In late February, the New York State Department of Financial Services (DFS) issued guidelines to financial institutions located within the state regarding prevention of elder financial exploitation. The guidelines were issued to remind banks and other lending institutions that they are allowed to report possible instances of elder financial exploitation to New York’s Adult Protective Services (APS) in addition to outlining the best practices used to identify, investigate, and report instances of elder financial abuse to the authorities.
Federal and State Reporting Law
While not mandated, DFS strongly recommended that financial institutions report any suspected elder financial abuse to APS. A joint task force of the federal OCC and FDIC released their own report in 2013 that clarified that it is not a violation of state or federal law to report suspected elder financial abuse to the relevant authorities.
The report specifically stated that any notification would not violate the Gramm-Leach-Bliley Act’s (GLBA) privacy provisions or related regulations. In fact, the joint federal report went so far as to point out that the GBLA and regulations explicitly permit the sharing of nonpublic personal information when elder financial abuse is suspected without complying with notice or opt-out requirements.
In addition, Section 473-b of the New York Social Services Law allows financial institutions operating within the state to report suspected elder financial abuse to APS or other authorities and gives civil immunity to any person who makes the report in good faith. This immunity extends to the employees of a financial institution and the institution itself.
Best Practices to Avoid Exploitation
The report released by DFS stresses the importance that financial institutions play in deterring and preventing elder financial abuse. Bank employees are usually the first people to notice the “red flags” of elder financial exploitation, especially if they are working directly with an elderly client. In order to deter elder financial exploitation, DFS recommends the following best practices for financial institutions:
· Develop a plan and “red flag” procedures for detecting and reporting suspected elder financial abuse · Hold regular trainings for employees regarding the institution’s policies to prevent future exploitation · Appoint or hire staff specifically to investigate suspected elder financial abuse and report their findings to APS or other authorities For guidance regarding potential red flags of elder financial abuse, lending institutions are encouraged to review the Financial Crimes Enforcement Network’s 2011 advisory report. It describes the most common red flags of exploitation but also encourages financial institutions to immediately investigate whenever any uncharacteristic behavior of an elderly client is noticed.
How to File a Report
When elder financial abuse is suspected, the lending institution should file a Suspicious Activity Report (SAR) with the code of “elder financial exploitation. The bank can make the SAR without fear of civil liability as long as it is made in good faith and should notify either APS or local law enforcement about the SAR filing. Because there is no specificity as to what type of information should be included in an SAR, financial institutions should provide enough information to a reasonable degree explaining the basis of the report.