Suspicious Activity Reports on Elder Financial Exploitation: Issues and Trends —

>>Coordinator: Welcome and thank you for
standing by. All participants will be on a listen-only
mode for the duration of the call. Todayís call is also being recorded. If you have any objections, you may disconnect
at this time. Questions will be taken throughout the call
via WebEx. To open the QA box, please click on the blue
circle with the question mark located at the bottom of the screen. At this time I would now like to turn the
conference over to your host, Naomi Karp. Thank you. You may begin.>>Naomi Karp: Thank you so much. Hi, everyone. Thanks so much for participating in todayís
CFPB Webinar, Elder Financial Exploitation Suspicious Activity Report, Issues and Trends. Before we get going I just wanted to let you
know that we plan on sending you the slides in the coming days. In addition, weíll be archiving the Webinar
and weíll send you a link to that at a later point so you can share that with any colleagues
you may have who couldnít join us today. My name is Naomi Karp and Iím a Senior Policy
Analyst in the CFPBís Office for Older Americans. Iím joined by my colleague Hector Ortiz,
also a Senior Policy Analyst in the Bureauís Office for Older Americans. As you heard the operator say, we plan on
taking some questions at the end of the Webinar so just keep them coming during the Webinar
and we will answer them when we get towards the end. So this is our Bureau disclaimer and I just
wanted to mention that any opinions or views that Hector or I may share during this Webinar
are our own and may not represent the views of the CFPB. In case you werenít familiar with us, the
CFPB or Consumer Financial Protection Bureau is a federal financial regulatory agency. We regulate the offering and provision of
consumer financial products and services under the federal consumer financial laws. We also have a robust educational component
empowering consumers to make better-informed financial decisions. And to tell you a little bit about our office,
the Office of Financial Protection for Older Americans is a statutorily-mandated office
created in the Dodd-Frank Act. We engage in research, policy and educational
initiatives that fall into what I like to call two buckets. The first is helping to protect older consumers
from financial harm and that includes our work to combat elder financial exploitation
and secondly we help older consumers make sound financial decisions as they age. I would encourage you to check out our landing
page that you see on the slide here that will take you to lots of great tools and resources
that our office has created so Iím going to give you a little bit of background on
elder financial exploitation, on suspicious activity reports and the work that weíre
doing here and then weíll proceed to tell you about our recent analysis and research
report. So Iím sure a lot of you are very familiar
with the elder financial exploitation but just to get us on the same page, there are
many different definitions of elder financial exploitation that you might find in state
law, federal law and other places. Weíre using a simple one, the illegal or
improper use of an older personís funds, property or assets. Thereís a whole range of perpetrators who
create this devastating problem from the offshore scammer to those closest to the older adults
such as family members or caregivers. Studies show the tip of the iceberg phenomenon
that only a very small fraction of the incidents are actually reported to authorities. One study showed that only one in 44 cases
was reported to an entity that could provide services to evict and the estimates of the
annual dollar losses vary greatly from $2.9 billion to over $36 billion so now letís
just talk a little bit about suspicious activity reports or SARs. The Federal Bank Secrecy Act mandates that
financial institutions report suspicious activity that might indicate some financial criminal
activity to FINCEN or the Financial Crimes Enforcement Network which is part of the U.S.
