Financial exploitation refers to the misuse of a third party to take advantage of a weak adult's finances or possessions. Because the elderly are more prone to be lonely or subject to exploitation. They are an appealing target for thieves looking to exploit or use them for money laundering (ML) and terrorist financing (TF). Financial exploitation of the elderly is becoming more common in many countries across the world; as a result, businesses should be aware of the warning lights, implement an effective Countering the Financing of Terrorism(CFT) and Anti Money Laundering (AML) response, and, most importantly, safeguard their vulnerable clients.
What is Elder Financial Exploitation (EFE)?
Elder financial exploitation (EFE) is the most frequent type of elder abuse, and it includes the inappropriate or unlawful use of an older person's finances, property, or possessions. EFE offenders may be intimate relatives and family members of the victims or outsiders such as the internet or offshore fraudsters. Financial institutions are in a distinct position to detect and prohibit this sort of illicit conduct since offenders may try to transfer the proceeds of EFE using financial goods and instruments.
EFE may be more common in regions where there is a financial struggle or when there are crises that put the elderly in danger. For instance, the coronavirus outbreak has left millions of elderly individuals alone, financially disadvantaged, and more vulnerable to criminal exploitation.
Financial exploitation of the elderly can be caused by a variety of factors, including:
- Taking an elderly person's goods
- Taking possession of a power of attorney for an elderly person
- Taking advantage of the elder's funds or credit cards
Who Commits Elder Financial Abuse?
Financial abuse against the elderly is most commonly perpetrated by family members, spouses, or those in a senior's trust.
- Friends and Family Members
While people may believe that strangers are the most prevalent offenders of financial exploitation, this is not the case. According to the NCEA, family members, such as grown children or spouses, were responsible for 53% of elder financial abuse cases.
- Financial Planners & Lawyers
Attorneys, managers, and financial advisers may be trusted by the elderly to protect their possessions. These individuals, on the other hand, can utilize their positions of authority to exploit their customers.
- Carers and Nursing Home Employees
Financial exploitation in elderly homes may take many forms. For example, staff can steal cash or ATM cards from a resident's handbag or pocket, create checks in their name, or use other ways to steal.
- Outsiders
A family member or a caretaker is not always the perpetrator of elder financial abuse. Every year, the elderly are defrauded by phone and email fraud. Perpetrators may act as though they are:
- The senior has won a lottery.
- They are a relative in need of funds.
- They work in the banking industry as examiners.
- They are builders, and the elder's home requires work.
Warning Signs of Elder Financial Exploitation
There are a variety of indicators that may signal financial elder abuse since it might take different forms. The following are some indications of elder financial abuse:
- Checks or bank statements are given directly to the perpetrator
- Falsified signatures on legal documents or cheques
- Excessive bank withdrawals or account transfers
- Loss of personal items or property
- Any modifications to an elder's freewill power of attorney
- The elders signed odd documents that they had no idea about.
- Eviction notifications and unpaid debts
- Disconnection of utilities if bills are not paid
- Unaccounted for withdrawals that could not have been done by the elderly person
Compliance With EFE Regulations
The Bank Secrecy Act (BSA) and FinCEN's advisory guideline require the submission of a suspicious report to FinCEN if banks, financial institutions, and other regulated organizations identify suspect financial activities, including EFE. SARs are utilized by law enforcement authorities to initiate and inform investigations into incidences of money laundering, fraud, and terrorist funding that may be linked to or predicated by elder financial exploitation. EFE has its own category in FinCEN's electronic Suspicious Activity Report (SAR) filing, with filers instructed to give a description of the sort of activity engaged.
Firms may be able to identify EFE by implementing controls and procedures such as identity verification and transaction monitoring as part of their BSA AML/CFT programs. Those procedures should be risk-based, which means they should be implemented in proportion to the amount of criminal risk posed by their clients and transactions. Sanction Scanner offers different AML programs with advanced technology where compliance officers can easily keep track of suspicious activities, including EFE.
