors. 

The commission approved the rule in March, with an effective date of February 5, 2018.

The new rule involves “two key steps to protect investors. First, firms will be required to make reasonable efforts to obtain the name and contact information for a trusted contact person for a customer’s account. Second, firms will be permitted to place a temporary hold on a disbursement of funds or securities when there is reasonable belief of financial exploitation.” For more information on the SEC and Finra rule, please click here.

Some studies suggest that 10 percent of seniors may suffer some form abuse, financial exploitation or neglect, according to DOJ.

Likewise, other studies suggest that older adults “may suffer billions in losses as a result of financial fraud, and that being victimized by financial fraud could lead to higher rates of hospitalization and mortality.”

[Did You Know] ACFCS offers training on financial abuse of older adults? 

We have teamed up with TAMLO to offer you an award-winning 35-minute course Financial Abuse of Older Adults: Recognize, Review and Respond. The course is built around 3 short videos that illustrate how older adults are vulnerable to those they rely on the most – and what financial institutions can do about it. This course awards 0.5 CFCS Credits and the content can be modified to form a customized version of the course for your financial institution. If you are interested in customization, please contact us.

Learn more and start your training:

Red flags to consider from recent ACFCS coverage:

An aging population, desperate relatives still downtrodden by the economic downturn and fraudsters more readily realizing the vulnerability of older folks is leading to a surge in financial crimes against the elderly.

According to the Census Bureau's “middle series” projections, the elderly population will more than double between now and the year 2050, to 80 million. By that year, as many as 1 in 5 Americans could be elderly.

This puts more pressure on bank compliance teams to look for the signs of elder abuse, including: 

  • Has an elder customer with a stable account balance suddenly started incurring non-sufficient funds (NSF) charges or low account balance?
  • Has an elder customer account shown a large increase in withdrawals or checks to unfamiliar recipients?
  • Do accounts of an elder customer show large transfers into the account from investment accounts, only to be quickly withdrawn?
  • Is an elder customer with no or infrequent ATM withdrawals now showing an increased pattern of ATM withdrawals?
  • Is an elder customer with consistent spending patterns now showing a sharp increase in spending?

To read the full story and for more red flags, please click here.

Expert insights and warning signs from the ACFCS Annual Conference

ACFCS also analyzed how and why criminals are targeting seniors and offered solutions from renowned experts at the association’s annual conference last year.

In a June 2nd 2016 presentation, Jilenne Gunther, a senior strategic policy advisor for the American Association of Retired Persons (AARP), shed light on the increasing prevalence of fraud and financial abuse targeting elderly individuals.

“Older Americans lose about $3 billion, but we know it’s just the tip of the iceberg,” said Gunther, who also leads the AARP’s BankSafe initiative. She added that banks as a result of scams against seniors, lose $1 billion annually.

Moreover, compounding the problem is that the people older folks should be able to trust the most are the ones most at risk to steal, and steal even more than strangers or non-related caregivers, she said, citing a study. And with the elderly population set to double in coming years, the “problem is only going to get worse.”

Thousands of older Americans are victims of financial exploitation every day.

Older Americans are targeted not only because they have accumulated $18 trillion in assets, but also because they are more likely to suffer from cognitive decline making them vulnerable to exploitation.

Customers are asking their banks to help. Four of every five older Americans want their financial institutions to fight exploitation, according to the AARP’s own research.

Theft tied to older people averages $120,000, a figure roughly equal to their life savings. Studies also reveal that the closer a person is to the victim, the more they steal, with a child stealing an average of nearly $160,000, down to a non-related caregiver stealing an average of nearly $20,000.

In tandem with the elderly population expanding comes a greater awareness by fraudsters and hacking groups that they can potentially get more money from older people and do so with less stolen information, in some cases only needing a phone number, address and a bank account statement.

Investigators have noted that in some data breaches, the hackers parsed out the information by age to better manipulate older victims, through such means as penny stock pump-and-dump scams.

“The exploiters are good. They know who to target,” said Liz Loewy, the general counsel and senior vice president of industry relations at EverSafe and the former head of the elder abuse unit at the Manhattan District Attorney’s office. “It’s just a huge problem, an epidemic.”

According to the Census Bureau’s “middle series” projections, the elderly population will more than double between now and the year 2050, to 80 million. By that year, as many as 1 in 5 Americans could be elderly.

Those trends put more pressure on bank staff at all levels – including front line tellers, AML analysts and compliance officers, business line executives and even the investment arms of institutions – to “train employees to detect and prevent exploitation,” Gunther said.

The session highlighted several overarching scam areas fraudsters attempt to employ against the elderly, including

·         Telemarketing

·         Construction/Home Repair

·         Sweetheart Grandparent

·         Lottery

·         Investment Fraud

·         Reverse Mortgages

·         Phishing and Internet Fraud

·         Cold calls from a boiler room

·         ID Theft

The panel also detailed key red flags that would be of value to compliance analysts and fraud investigators:

Changes in Financial Activity:

  • Unusual and/or inconsistent transactions
  • New debit card, credit card &/or increased activity
  • Withdrawals over daily maximum limit
  • Bounced checks and/or nonpayment for services
  • Unusual credit or debit transactions
  • New wired funds without a previous history of the customer doing so
  • New access to internet banking without a previous history of the customer doing so
  • Closed CDs, without regard to penalties
  • New power of attorney (POA), account holder, or change of address

Red flags focusing on seniors, companions and caregivers:

  • Senior makes complaints about missing assets
  • Inability to contact/speak with senior, despite repeated attempts
  • Changes in the older victim; clothing, demeanor, conversation
  • Senor unable to recall or discuss transactions
  • New caregiver or ‘family member’
  • Senior appears to be frightened, fearful or submissive w/companion
  • Companion – excessive interest
  • Companion won’t permit senior to speak for himself/herself

To read the full story about last year’s ACFCS conference, please click here.

Further resources

Here are some additional resources from the U.S. government and private sector groups to more efficiently and effectively spot elder financial abuse:

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