I. INTRODUCTION
The Federal Reserve Bank of Philadelphia issued an article reviewing federal privacy laws, regulatory guidance, and sound practices that institutions can adopt to help protect their elderly customers from financial abuse.
Financial institutions should be aware of the signs of elder financial abuse. Institutions can play a key role in helping to prevent and respond to abuse because they interact directly with customers, have information about customers’ accounts and transactions that may flag potential abuse, and have tools and resources to report suspected abuse. However, some financial institutions are concerned that state and/or federal privacy laws may prohibit them from disclosing their customers’ financial records to authorities and are uncertain of the best way to proceed.
II. FEDERAL PRIVACY PROTECTION
A. Sharing Nonpublic Information to Third Parties – The Gramm-Leach-Bliley Act (GLBA)
Section 502 of the GLBA generally prohibits a financial institution from disclosing nonpublic personal information about a consumer to nonaffiliated third parties unless the consumer is notified and has the opportunity to opt out. “Nonpublic personal information” (NPPI) generally is any information that is not publicly available and that:
The “Interagency Guidance on Privacy Laws and Reporting Financial Abuse of Older Adults” (guidance) clarifies whether the privacy provisions of the GLBA apply to reporting suspected financial exploitation of older adults. The guidance notes that, while the GLBA restricts sharing NPPI, the law contains exceptions, four of which may apply to the reporting of elder financial abuse depending on the particular circumstances of the suspected abuse:
The guidance also provides the following two examples of permissible disclosure under the fraud exception that are relevant for elder financial abuse:
A concluding statement in the guidance is particularly important: “[G]enerally disclosure of nonpublic personal information about consumers to local, state, or federal agencies for the purpose of reporting suspected financial abuse of older adults will fall within one or more of the exceptions.”
III. STATE PRIVACY PROTECTION
Financial institutions and their employees are not required to report instances of elder financial abuse, but “may report abuse if they have reasonable cause to believe that a vulnerable adult has been subjected to abuse or have observed the adult being subjected to conditions or circumstances which reasonably would result in abuse.”
Effective August 24, 2017, state law (Neb.Rev.Stat. Section 8-1401) will provide an exception to the restrictions on disclosure of confidential customer information to allow “the disclosure of records or information or the making of reports pursuant to a statute which, by its terms or rules and regulations adopted and promulgated thereunder, permits the disclosure or reports.”
IV. SOUND PRACTICES
Financial institutions can play a critical role in helping to detect and prevent elder abuse. Some sound practices to consider are:
A. Prevention
The best outcome for financial institutions and their customers is to prevent elder financial abuse from occurring. Sound practices to help prevent elder financial abuse recommended by the CFPB, include the following:
B. Age-Friendly Banking
Age-friendly banking refers to recommendations from the National Community Reinvestment Coalition (NCRC) to improve banking services for older adults. Age-friendly banking includes proactive strategies to address the particular needs of elderly customers in their use of banking services. This approach is designed in part to lead to reduced levels of financial abuse and exploitation while leading to increased levels of inclusion and access to the banking system. Principles of age-friendly banking include:
C. Training
Training staff, especially tellers, is critical to combating elder financial abuse because they interact directly with elderly customers. Tellers are in a good position to observe suspicious conduct, such as changes in banking patterns and unusual transactions.
Tellers also often develop a relationship with customers and might be able to recognize if a customer is acting in an unusual manner or under duress. Bank tellers are thus a key resource in the battle against elderly financial abuse.
Periodically incorporating some of the key considerations about elder financial abuse and the warning signs into a financial institution’s staff meetings or training can be an effective reminder. Institutions also can provide sample questions to staff to ask elderly consumers under common red flag scenarios to elicit additional information about potential abuse. Finally, training should include action items to complete when elder fraud is suspected.
D. Identification
Bank staff must be able to identify suspected elder financial abuse before it can be reported. To assist institutions in identifying possible illicit activity, the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) issued an alert on elder financial exploitation that encouraged financial institutions to file a Suspicious Activity Report (SAR) when abuse is suspected. The alert listed the following warning signs:
Erratic or unusual banking transactions or changes in banking patterns
Interactions with older adults or caregivers
V. REPORTING
Financial institutions should have policies and procedures in place to address the point at which staff should report suspected elder financial abuse, to whom those concerns should be reported, and to designate the person who should be contacted if staff have questions.
VI. CONCLUSION
Financial institutions play a critical role in helping to prevent elder financial abuse. Institutions are encouraged to enhance their policies, procedures, and training to ensure they identify and report suspected elder financial abuse to the appropriate authorities in compliance with applicable laws. Specific issues or questions should be discussed with your primary regulator.