Compliance Update with Amy K

​An in-depth look at the FinCEN Advisory on rising elder financial exploitation; and the CFPB is looking for information on relationship banking and customer service. 

FinCEN Advisory – Elder Financial Exploitation
The Financial Crimes Enforcement Network (FinCEN) issued an advisory earlier this week alerting financial institutions to the rising trend of elder financial exploitation (EFE). FinCEN Advisory, FIN-2022-A002, can be found here.

As discussed in the advisory, “According to the U.S. Department of Justice, elder abuse, which includes EFE among other forms of abuse, affects at least 10 percent of older adults each year in the United States, with millions of older adults losing more than $3 billion to financial fraud annually as of 2019. Despite the fact that EFE is the most common form of elder abuse, the majority of incidents go unidentified and unreported as victims may choose not to come forward out of fear, embarrassment, or lack of resources.”

Credit unions, and other financial institutions, are uniquely situated to detect possible financial exploitation through their relationships with older customers. They therefore play a critical role in helping to identify, prevent, and report EFE to law enforcement and their state-based Adult Protective Services.

The advisory discusses trends of EFE. Elder theft is generally perpetrated by known and trusted individuals of the older adult. Scams, which can disproportionally affect older adults, frequently involve fraudsters, often located outside of the United States, with no known relationship to their victims. Victims of elder financial exploitation are often re-victimized.

Be sure to read and review the advisory in its entirety with staff as it discusses common elder scam typologies and behavioral and financial red flags, a few of these red flags include:

• An older customer with known physical, emotional, and cognitive impairment has unexplainable or unusual account activity.
• An older customer appears distressed, submissive, fearful, anxious to follow others’ directions related to their financial accounts, or unable to answer basic questions about account activity.
• During a transaction, an older customer appears to be taking direction from someone with whom they are speaking on a cell phone, and the older customer seems nervous, leery, or unwilling to hang up.
• An older customer is agitated or frenzied about the need to send money immediately in the face of a purported emergency of a loved one, but the money would be sent to the account of a seemingly unconnected third-party business or individual.
• Dormant accounts with large balances begin to show constant withdrawals.
• An older customer purchases large numbers of gift cards or prepaid access cards.
• An older customer sends multiple checks or wire transfers with descriptors in the memo line such as “tech support services,” “winnings,” or “taxes.”
• An older customer receives and transfers money interstate or abroad to recipients with whom they have no in-person relationship, and the explanation seems suspicious or indicative of a scam or money mule scheme.
• Debit transactions that are inconsistent for the older customer.
• Uncharacteristic attempts to wire large sums of money.

 
Specific SAR filing instruction - FinCEN requests that financial institutions reference the advisory by including “EFE FIN-2022-A002” in SAR field 2 (“Filing Institution Note to FinCEN”) and mark the check box for elder financial exploitation.

A reminder was also included in the advisory that, “the narrative section of the report is critical to understanding the nature and circumstances of the suspicious activity. The care with which the narrative is completed may determine whether the described activity and its possible criminal nature are clearly understood by investigators. Filers must provide a clear, complete, and concise description of the activity, including what was unusual or irregular that caused suspicion.”

The advisory includes tips on what information would be helpful to include when filing a SAR: 

• Report on how perpetrators of EFE communicated with and targeted older adult.
• Include any and all available information relating to the account and locations involved in the reported activity, identifying information and descriptions of any legal entities or arrangements involved and associated beneficial owners, and any information about related persons or entities involved in the activity.
• Financial institutions also should provide any and all available information regarding other domestic and foreign financial institutions involved in the activity.
• Provide a statement in the narrative documenting the age and location (county/city) of the target or victim. Provide details about the reporting entity’s response, e.g., whether accounts were closed, whether the person was warned that transactions appear to involve fraud, if the person was not permitted to conduct new transactions, etc.
• Provide details about the amounts involved and whether any amounts were refunded to the older customer (as of the submission date of the SAR).
• Reference supporting documentation, including any photos or video footage, in the narrative.
• Cross-report the circumstances leading to the filing of EFE SARs directly to local law enforcement if there is any indication that a) a crime may have been committed and/or b) the older adult may still be at risk for victimization by the suspected abuser. Filers should note that the filing of a SAR is not a substitute for any requirement in a given state to report suspected EFE to law enforcement and Adult Protective Services.
• Take advantage of the law enforcement contact field to indicate if the suspicious activity was also reported to law enforcement or Adult Protective Services, as well as the name and phone number of the contact person.

In addition to filing a SAR, FinCEN recommends that financial institutions refer their older customers who may be victims of EFE to the Department of Justice’s National Elder Fraud Hotline at 833-FRAUD-11 or 833-372-8311 for assistance with reporting suspected fraud to the appropriate government agencies. For educational resources on EFE and scams targeting older adults, please see the CFPB’s Office for Older Americans.

CFPB – RFI Relationship Banking and Customer Service
The Consumer Financial Protection Bureau (CFPB) has issued a Request for Information (RFI) regarding relationship banking and customer service. This RFI can be found here and is focused on how customers and members can get better customer service at the big banks and credit unions – over $10 billion. Information is being sought on what customer service obstacles consumers face in the banking market, and specifically, what information would be helpful for consumers to obtain from depository institutions.

As explained by the CFPB, “Relationship banking is an aspirational model of banking that meets its customers’ needs through strong customer service, responsiveness, and care. Relationship banking can play a critical role in helping to foster fair, transparent, and competitive marketplaces.”

While the RFI is focused on large financial institutions, it does make the note that “the CFPB endeavors to help institutions of all sizes foster an inclusive relationship banking model that meets consumers’ reasonable expectations of high levels of customer service and enables consumers to hold financial institutions accountable when they encounter problems.”

The CFPB also discussed challenges for rural customers, remarking that “Rural customers are more likely to visit smaller banks or credit unions, but face decreased banking access due to “[t]rends in banking consolidation, [which] may be a contributing factor to the prevalence of rural banking deserts.” Rural customers rely on smaller banks and the relationship banking they offer, with local knowledge and long-standing relationships, to help maintain the “civic fabric of rural communities.”

The RFI asks for feedback on a number of questions, a few of these questions include:

• What types of information do consumers request from their depository institution? How are consumers using the information?
• What types of information do consumers request from their depository institution, but are often unable to obtain?
• How are customer service representatives evaluated and compensated, and how might compensation structure and incentives impact the service provided?
• What unique customer service obstacles do immigrants, rural communities, or older consumers experience?
• What are typical call wait times? How often are calls dropped or disconnected?
• Are there any fees associated with customer service or requests for information?

 
As always, DakCU members may contact Amy Kleinschmit with any compliance related questions. 

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