Compliance Corner

Guidance on financial elder abuse

By Nanette Stanley

Guarding and preserving the dignity, safety and finances of the elderly has become increasingly important as boomers and their parents reach the point where age and the accompanying limitations become issues requiring extra attention and effort.

Why, you ask? Because more than 70 percent of the nation’s wealth is controlled by individuals over the age of 50.

Many older adults do not realize the value of their assets, and they are more likely to have disabilities that make them dependent on others who may have a significant influence on them. Local, state and federal governments typically define the elderly as those over the age of 60.

Elder abuse may be physical, psychological and financial. The financial abuse of elders may occur through fraud or promises of services, such as never having to worry about money or a place to live.

Individuals who prey on the elderly may be family members such as children, grandchildren, siblings or even a spouse. Still others who may defraud the elderly are dishonest professionals and business people who overcharge for their services or use their positions of trust to gain access to the elderly person’s finances.

The guidance, titled the “Interagency Guidance on Privacy and Reporting Financial Abuse of Older Adults,” was released in September. The guidance addressed the general rule that banks and other financial institutions may not disclose personal, non-public information to a third party without having provided the opportunity to opt-out. It also points out exceptions to this general rule and that these exceptions may apply in situations of suspected financial abuse of the elderly without the authorization of the individual and not be in violation of the Gramm-Leach-Bliley Act.

The exceptions include state or local government reporting requirements, response to a proper judicial investigation or other law enforcement or official investigatory process with the goal of the prevention of actual or potential fraud.

Some of the signs which may indicate financial abuse are these:

  • unusually large, frequent withdrawals;
  • sudden nonsufficient funds activity that is uncharacteristic of the account holder;
  • transactions which are inconsistent for an older adult;
  • abnormal efforts to wire large sums of money; or
  • closing certificates of deposit in spite of penalties.

Interactions to watch for are these:

  • a caregiver or other individual who does not permit the older individual to speak or appears hesitant to leave the individual alone;
  • the older person seems fearful or submissive or expresses concern that they could be evicted if money is not given to their companion;
  • the financial institution is unable to speak directly to the older individual despite efforts to contact them;
  • a new caretaker, relative or friend suddenly begins conducting financial transactions without proper documentation;
  • new relationships with unexplained strangers begin replacing existing friends;
  • a sudden change in a power of attorney; or
  • an abrupt reluctance to discuss financial matters.

Many states’ laws offer protections of other at-risk adults and at-risk juveniles such as those who may not be able to walk, see, hear or speak, or those who may be developmentally disabled, or have a mental illness or impairment.

While this article addresses exceptions to the Gramm-Leach-Bliley rule regarding the parameters of sharing information, financial institutions need to be mindful of reporting suspicious activity related to potential elder abuse.

Many pressing issues face financial institutions in these ever-changing days of regulation. Elder financial abuse may not be at the top of the list; however, reviewing the interagency guidance would be useful in reminding bank staff of the potential threats that exist for the elderly.