Financial Institutions Law Alert

On December 4th, the Financial Crimes Enforcement Network (FinCEN) released a new strategic analysis of Suspicious Activity Reports (SARs) reflecting the increasing threat of financial exploitation of the elderly by both domestic and foreign actors. The analysis found SAR filings relating to financial exploitation of the elderly increased dramatically over the six-year study period, from about 2,000 filings per month in 2013 to nearly 7,500 filings per month in August 2019. Financial institutions, including banks, credit unions, brokerages, and money services businesses (MSBs) are generally required to file SARs when they detect potentially suspicious activity or activity that lacks a lawful or apparent purpose. Several major scam categories were identified in the analysis, including:

  • Romance: Scammers establish a romantic relationship with their victims and then request money for “hardships” they experience, or to “visit” the victim (but never do).

  • Emergency/Person-in-need: Scammers prey on victims’ emotional vulnerability by claiming to be a loved one who needs money quickly to help with an emergency.

  • Prize/Lottery: Scammers coerce their victims into sending an “import tax” or “fee” in order to receive the money they have supposedly won in a lottery.

Many SARs filed by MSBs showed elders fell victim to scams in which they sent money overseas.

Several SARs filed by depository institutions and brokerage firms identified theft from elders. According to SAR reporting, when an elder is the victim of theft from a bank or brokerage account, most often family members and non-family members caregivers are involved.

Overall, the yearly dollar amount of suspicious activity reported for elder financial exploitation trended upward during the study period, likely indicating increased financial threat to elders. In 2014, the total suspicious activity amount reported was $2.2 billion. In 2019, with only a partial year of data, the total amount rose to $5 billion through August. 

Although this analysis does not introduce new regulatory guidance or impose any new requirements on regulated entities, financial institutions should be aware of the issues related to senior and vulnerable investors. FinCEN also encourages those who work with senior or vulnerable investors to avail themselves of resources supplied by governmental bodies.

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