Department of the Treasury. SAR filers, those financial institutions include
a great array including banks, credit unions, money services businesses or MSBs that do
money transfers or wires, broker-dealers and quite a few others. Access to SARs and even knowledge of the existence
of the SAR is generally limited to law enforcement and to certain financial regulatory agencies. Law enforcement can use the SAR information
to trigger new investigations, to support ongoing investigations and to identify subject
who they might want to investigate further and now letís turn specifically to elder
financial exploitation SARs. In 2011 FINCEN put-out an advisory noting
that SARs are a valuable avenue for financial institutions to report elder financial exploitation
and in that advisory they talked about some basic red flags that could help financial
institutions spot elder financial exploitation and those include transactional red flags. Those would be things like frequent large
withdrawals or uncharacteristic attempts to wire large sums of money. They also could be behavioral flags that someone
like a bank teller or someone on the front line might notice. For example an older person comes into a bank
with a caregiver and they look fearful or they are acting submissive. That would be a behavioral red flag. In 2013 two years later FINCEN introduced
electronic filing of the SARs and on the electronic form they included a designated category or
checkbox for elder financial exploitation. Also I wanted to mention that in FINCENís
2011 advisory they did not specify an age definition for elder financial exploitation
so itís actually been up to financial institutions to decide that when they file SARs so most
of the findings that weíll present today are in this report. You see a copy of the cover on the screen
and you see a link and you donít need to scribble-down that URL. We will be sending you the deck but we do
have a number of additional data points that weíll present today so stay tuned for even
more findings of interest so now Iím going to turn it over to Hector to talk a little
bit about the methodology of our studies.>>Hector Ortiz: Thank you, Naomi and good
afternoon, everyone. Before I delve into the results of the study,
I would like to share with you some details about the methodology using our study. To develop this report specifically, we analyzed
a limited number of structured data fields for whole EFE SARs, those elder financial
exploitation suspicious activity reports filed from April 2013 to December of 2017. That was about 185,000 SARs. EFE SARs were those in which the filers selected
the elder financial exploitation checkbox or selected the other category under the suspicious
activity category and wrote some variation of the word elder in the open-text field such
as elder abuse or elder financial abuse. In addition we read full SAR transcripts of
the representative sample of 1051 SARs in analyzing numerous elements that allowed us
to make findings about the patterns, issues and amounts involved. Throughout the project we worked very closely
with FINCEN staff in this project and you will find more detailed information about
the methodology in Appendix A of the report. Iíll be briefly discussing some of the trends
that we found in terms of elder financial exploitation SAR submissions. This slide shows that EFE SARs filings quadrupled
from 2013 to 2017 from about 1300 SARs per month in 2013 to 5300 SARs per month in 2017. This was a much greater growth than the overall
growth rate for all SARs which was only 40%. The incidents reported in this EFE SARs likely
accounts for a tiny fraction of all the incidents of EFE elder financial exploitation in a given
year perhaps 2%. In fact, based on one of the lowest estimated
prevalence rates, there were 3.5 million cases of elder financial abuse in 2017 yet there
were only 53,000 SARs filed on elder financial abuse in 2017. Another key trend that we found is that MSB
have filed an increasing share of the elder financial exploitation SARs since 2013. In 2016 they surpassed filing by depository
institutions such as banks and credit unions and they accounted for 58% of all EFE SARs
in 2017. Depository institution filings continued to
increase as well through this period even though their share diminished. Filings by other entities have remained relatively
a constant share of all EFEís filed 2013. Other entities here we refer to casinos, broker-dealers,
insurance companies, mutual funds, loan or finance companies among others. Now I will share what we have learned about
the amounts reported in the SARs. In total the amount involved between 2013
and 2017 was approximately $6 billion. In this graph you can see a clear pattern
of increasing total amounts by year. In 2017 specifically the amount involved was
$1.7 billion. Note that this amount includes monetary losses
to both older adults and filing institutions as well as attempts where they may have not
been an actual loss. We made a few adjustments. First we excluded significant outliers, those
who are EFE SARs in the highest 1% by dollar amount per year. Some of these SARs were in the billions of
dollars, often a fake check or an attempt to steal from an account that did not have
that money. These SARs had an effect on the observation
and the ability to analyze trends. In addition if we had reported those SARs
we will have created a risk of disclosure. We did however include the amounts in continuing
activity SARs. These SARs are specific SARs that report that
a given activity appeared to be ongoing. If you take a quick look at a SAR transcript
and you have access to that, the total amount involved is the amount that you will immediately
notice in the SAR but this is the importance of creating each SAR to provide context to
this amount. The narratives tell you whether the entire
