Search results for: elder financial abuse

On June 14, 2024, President Biden declared June 15th World Elder Abuse Awareness Day.  In honor of the day, the Financial Crimes Enforcement Network (FinCEN) reminded financial institutions (FIs) to remain vigilant in identifying and reporting elder financial exploitation (EFE).

In issuing the reminder, FinCEN cited the Financial Trend Analysis (2024 Analysis) it recently performed which focused on patterns and trends identified in Bank Secrecy Act data linked to EFE, which we previously blogged on here.  In performing that analysis, FinCEN studied 155,415 suspicious activity reports (SARs) filed by FIs that referred to EFE.  Those SARs indicated approximately $27 billion in EFE-related suspicious activity occurred between June 15, 2022 and June 15, 2023.

In its reminder, FinCEN also recommended that FIs refer suspected victims of EFE to the Department of Justice’s National Elder Fraud Hotline and that victims file reports with the Federal Bureau of Investigation’s Internet Crime Complaint Center (IC3).

Although not cited in FinCEN’s reminder, on April 30, 2024, the IC3 issued its own Elder Fraud Report (the IC3 Report) based on complaints it received in 2023.  The IC3 Report showed that complaints of EFE to the IC3 increased by 14% in 2023, and associated losses increased by approximately 11%.  However, the FBI noted that many of these crimes go unreported, and it warned that the threat EFE poses is likely much greater.

There are several key takeaways from the IC3 report:

  • Elder fraud is a costly crime, with fraud against individuals aged 60 and over causing more than $3.4 billion in losses in 2023.  The average older victim reported losing nearly $34,000, while 5,920 older victims reported losing more than $100,000.
  • Older people are disproportionately impacted by scams and fraud, with more than 101,000 victims aged 60 and over reporting these types of crimes in 2023.  In contrast, the second most impacted demographic – individuals aged 30-39 years old – filed 88,138 reports with losses totaling over $1.1 billion – less than a third of the $3.4 billion in losses experienced by older victims.  
  • Tech support scams were by far the most widely reported type of EFE, with the next most common type of scam, personal data breaches, being reported less than half as often.
  • While tech support scams were reported most often, investment scams were the most costly type of EFE in 2023, costing older victims more than $1.2 billion.

While the numbers in the IC3 Report were lower than those in FinCEN’s 2024 Analysis, recall that FinCEN’s analysis studied SAR filings, while the IC3 Report studied complaints of actual fraud (and, as stated previously, most victims do not file reports). 

FinCEN’s reminder – especially as accentuated by its 2024 Analysis and the IC3 Report – underscores the costly and growing problem EFE poses.  In issuing the 2024 Analysis and its June 2022 EFE Advisory (which we blogged on here), FinCEN has made it abundantly clear that it not only expects FIs to report EFE, but also to protect the elderly against scams.  To that end, in addition to identifying and reporting EFE, FIs should develop, implement and maintain internal protocols and procedures for protecting elder account holders.

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The Financial Crimes Enforcement Network (“FinCEN”) recently issued a Financial Trend Analysis (“Analysis”) focusing on patterns and trends identified in Bank Secrecy Act (“BSA”) data linked to Elder Financial Exploitation (“EFE”) involving scams or theft perpetrated against older adults.

The Analysis is a follow up to FinCEN’s June 2022 EFE Advisory (“2022 Advisory”). The Analysis reviews BSA reports filed between June 15, 2022 and June 15, 2023 that either used the key term referenced in the 2022 Advisory (“EFE FIN-2022-A002”) or checked “Elder Financial Exploitation” as a suspicious activity type.  In its 2022 Advisory, FinCEN warned financial institutions (“FIs”) about the rising trend of EFE, which FinCEN defines as “the illegal or improper use of an older adult’s funds, property, or assets, and is often perpetrated either through theft or scams.” The 2022 Advisory identified 12 “behavioral” and 12 “financial” red flags to help FIs detect, prevent, and report suspicious activity connected to EFE. Additionally, FinCEN recommended EFE victims file incident reports to the FBI’s Internet Crime Complaint Center (IC3) and the Federal Trade Commission. Consistent with a risk-based approach to BSA compliance, FinCEN encouraged FIs to perform additional due diligence where appropriate.

Continue Reading FinCEN Issues Analysis of Increasing Elder Financial Exploitation

On June 15, FinCEN issued an Advisory on Elder Financial Exploitation (“Advisory”) to warn financial institutions about the rising trend of elder financial exploitation (“EFE”), which FinCEN defines as “the illegal or improper use of an older adult’s funds, property, or assets, and is often perpetrated either through theft or scams.”  The Advisory is detailed.  It highlights new EFE typologies and potential red flags and builds upon a related advisory issued in 2011.  It also offers tips on Suspicious Activity Report (“SAR”) filings and describes other resources available to fight EFE.

