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

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