amount reported was a loss and to whom. They will also tell you if it was only an
attempt or both. While it is important to note that often they
donít provide the specific breakdown of loss and attempt. In about 6% of those it was unclear. After reading a representative sample of the
SAR and analyzing the narrative, we learn something very important and that is that
monetary losses were both common and substantial. Most SARs in fact nearly 80% involve an actual
monetary loss. In SARs where the entire amount reported was
a monetary loss, when the older adult was the one who lost the money, the average loss
was approximately $34,000. In 7% of these SARs the loss exceeded $100,000. In comparison losses to filers were approximately
$17,000 and we found no cases of losses exceeding $100,000. We looked at the age of those who lost money. This graph shows the percent of EFE SARs with
a loss to older adults by age group. As shown, 1/3 of the individuals who lost
money were ages 80 and older, 23% were ages 70 to 79 and as you can see here, in 29% of
the cases the age was unknown. We also examined whether the average loss
varies by age group. This slide shows the average monetary amount
lost by age category. Among adults who lost money, adults ages 70
to 79 had the highest average loss of approximately $45,000. Followed by those ages 80 and older who lost
an average of $39,000. EFE SARs identify a variety of suspects. Half of the EFE SARs identify a stranger either
located in the U.S. or internationally as the suspect. Thirty-six percent were people known to the
older adult. Not shown here is that approximately 14% of
all SARs did not provide enough information to determine the relationship of the suspect
to the targeted older adult. Another important finding to note here and
itís shown in the three light green bars which denote the specific categories of people
known to the older adults and these are a subset of what 36% and as you can see in this
category, the largest category are family members accounting for 25% of all EFE SARs
that involved a known person. As we saw in the previous slide, among the
known prospects family members are the largest categories. When we look specifically at this group of
family members, we find that the child of the targeted older adult often become unsuspected
perpetrators. We also saw in the earlier slide that strangers
are involved in over half of the activities reported in SARs. This graph shows a breakdown of the location
of this stranger suspect. You can see here that while the majority of
the suspects in this SARs are operating internationally, 37% are in the U.S. and 11% are located both
in the US and internationally. We also looked at the losses associated with
this different suspect category. We found that monetary losses were more common
and the amount of losses greater when the older adult knew the suspect then when the
suspects were strangers. In addition the loss is more common and the
amount of losses greater when the suspects were fiduciaries such as agents under a power
of attorney or authorities. Now (the only) will describe some unique patterns
and issues in trends that we found in EFE SARs.>>Naomi Karp: Thanks, Hector. So moving to the first slide in this section,
the type of suspicious activity varies significantly by style or type so in doing our analysis,
we divided the activities described as either scams or non-scams. So SARs related to scams are those where the
filer specifically referred to the activity as a scam or where the filer described the
following: a scheme involving the transfer of money to a stranger for a promised benefit
that the elder adult did not receive. That was our prototype of what a scam was. Of course there were some SARs where the type
of activity was unknown so looking at the different types of filers, when the filer
was a money services business, 69% of the EFE SARs described scams by strangers. In the depository institution filings in contrast,
those involved a whole array of financial crimes. What weíve grouped here is non-scams and
only 26% of the DI SARS involved stranger scams so those non-scams included as theft,
abuse of power of attorney, account takeovers and a whole range of other fraudulent activity. So in the report we didnít just want to give
folks numbers, we wanted to give them a flavor of what we were reading particularly in the
narrative portion of the SARs so we developed four common patterns or prototypical activity
patterns and we want to make it really clear, these are composites based on large numbers
of SARs. None of these are based on any one individual
SAR so first we wanted to talk about scam and romance scams were the most common scam
types that we identified so we included a description of the typical romance scam pattern. Those often begin online and the target tends
to believe that he or she has a love interest who needs money to travel to a rendezvous
or needs money for some other purpose and thatís why theyíre sending you money. Then we had a couple of prototypes involving
non-scams so those often involve exploitation by family members as Hector mentioned or theft
by caregivers and then finally we read many cases where the older adult appeared to be
a money mule either knowingly or unwittingly. So the narrative may describe that this individual
this older adult is receiving money transfer and then is following-up by wiring money as
the person is instructed to a recipient overseas and in some cases the MSB might describe this
pattern as flipping. We actually saw that term in many of the millennial
SARs. This slide is about the type of financial
product used in the EFE SARs so more than half of the EFE SARs involved a money transfer
and it isnít surprising as we saw the share of the SARs filed by MSBs go up. The second most common financial product used
