The NCUA recently released a statement made in cooperation with five federal financial regulatory agencies, the Financial Crimes Enforcement Network (FinCEN), and state regulators to mitigate elder financial exploitation.

Fraud involving elder citizens has become a major issue with potentially billions of dollars lost. According to a FinCEN trend analysis of Bank Secrecy Act reports over a one-year period ending June 2023, “about $27 billion in reported suspicious activity was linked to elder financial exploitation.”

And while a large portion of the fraud involves family members or caregivers, a slight majority of perpetrators are strangers. According to a 2019 CFPB report, elder abuse results on average in losses of $32,000, and less than one-third are reported to law enforcement.

One glimmer of hope from the report is that crimes are committed, on average, over a period of 120 days. This presents an opportunity for credit unions and other financial institutions to detect abnormal activity and intervene earlier.

To combat this growing trend and major financial concern, credit unions can take steps to improve education, outreach, and counter-measures. The interagency statement identified nine key areas where financial institutions can improve:

Improved governance and oversight

Among the advice given, credit unions should consider enhancing “risk-based policies, internal controls, employee codes of conduct, ongoing transaction monitoring practices, and complaint processes” to mitigate elder financial exploitation. In particular, improving cross-team communication of suspicious activity, BSA compliance, lending, and fraud prevention to ensure the left hand knows what the right hand is doing.

Better training staff to recognize warning signs

A well-trained employee can be one of the best lines of defense against elder financial exploitation. As such, credit unions would be advised to implement ongoing education programs aimed at helping broaden the staff’s knowledge of the different types of elder abuse and their respective red flags, and creating clear instructions for what to do in the event of suspected abuse.

Using transaction holds and disbursement delays to slop the flow of money (where appropriate)

A somewhat touchier method is to make use of transaction holds and disbursement delays to slow the movement of money when exploitation is suspected. It’s touchier insofar as credit unions need to navigate not only the applicable laws that dictate when and for how long these tactics can be employed, but also false positives and cranky members.

Using trusted contacts

A softer method may be to establish trusted contacts with account holders that might be contacted in the event of suspected exploitation. This might be a family member, attorney, accountant, or other individual who the member authorizes the credit union to contact if they themselves cannot be reached. Just keep in mind your credit union’s rules for viewing account information, and keep in mind that a large portion of abuse occurs at the hands of known individuals.

Filing suspicious activity reports (SAR) sooner

Credit unions are required to fill out and submit suspicious activity reports within 30 days, but they don’t have to use that whole time. On the advice of the interagency statement, financial institutions should work towards turning those reports around sooner. They also suggest that while there is a dollar amount that triggers a mandatory report, credit unions should not be shy of optionally submitting reports of suspicious activity that falls under the specified dollar amount.

Reporting to authorities when suspected elder abuse has occurred and providing records

Per the statement, “the privacy provisions of the Gramm-Leach-Bliley Act generally do not prevent financial institutions from reporting elder financial exploitation to appropriate local, state, or federal agencies.” That means that credit unions can report instances of suspected abused to the proper authorities as earlier reporting increases the chances of recovery funds.

Additionally, where consistent with the law, credit unions should cooperate with law enforcement agencies and provide supporting documentation as appropriate.

Working with fraud prevention and response networks

All of the above requires a great deal of thought, effort, and coordination. Thankfully, there are elder fraud prevention and response networks that credit unions can work with that specialize in connecting all the dots. These networks can help with training as well as working with law enforcement and the credit union to manage cases.

And increasing awareness and consumer education 

Lastly, and possibly the most important, is consumer outreach. Knowledge is power, so educating members on typical fraud tactics, scams, and the newest tools they may be using will help reduce the risk. If members can recognize a potential scam before they have been drawn into it, they will be far less likely to find themselves in a compromising situation resulting in loss of finances.

All of the methods the agencies laid out come with their own caveats. There is still the balancing act of not overstepping and breaking laws pertaining to age discrimination and what not. For more detailed recommendations, including what to avoid, read the full interagency statement.