Jan 1, 2014

Financial institutions encouraged to report suspected financial fraud of elderly

Financial abuse of the elderly is a widespread and growing problem. Only 1 in 44 cases are ever reported, according to The National Adult Protective Services Association. While financial institutions are in a unique position to detect such abuse, they can be reluctant to report it for fear of running afoul of the Gramm-Leach-Billey Act of 1999, which safeguards customer privacy.  

Recognizing the growing threat against older Americans, several federal agencies recently clarified parts of the Gramm-Leach-Billey Act with the goal of encouraging banks and brokerages to do a better job of reporting suspected cases of financial abuse and fraud against the elderly. The clarification states that disclosing a customer's information to local, state or federal authorities for the express purpose of reporting suspected abuse is an exception to the general non-disclosure rule under Gramm-Leach-Billey. You can read the clarification in its entirety here.  

The clarifying memo also lists several red flags that could indicate someone is being financially abused. The list is directed to personnel at financial institutions, but I am excerpting it here as my readers may be in a position to notice some of these red flags, too:
  • A caregiver or other individual shows excessive interest in the older adult's finances or assets; does not allow an older adult to speak for himself/herself; or is reluctant to leave the older adult's side during conversations.
  • The older adult shows an unusual degree of fear or submissiveness toward a caregiver, or expresses fear of eviction or being placed in a nursing home if money is not given to a caregiver.
  • Erratic or unusual banking transactions, or changes in banking patterns.
  • Frequent large withdrawals, including daily maximum currency withdrawals from an ATM.
  • Sudden non-sufficient fund activity.
  • Uncharacteristic nonpayment for services, which may indicate a loss of funds or access to funds.
  • Debit transactions that are inconsistent for the older adult.
  • Uncharacteristic attempts to wire large sums of money.
  • Closing of CDs or accounts without regard to penalties.
  • The financial institution is unable to speak directly with the older adult, despite repeated attempts to contact him or her.
  • A new caretaker, relative, or friend suddenly begins conducting financial transactions on behalf of the older adult without proper documentation.
  • The older adult moves away from existing relationships and toward new associations with other “friends” or strangers.
  • The older adult's financial management changes suddenly, such as through a change of power of attorney to a different family member or a new individual.
  •  The older adult lacks knowledge about his or her financial status, or shows a sudden reluctance to discuss financial matters.

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