to move funds was a checking or savings account noted in 44% of these SARs and then the percentages
drop down lower for things like credit cards, payday loans, money orders and so forth. So while money transfers were the most common
type of transactions, checking or saving account transactions had the highest monetary losses. The average loss per older adult was $48,300
for EFE SARs involving a checking or savings account versus $32,800 for a money transfer
so hereís one of those items thatís not in the report. We examined the representative sample of SARs
to see whether they indicated red flags that might signal elder financial exploitation. Now we were looking in particular for the
red flags that FINCEN had listed in its 2011 advisory. We found that uncharacteristic attempts to
wire large sums was the most frequent red flag described in the SARs. Financial institutions observed this activity
in 38% of these SARs and again thatís not surprising given that the most common product
was a money transfer. The next two most common red flags were frequent
large withdrawals. We saw that in 21% of these SARs and debit
transactions that were inconsistent for the elder in 10% of the SARs so for each SAR filers
are required to provide the range of dates during which the suspicious activity took
place. The average length of time in our analysis
was about four months. We note on this slide some situations where
the suspicious activity lasts longer than that average time period of four months so
for example where a joint account is involved, itís 230 days. When a family member is the suspect, itís
almost 200 days. When the older adult or when the targeted
older adult has diminished capacity, itís 158 days. And I wanted to make clear that we were able
to identify those cases because the filer either said specifically the person appeared
to have diminished capacity or in the SAR they referred to dementia or Alzheimerís
disease or some other medical condition that would indicate that the person had diminished
capacity to manage finances. Also when the targeted person was age 80 or
older, the activity lasted 134 days on average. So now we want to talk a little bit about
what the SARs indicate about whether the filer reported the suspicious activity directly
to a local, state or federal authority and we found that fewer than 1/3 of the EFE SARs
indicated that the filer reported the suspicious activity directly to an authority such as
law enforcement or adult protective services. So for depository institutions, slightly more
than half of those DI SARS indicated that the DI reported directly to an authority but
only 1% of the MSB SARs indicated that they reported to any authorities so just to be
clear, obviously they all filed SARs. What weíre talking about in direct reporting
to an authority in addition to filing the SAR so we donít know for sure that almost
3/4 didnít report but what we did identify was that they did not say on the SAR that
they did report and they could have done that either by filling-out the law enforcement
contact portion of the SAR or in the narrative portion. And we noted that if financial institution
filers donít notify first responders, those responders are less likely to take action
to help the victim and to prosecute the perpetrator and this in our view was a missed opportunity
so now Iím going to take a few minutes to talk about the implications of our findings
and possible next steps. So clearly I think youíve gotten the idea
by now from hearing all of our statistics that the elder financial suspicious activity
reports indicate that elder financial exploitation is widespread and itís damaging and this
highlights the need for strong interventions by financial institutions, by law enforcement,
by social services, by all of the key stakeholders and some involvement by policymakers. The second point here is the one I just went
over that financial institutions are filing a lot more EFE SARs but in most cases are
not indicating direct reports to law enforcement or APFs. Third, by doing this analysis it really brought
home for us that EFE SARs are useful and until now an untapped resource for monitoring and
measuring elder financial exploitation and such as that indicated that this is an exercise
that might be repeating in the future. Next we found that the types of suspects and
the types of activities reported by MSBs on the one hand and depository institutions on
the other hand differ significantly and this suggested to us that interventions can be
tailored accordingly and if you read the report, we do provide some suggestions about what
some potential interventions could be in the case of an MSB filer versus if depository
institutions and others are involved. And finally we wanted to just emphasize that
law enforcement can mine the database of elder financial exploitation SARs and thereby be
more proactive in investigating cases and bringing more prosecutions. Clearly we saw 185,000 SARs on elder financial
exploitation so thereís a lot there in the data (sets). So again hereís the link to our report and
as mentioned we will be sending-out the deck so you donít need to write it down. We also wanted to flag when you get the deck
a few other initiatives by the CFPB that are related to this report so the first is an
August 2017 joint memorandum that we put-out together with FINCEN and the Department of
the Treasury. This is a brief memorandum that talks about
the importance of collaboration between law enforcement, financial institutions and adult
protective services, talks a little bit about SARs and just have some general thoughts and
observations that the agencies thought it was important to communicate together. Secondly in March of 2016 we published an
advisory and also a longer report with recommendations for financial institutions on preventing and