Continue Reading FinCEN Warns Against Elder Financial Exploitation

On September 8, 2023, the Financial Crimes Enforcement Network (“FinCEN”) released an alert regarding a notorious virtual currency scam called “pig butchering,” because, unfortunately, it resembles the “fattening a hog before slaughter.” These scams are primarily perpetrated by criminal organizations in Southeast Asia where these scams are also called “Sha Zhu Pan.”

The unwitting victims are the so-called “pigs,” who, according to various U.S. law enforcement sources, have lost billions of dollars to this scam. Unfortunately, some victims have liquidated tax-advantaged accounts or taken out home equity lines of credit or second mortgages to purchase virtual currency, as part of falling victim to these scams. The alert highlights that pig butchering is linked to fraud and cybercrime, two of FinCEN’s stated national priorities.

As we discuss, FinCEN’s alert provides 15 “red flags” for financial institutions (“FIs”) to consider when attempting to detect, prevent and report potential suspicious activity relating to such scams.  These “red flags” may serve not only to put FIs on guard for potential Suspicious Activity Report (“SAR”) filings under the Bank Secrecy Act (“BSA”), but they also may serve as considerations for FIs to try to detect and stop such activity, in order to cut off potential related civil suits by victim customers who may blame a FI for purportedly “allowing” the scam to occur.

Continue Reading “Pig Butchering”: FinCEN Issues Alert on Virtual Currency Scam

Testimony Supports Bill Requiring States to Collect Beneficial Ownership Information at Entity Formation

As we have blogged, the proposed Corporate Transparency Act of 2019 (the “Act”) seeks to ensure that persons who form legal entities in the U.S. disclose the beneficial owners of those entities. Specifically, the Act would amend the Bank Secrecy Act (“BSA”) to compel the Secretary of Treasury to set minimum standards for state incorporation practices. Thus, applicants forming a corporation or LLC would be required to report beneficial ownership information directly to FinCEN, and to continuously update such information.

If passed, the Act would build significantly upon FinCEN’s May 11, 2018 regulation regarding beneficial ownership (“the BO Rule,” about which we blog frequently and have provided practical tips for compliance here and here). Very generally, the BO Rule requires covered financial institutions to identify and verify the identities of the beneficial owners of legal entity customers at account opening. The issue of beneficial ownership is at the heart of current global anti-money laundering efforts to enhance the transparency of financial transactions.

On May 21, the U.S. Senate Committee on Banking, Housing and Urban Affairs, held a hearing entitled: “Combating Illicit Financing by Anonymous Shell Companies Through the Collection of Beneficial Ownership Information.” This hearing, which provided fuel for passage of the Act, featured the exact same trio of speakers who had appeared before the Committee during a November 2018 hearing on “Combating Money Laundering and Other Forms of Illicit Finance: Regulator and Law Enforcement Perspectives on Reform,” which pertained to a broader set of potential changes to the BSA. The speakers were:

  • Grovetta Gardineer, Senior Deputy Comptroller for Bank Supervision Policy and Community Affairs at the Office of the Comptroller of the Currency (“OCC”) (written remarks here)
  • Kenneth A. Blanco, Director of FinCEN (written remarks here); and
  • Steven D’Antuono, Acting Deputy Assistant Director of the FBI (written remarks here).

Unlike the broader November 2018 hearing, which featured some distinct tensions between certain positions of the OCC and those of FinCEN and the FBI, this hearing reflected close alignment amongst the speakers. Every speaker stressed the advantages to be reaped by law enforcement, regulators and the public if a national database of beneficial owners was required and created. Only the OCC acknowledged the need to consider the issue and sometimes competing concern of the regulatory burden imposed on financial institutions by the current BSA/AML regime, and even the OCC seemed to assume that a national database on beneficial ownership would represent only a boon to financial institutions, as opposed to yet more data – however helpful – to be absorbed and acted upon to the satisfaction of regulators. None of the speakers addressed some of the potential ambiguities and problems inherent in the current language of the Act, such as the fact that the Act lacks precision and fails to define the critical terms “exercises substantial control” or “substantial interest,” both of which drive the determination of who represents a beneficial owner. Continue Reading Senate Committee Hears from OCC, FinCEN and FBI on Risks Posed by Anonymous Corporate Structures