Reported by Kristen E. Larson, Beth Moskow-Schnoll & Peter D. Hardy

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.

Reports of EFE are significant, and increasing.  In the Analysis, FinCEN identified 155,415 relevant BSA filings over this period, reporting approximately $27 billion in EFE-related suspicious activity.  Further, FinCEN continues to receive EFE BSA reports, and has received on average 15,993 reports per month between June 15, 2023 and January 15, 2024.

Key findings from the Analysis include:

• Banks filed 72% of all EFE-related BSA filings;
• 80% of EFE-related BSA filings involve scams (the transfer of money to a stranger or imposter for a promised benefit that the older adult does not receive).  Most elder scam reports referenced “account takeover” by an unknown perpetrator where fraudsters relied on unsophisticated means to steal the funds;
• 20% of EFE-related BSA filings involve theft (a trusted person steals an older adult’s assets, funds, or income).  Unfortunately, 40% of elder theft reports named the elder adult’s children as the perpetrators; and
• Perpetrators mostly rely on unsophisticated means to steal funds that minimize direct contact with FI employees, including previously compromised usernames and/or passwords, guessing passwords, or phishing emails that elicit replies containing sensitive information.

As stated above, banks filed the vast majority of EFE-related BSA filings, followed by money services businesses (“MSBs”), credit unions and securities/futures institutions.  Within MSBs, virtual asset service providers accounted for 42% of the filings.

For elder theft, filers report an average suspicious activity amount of $98,863 and a median amount of $23,762.  For elder scams, filers reported an average suspicious activity amount of $129,483 and a median amount of $33,499.

Although methods of elder theft varied, they generally relied on cash withdrawals, card transactions, online bill pay, and funds transfers made for the abuser’s benefit, while making little effort to obfuscate the transactions.  The Analysis provides that in elder scams, money was most commonly transmitted through checks and domestic wires.  Further, “[p]erpetrators of both EFE scams and theft utilize methods of siphoning funds that avoid direct contact with depository institutions or MSB personnel[,]” who “would likely identify EFE activity more frequently if victims or perpetrators conducted transactions in person, and presumably not permit the requested transactions.”

FinCEN’s manual review of the filings indicated perpetrators used the following scams: impersonation (8%), romance scams (9%), tech support (10%), account takeover (22%), scam unidentified (23%), and 41 other scam types (28%).

Read full report: https://www.consumerfinancemonitor.com/2024/05/02/fincen-issues-analysis-of-increasing-elder-financial-exploitation/