responding to elder financial exploitation. Thatís not a compliance document, it was
a set of voluntary recommendations and it was addressed primarily to banks and credit
unions. You can find that on our site as well. And finally in September 2013 we released
with seven other federal financial regulatory agencies all 8 agencies had jurisdiction over
the Gramm-Leach-Bliley Act privacy provisions. We put-out interagency guidance stating that
generally financial institutions may report elder financial exploitation through APF law
enforcement or other authorities without worrying about violating the privacy provisions of
the Gramm-Leach-Bliley Act so those are all resources that you can find on our Website. So we hope that youíll stay in touch and
you can visit us at and find all of our resources. We urge you if youíre not on it already to
join our mailing list for news and updates on our resources. We promise we will not drown your inbox. We just send-out key things as we develop
them and you can contact us directly by e-mail at [email protected] and now we will
turn to some questions.>>Hector Ortiz: So Naomi we received a few
basic questions that I think will be helpful to clarify. Some of them are just key concepts. What is an MSB, what is a DI? [Crosstalk]>>Naomi Karp: Okay, so sorry if we used acronyms
but just to clarify so again MSB stands for money services businesses. These are businesses that enable consumers
to transfer money. You might sometimes hear those being referred
to as wires, as remittances so thatís what we mean by an MSB. DI again is depository institution and weíre
talking primarily here about banks and credit unions and there could be other entities that
come under that definition. And just a reminder that those are not the
entirety of the filers. There are a lot of other types of filers that
are mentioned in the Bank Secrecy Act. As Hector mentioned earlier, itís everything
from casinos and insurance companies to broker-dealers, financial advisors, those were all spelled-out
in the Bank Secrecy Act. You can also find a lot of information on
FINCENís Website. They have a lot of directives for filers so
thatís a great source of information.>>Hector Ortiz: Two excellent questions here
about the ability to share information (of SARs) so one is how much can law enforcement
share with APFs about the info that they gather in the SAR and secondly can also filing institution
disclose the filing to family members.>>Naomi Karp: Okay, so the second question
about can a filing institution disclose it to a family member, no, because SARs are highly
secretive and filing institutions are not supposed to disclose their existence. Those are only made available to law enforcement. In fact I believe there are civil and criminal
penalties for unauthorized disclosure of a SAR so thatís something that you want to
be really, really, really careful about. Remind me Hector what was the first part of
that question?>>Hector Ortiz: That the first question has
to do how much info can law enforcement share with APF?>>Naomi Karp: Okay, so I donít think I want
to get totally into the weeds on that but basically the answer is that APF cannot obtain
copies of SARs. I believe that law enforcement should not
even be revealing the existence of a SAR to APF just as they shouldnít be revealing it
to anyone else. If law enforcement opens an investigation
and you know, thereís information they get through an investigation that might not be
covered by the same prohibition but in terms of the SAR itself and the existence of the
SAR, definitely not.>>Hector Ortiz: We also have a question related
to reporting. If someone suspected fraud, could they report
it through a SAR?>>Naomi Karp: So Iím not sure what the someone
is. If itís an individual, no. An individual would not be filing a SAR. An individual would be making a report and
every state in the country has an adult protective services agency. Theyíre structured differently in different
states. Sometimes itís on the state level, sometimes
itís on the county level so individuals can report directly to APFs. They also could report directly to law enforcement. That could be their local law enforcement. It could be a state law enforcement agency
but no, an individual unless itís an employee of a financial institution acting, you know,
in that capacity, an individual would not file a SAR but we do encourage all individuals
to report. I guess the other thing I would want to flag
(in that) an action is that many states have in fact almost all states have what we call
mandatory reporting laws for elder financial abuse or elder abuse in general and many of
those states mandate that any person who suspects elder financial exploitation must report to
adult protective services, to law enforcement or to both. And in many other cases it depends on what
your profession is if youíre a healthcare professional. In quite a few states now, if youíre a financial
institution professional, you may be a mandatory reporter also so people should really understand
what their mandatory reporting obligations are so not only may individuals report but
in many cases they must report.>>Hector Ortiz: I have also a question (definitionally),
what is a fiduciary? What do we mean by fiduciary in this study?>>Naomi Karp: Okay, thatís a good question
so kind of generically a fiduciary is someone who or the way we use the term is someone
who manages money for another person, someone who has legal authority, formal legal authority
to manage money for someone else and therefore has some legal and ethical duties. So the most common types of fiduciaries that
we were talking about and that we used when we were doing our analysis with the SARs or
agents under a power of attorney, a trustee under some sort of a written trust, a court-appointed
