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Elder Financial Exploitation: Why it Occurs, How it Occurs, and Red Flag Indicators for Financial Institutions, Family, and Friends

Elder financial exploitation is the most common and least understood form of elder abuse.  Billions of dollars annually are stolen or unlawfully converted from elders and vulnerable adults.  It is critical to timely prevent, detect, and report any suspected financial exploitation.  The crime is predatory in nature as it is often family, friends, neighbors, professional service providers (i.e., attorneys, investment advisors, etc.), health care providers, or other professionals that abuse positions of trust or power for monetary gain.

Two common forms of elder financial exploitation exist: 1) Cybercrime and resulting fraud or scams which have increased exponentially during the Covid-19 pandemic and 2) Violations/abuse of trust. Elders are specifically targeted because of the natural physical, mental, and emotional decline which inevitably occurs in the aging process combined with the fact that elders have amassed the highest percentage of owned assets and median net worth in the nation.   As a result, elders are an ideal, vulnerable target for predatory friends, family, or professionals that seek a relatively easy pay day by manipulating an otherwise trusting elder or vulnerable adult. If financial exploitation is a concern in a client relationship, adding a trusted third-party contact should be considered as a protective measure, which is encouraged by FINRA Regulation 4512.

FSTC takes the threat of elder financial exploitation very seriously and conducts annual training so that the issue remains in focus.  An internal risk management and reporting structure exists to detect, prevent, monitor, and/or report any suspected elder financial exploitation (reasonable basis in good faith standard) to the appropriate State Departments of Health and Safety, State Departments of Justice, local law enforcement, and federal government (i.e., Suspicious Activity Report with Department of Treasury), as applicable.  FSTC is typically a mandatory reporter as a state chartered, limited purpose trust company but will report suspected abuse even when voluntary to protect any elder or vulnerable adult.  Reports typically must be filed in the state where the elder resides with its local departments and agencies.  Time is of the essence to mitigate any damage or loss so oral reports may be made followed up with a written report immediately thereafter, as necessary.  Furthermore, transactions may be held for a period of time under certain circumstances as an additional protective mechanism.

Under Delaware law, an elder is defined as anyone over the age of 62 (or any person aged 60 or older) who is experiencing the infirmities of advanced age, organic brain damage, physical/mental/emotional dysfunction, or to the extent that one cannot adequately care for oneself.  It is important to note that Delaware protects vulnerable adults as well, including those individuals with special needs.

Financial exploitation means the illegal or improper use, control, or withholding of property, income, resources, or trust funds by any person or entity for the advantage of anyone other than the elder or vulnerable adult.  Financial exploitation includes, but is not limited to 1) deception, intimidation, or undue influence; 2) breach of fiduciary duty; and 3) obtaining or using property, income, resources, or trust funds when one knows or should know that the elder or vulnerable adult is incapable of consent to its use.

Elder financial exploitation has become so pervasive that the United States Treasury (FINCEN) has released relevant guidance for financial institutions to assist in monitoring, preventing, detecting, and reporting any suspected abuse.  Financial institutions are in a unique position to help our elderly loved ones when funds flow through the institution. Transactions may be suspicious or unusual and the following behavior alerts to potential exploitation when such is detected through regular monitoring: 1) erratic, unusual changes to banking patterns or activity that does not meet expected account activity; 2) frequent, large withdrawals occur which did not happen previously; 3) sudden insufficient funds activity is present; 4) uncharacteristic non-payment of services occurs when bills are always timely paid; 5) inconsistent disbursements occur when considering the elder’s background and normal, known expenses; 6) uncharacteristic attempts to wire large sums of money or transfer large sums internationally occur; 7) withdrawals and transfers the elder cannot explain or do not make reasonable, economic sense may be present; 8) activity occurs in previously inactive accounts; 9) authorized signer is added to an account and suspicious activity occurs shortly thereafter; and 10) accounts are closed without regards to fees or penalties.

Additional suspicious indicators can be present upon interaction with a client or caregiver.  These unusual activity indicators show that something is amiss when the caregiver or another individual insists upon inserting herself into the relationship.  These indicators show a present impact on the elder and careful attention should be paid if alerted to any of the following: 1) caregiver/individual shows excessive interest in elder’s finances or assets; 2) individual doesn’t allow the elder to speak for herself or is reluctant to leave the elder’s side during conversations; 3) elder shows unusual degree of fear or submissiveness towards the caregiver or expresses fears of eviction or losing nursing home placement if the money is not received; 4) financial institution is unable to speak with the elder after multiple attempts or such communication is controlled by the third party; 5) a new individual begins to conduct transactions on the elders behalf without the proper documentation or is reluctant to provide such documentation; 6) elder’s financial  management suddenly changes such as a new Power of Attorney to different individual or family member; 7) returned mail and stale dated checks occur when sent to the elder’s address; and 8) the elder lacks knowledge about her financial status, is suddenly reluctant to discuss financial matters, or seems confused about the situation.

Other suspicious activity indicators exist which can assist family and friends in detecting or preventing financial exploitation of their loved one.   Often speaking with the elder or vulnerable adult about these situations, or the designated trusted contact, can help provide additional clarity.  Be alert and discuss with the relevant parties anytime you suspect the following: 1) elder begins to spend substantial sums of money, which did not occur previously or is contrary to overall estate plans; 2) large, unexplained loans or a sudden increase in debt or liabilities or using a trust as collateral for a line of credit, especially considering elders are unlikely to take on substantial debt at this stage of life; 3) changes or additions to a will or trust, especially if incapacitated; 4) frequent checks are written to the same individual/entity/charity or are out of order; 5) service provider or caregiver is paid more often than expected or in an amount considered unreasonable or unusual given the circumstances; 6) elder’s financial situation suddenly changes drastically; 7) unexplained sales or transfers of assets occurs to a third party, known or unknown; 8) unpaid bills, eviction notices, foreclosure notices or utility shut offs occur when the elder otherwise has the funds to pay; 9) elder is unaware of or does not understand financial arrangements made on her behalf; 10) elder expresses excitement about winning a sweepstakes, contest, or lottery; and 11) elder reports financial exploitation or physical, mental, or emotional abuse.

It is important to move quickly when elder financial exploitation is suspected and having the pertinent contacts on hand certainly assists in this endeavor.  In Delaware, the important contacts are 1) the DE Adult Protective Services (302-255-9040); 2) the DE Department of Justice, Investor Protection Unit (302-577-8424); 3) the DE Long Term Care Ombudsman (nursing homes, 302-857-5006); and 4) the DE Department of Health & Social Services, Aging and Disability Research Center (ADRC) (1-800-223-9074).  To file a written, confidential report with the DE Department of Justice, Investor Protection Unit, download the IPU Report of Suspicious Financial Exploitation at with the completed report emailed to (Attorney General, IPU Unit) and Delaware


For more information, please contact:
Michael McElwee, Esquire
VP/Chief Compliance Officer, AML/OFAC Officer

The posts expressed are views of FSTC and are not intended as advice or recommendations. For informational purposes only.  FSTC does not offer tax, legal, or investment advice, professional counsel should be sought for tax or legal advice.


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