Banking and Finance Law Daily CFPB advises FIs to report suspected elder financial abuse
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Thursday, July 18, 2019

CFPB advises FIs to report suspected elder financial abuse

By Katalina M. Bianco, J.D.

The CFPB has updated an advisory on financial abuse of the elderly to urge financial institutions to report suspected abuse to authorities.

The Consumer Financial Protection Bureau has published an updated advisory urging financial institutions to report any suspected elder financial exploitation (EFE) to the appropriate local, state, and federal authorities. The original advisory, Advisory and Recommendations for Financial Institutions on Preventing and Responding to Elder Financial Exploitation, was released in 2016 (see Banking and Finance Law Daily, March 23, 2016). The updated advisory also provides new information on reporting, based on federal and state legislative changes, and highlights findings from the CFPB’s 2019 analysis of Suspicious Activity Reports (SARs) on EFE (see Banking and Finance Law Daily, Feb. 28, 2019).

"The Bureau is renewing its efforts to alert banks and credit unions to elder financial exploitation as they are uniquely positioned to detect that an older account holder has been targeted or victimized, and to take action," said CFPB Director Kathleen L. Kraninger.

The Bureau notes in the updated advisory that the recommendations in the 2016 advisory "remain vital today." The 2016 advisory provided six categories of voluntary best practices intended to help financial institutions prevent EFE and take effective action when it occurs. One such recommended category is the focus of the updated advisory: banks and credit unions should file a Suspicious Activity Report with the federal government when they suspect EFE.

The CFPB recommends that financial institutions report suspected EFE to appropriate authorities regardless of whether reporting is mandatory or voluntary under state or federal law. The Bureau refers to 2013 guidance issued by eight federal regulatory agencies with the authority to enforce the privacy provisions of the Gramm-Leach-Bliley Act. The guidance, Interagency Guidance on Privacy Laws and Reporting Financial Abuse of Older Adults, clarifies that reporting financial abuse of older adults to appropriate authorities generally does not violate the privacy provisions of the GLBA.

State requirements. At the time of the 2016 advisory, approximately half the states mandated that financial institutions report suspected EFE to Adult Protective Services or law enforcement. The CFPB recommended at that time that financial institutions determine whether and when state law mandates reporting by the institution. Under state mandatory reporting laws, proof of EFE generally is not required, and a reasonable suspicion of EFE triggers a duty to report. As of April 2019, 26 states and the District of Columbia mandate reporting of suspected EFE by financial institutions or specified financial professionals. The update includes a chart identifying state reporting requirements. The Bureau notes that since 2016, one state, Ohio, added a broad mandatory reporting requirement for financial institutions and financial professionals.

Senior Safe Act. The federal Senior Safe Act, which became effective in June 2018, provides that a financial institution is not liable for disclosing suspected EFE to covered agencies if the institution has trained its employees on identifying EFE. The Act applies to depository institutions, credit unions, investment advisers, broker-dealers, insurance companies, insurance agencies, insurance advisers, and transfer agents.

The Act also provides individual immunity for persons who have served as a supervisor or in a compliance or legal capacity. To establish immunity, the report must be made in good faith and with reasonable care and the employee must have received appropriate training on how to identify and report EFE. The Senior Safe Act does not mandate either reporting or training but makes the safe harbor contingent on the financial institution having provided training to employees. It does not preempt state law unless the Senior Safe Act provides greater protection against liability to a covered individual or institution.

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