guardian or conservator, different states use different terms so that could be a guardian
of the property or of the person. And then we have government fiduciaries so
thatís for example if someone receives Social Security or SSI benefits and they canít manage
that benefit check themselves, Social Security Administration will appoint somebody whoís
called a representative payee to manage their money. Thatís a fiduciary. The VA also appoints fiduciaries so thatís
what we were talking about here when we were doing the analysis of whether you know, what
percent of suspects or subjects were fiduciaries so it was those types of individuals. Iím going to use this opportunity to make
a plug now, slightly off-topic for a set of materials that we think may be very helpful
to people out there in financial institutions may be interested in sharing these and that
is our Managing Someone Elseís Money guide. Those are plain-language guides for people
who you know, family members and friends who serve as fiduciaries. You really may not know what it involves and
how to protect that person so we have these plain language guides available for free. You can find them on our Website and download
to order them and also for all of those of you who are from financial institutions on
the phone, we just this week have unveiled a new opportunity to co-brand our Managing
Someone Elseís Money guide. You can find that co-branding information
on our Website now and it tells you how you can put your logo on it along with ours and
whatís involved in that so sorry, slight diversion but weíd love you to take a look
at that and see those resources. Okay, so we have a technical question about
Slide 23 because someone asked about, you know, why does it total 123% and Iím going
to ask Hector who is our data guy to answer that question.>>Hector Ortiz: Yes, definitely, so the reason
for that is the percentages certainly add-up to more than 100% because in a given EFE SAR
you may have multiple suspect categories and in the graph that we specifically showed Ö>>Naomi Karp: Hector, maybe you could remind
us what Slide 23 is about.>>Hector Ortiz: Ö the Slide 23 it shows
the percent of EFEs by suspect category so the common topic category is found and thatís
where I showed that about half were strangers and 36% were known individuals but then the
sort of lighter green was where the family member fiduciary and all family caregiver
and those were (assaults) that of the known person so thatís why it added to more than
100% so hopefully that answered that. And the report shows again all the technical
notes around that. Thereís a couple of other data questions
that I will Naomi and I will go through so those are very simple ones and one of it has
to do with the percentage of the SARs that weíve read that related to two specific products. One was virtual currency and the other one
was reverse mortgages. We did not publish those in the report but
we did comment those and I can share with you that both virtual currency and reverse
mortgages accounted for less than 1% of the EFE SARs that we examined. We also got a question about whether the amounts
were greater when the length of time involved was longer than three months and yes, so thereís
a correlation between loss and length of activity. And thereís also a set of other correlations
around that type of product as Naomi showed and the type of institution to more specifically
being checking accounts again and in filing by depository institutions again having longer
periods as well as higher losses.>>Naomi Karp: So someone asked about whether
the study was done nationally or among data in one state so this was a national study
and everything that weíve shared with you today about the data is national in scope
so you know, we did aggregate them nationally and we did not include any particular state-by-state
trends in this analysis. Also there was we had mentioned that romance
scams were the most common scams reported in the SARs so thereís a question about what
other scams were reported in the SARs and what was the relative frequency of those? Hector, do you want to take that one?>>Hector Ortiz: Sure, in total 45% of all
EFE SARs that we examined were related to scams so these scam-related SARs 25% were
romance scams so that was the largest category followed by 13% were person-in-need scam and
those included grandparent scams but sometimes they have variation of a family member or
someone known. And 12% were lottery scams so just right there
after and then you had a variety of other scams such as charity scams, IRS scams that
combined again add-up to the remaining percentage of scams and some SARs did not specify with
detail what type of scam was involved.>>Naomi Karp: That was a good question, thanks
for asking all your questions so someone asked if the financial institution reports to law
enforcement, does the elder know that the financial institution has done that so I guess
Iím going to ask you that question on two levels so first of all in terms of if a financial
institution files a SAR which is ultimately accessible to law enforcement, no. The elder does not know. Secondly, I would say generally it is not
necessarily true that if a financial institution reports to law enforcement that elder will
know. If a financial institution reports to law
enforcement then law enforcement does some investigation including talking to the elder
person, you know, they may figure-out that it was the financial institution that reported
but I donít think they would necessarily know in every case. And I can say in terms of adult protective
services, in many cases if a financial institution files a report about suspected elder financial
exploitation with APF, generally APF has duties of confidentiality and under a lot of statesí
laws if not all of them APF is not going to share where that complaint came from. And so that confidentiality is given to reporters
