How Your Financial Institution’s Anti-Money Laundering Program Can Stop Elder Abuse

old lady_200x200 (3)One of the main concerns financial institutions face today is the increased potential for financial exploitation of older adults. Financial exploitation is the most common form of elder abuse, with most victims being women or older adults with significant health issues. Financial exploitation has been defined as the illegal or improper use of funds, property, or assets. Older adults can become targets of financial exploitation by family members, caregivers, scam artists, financial advisors, home repair contractors, fiduciaries (such as power of attorneys), and guardians. As abuse of the elderly grows more pervasive, financial institutions need to play a key role in preventing and detecting elder financial exploitation.

Since one of the primary components of an effective Anti-Money Laundering/Bank Secrecy Act (AML/BSA) program is “Know Your Customer,” training should be prevalent throughout the organization. Employees should be trained to recognize common “red flags” they will likely encounter within their respective areas of responsibility. These red flag points of financial abuse or exploitation can be incorporated into your AML/BSA program. Employees must identify unusual activity, respond to concerns, and report suspicious red flags to their AML/BSA officer or banking supervisor if they suspect that their customer’s account or the customer themselves show any of the following signs:

  • Purchases a customer cannot afford.
  • Changes in the pattern or activity in the customer’s account.
  • Requests for unused methods of banking such as online access or debit cards the customer has never wanted or needed.
  • Closure of certificates of deposit or other accounts without regard to penalties.
  • Customers who are brought to the bank by someone other than a family member or caregiver who is already known to banking personnel.
  • Caregivers or family members who do not allow the customer to speak for themselves if able, or who are reluctant to leave the older customer’s side during conversations.
  • Customers who go to a branch where they are not known.
  • Customers who appear very nervous when asked about the transaction.
  • Unusual or large withdrawals or wire transfers from bank accounts.
  • Large credit card purchases they cannot explain.
  • Checks that are missing /out of sequence, or an increase in the number of checks written.
  • Checks made payable to “Cash” with suspicious signatures.
  • Insufficient funds with no prior history of such.
  • Significant drops in account balance.
  • Newly executed documents such as a Power of Attorney.
  • Changes in account owners, authorized signers, or beneficiaries.
  • Changes in the customer’s appearance or behavior.

An effective financial institution AML/BSA program will monitor for suspicious activity, investigate, and report promptly and accurately per the regulation. This type of activity should be reported to applicable state, local, and federal authorities as well. Promptly reporting suspected financial exploitation to organizations such as adult protective services or law enforcement can trigger appropriate intervention, prevent future financial losses, or detect other potential health-related issues.

Financial institutions play a vital role in alerting authorities in suspected elder abuse cases. Because of the relationships financial institutions have with their elderly customers, they are in a position to assist in elder abuse prevention by incorporating these measures within the organization’s AML/BSA program. Educating customers about potential financial risk can help as well. In order for this initiative to be successful, this detection must start with the Board of Directors and flow through to front-line employees.

For more information about financial exploitation of the elderly and how financial institutions can incorporate this endeavor into their daily AML/BSA programs, contact one of the experts listed below at PYA (800) 270-9629.

Mike Shamblin

Mike Shamblin

Managing Principal of Audit & Assurance Services

Related Posts
In the nonprofit world, organizations are fueled and sustained by generous contributions and grants, which are used to support the organization’s mission.  Although such funding can often be the deciding...
Read More

“Threading the Needle”—Accounting Standards Update Closes Hole in Nonprofit Grant Guidance

PYA, a national professional services firm headquartered in Knoxville, has been awarded a 2018 Top Workplaces honor by the Knoxville News Sentinel. The award is a result of employee feedback...
Read More

Knoxville News Sentinel Names PYA a Winner of the Greater Knoxville Area 2018 Top Workplaces Award

A recent Accounting Standards Update (ASU) addresses land easements and their accounting under the new lease standards.  In January 2018, the Financial Accounting Standards Board (FASB) issued ASU 2018-01 Leases:...
Read More

Land Easements—Guidance for Implementing New Lease Accounting Standards

Stakeholders seeking clarity were behind the latest Accounting Standards Update (ASU) issued by the Financial Accounting Standards Board (FASB).  In response to questions raised, the FASB released ASU 2018-03: Technical...
Read More

Measuring Fair Value: New ASU Offers Clarity

Businesses are increasingly reliant on technology to achieve organizational objectives. However, with the convenience and efficiency of technology come intensifying risks of data loss and theft. High-profile data breaches top...
Read More

Cybersecurity Framework “SOCs” It to Cyber Threats

The Financial Accounting Standards Board (FASB) has set forth amended guidance aimed at simplifying and reclassifying certain features of financial instruments. Accounting Standards Update (ASU) No. 2017-11 – Earnings Per...
Read More

The Update on Down Round—FASB Reclassifies Earnings Per Share

PYA is pleased to announce the promotions of Michael Ramey, Matt Stuart, and Jeff Pate to the level of Equity Principal. PYA has announced the promotion of Senior Manager Michael...
Read More

PYA Announces Three New Equity Principals

A Section 83(b) election could be one of the biggest tax-saving decisions for taxpayers who receive equity subject to vesting. It is common for start-up founders and key employees to...
Read More

83(b) Election for Start-Up Founders

In today’s business environment, cloud computing arrangements play a key role in the day-to-day operations of companies large and small. The Financial Accounting Standards Board’s (FASB) Accounting Standards Update (ASU)...
Read More

Clearing Up Cloud Computing Accounting

Share This Insight

If you received value from this article, please share it with your network (e.g., Facebook, Twitter, LinkedIn). Icons below for your convenience.

Stay Current

* indicates required
Monthly eNewsletters
See more newsletter and alert options.

PYA Population Health Ascend

PYA Healthcare Blog

PYA Thought Leadership Services

The Healthcare Loop