and that is certainly to encourage people to report so sometimes I know financial institutions
find this frustrating because they want to know what happened after they reported and
APFs wonít share with them but thatís because of legal protections of confidentiality.>>Hector Ortiz: Naomi, this is a variation
around the question of the state-level data and again the scope of the project and the
results shown here are (unintelligible) of all SARs so itís all the geographic locations
in the U.S. covered again national results but the SARs do contain geographic data. It is a different sort of scope of work in
terms of as you can imagine and think through transactions may cross states, may involve
multiple branches, may involve a given financial entity that is headquarter in a given state
and that is the filing institution so that is sort of a different scope in terms of the
type of analysis and projects but it is possible to sort of derive from analysis of the state
level.>>Naomi Karp: And one other complication,
one thing that we saw particularly in the MSB SARs is that frequently an MSB might file
a SAR that will include you know, a large number of subjects and a large number of targets
all described in one SAR and so you could have a SAR where you would have subjects or
suspects who could be in, you know, 10 different states or even 10 different countries. And then in the same SAR you might have 25
targets or potential victims who are also located in a lot of different states so again
it would be a little bit hard to tease-out the geographic association thatís connected
with those SARs so, you know, you could do that kind of analysis but itís complex and
it was beyond what we did.>>Hector Ortiz: Naomi, a question of the
more broadly of if an elder gives money to a caregiver, is that financial abuse, I mean,
this just may be a consumer as part of Ö>>Naomi Karp: Yes, so in some cases itís
hard to give like a bright line answer to a question like that so if an elder person
gives money to a caregiver on the one hand it could be voluntary. It could be a gift in which case, you know,
if we really thought it was voluntary and the elder person knew exactly what they were
doing and they intended to do it, that wouldnít be financial exploitation? On the other hand, they might be under some
sort of duress, intimidation, undue influence whether it be by a caregiver or a family member
or some other known or trusted person in which case we would probably say that that is elder
financial exploitation so thereís not a black-and-white answer to that question. It may also depend on a particular state clause,
statesí court decisions and so forth so unfortunately Iím going to say it depends.>>Hector Ortiz: This is one question that
sort of sends us back to some of the examples that you provided Naomi, common activity patterns
found and the question the person had was do you know of any case studies that will
make for helpful reading and Naomi mentioned a few of those and if you go to our report
in Page 20 specifically we have a figure with some of those broad descriptions. And those are just descriptions of what we
see in the SARs. Theyíre not – again because of the nature
of the SARs – theyíre not based on any specific or individual filing or SAR.>>Naomi Karp: And Iím going to broaden that
out a little bit more so if the person is asking the question wants means you know,
case studies that could be helpful, to better understand or to better flag cases of elder
financial exploitation, I guess I would want to flag that thereís a lot of training going-on
out there. And financial institutions broadly are doing
a lot of training now for their employees on elder financial exploitation, what it is,
what are the red flags, how to spot it and many of these training programs are quite
thorough and do walk people through you know, a prototypical case or a case example. And so if you work for a financial institution,
I think it would be worth looking into what training you have accessible. Sometimes trade associations create training
so for example a state bankersí association or a credit union league or national trade
associations have some training programs available as well and those to go into case studies
that could be helpful.>>Hector Ortiz: Naomi, this had a reporting
requirement question. Should an FI file a SAR for any suspected
abuse or just over a particular dollar amount?>>Naomi Karp: So SARs can be filed voluntarily
for any dollar amount. There are dollar thresholds and other threshold
requirements that make SAR filing mandatory. We do go through those threshold requirements
in the background section of our report. Iím not going to read all that out right
now. I will say that there are different dollar
thresholds depending on the type of financial institution so in addition to other non-dollar
threshold requirements for MSBs, itís $2000 and for banks or depository institutions itís
$5000 but donít only look at the dollar thresholds, look at the other criteria for whether a SAR
filing is mandatory.>>Hector Ortiz: The other questions are real
state issues also involved in those SARs, those are easy SARs covering real state issues.>>Naomi Karp: Oh, real estate, yes, we definitely
read SARs involved real estate so, you know, sometimes a mortgage is in question or a reverse
mortgage. Someone might be pressured to take-out a loan,
you know, for their real estate. Sometimes a known person or I guess even a
stranger may have impersonated someone and taken a loan or actually fraudulently transferred
the title to real estate and so the SARs definitely cover real estate issues. I can tell you from reading those over 1000
SARs that we did see that. We also saw it for other types of property,
real property or personal property so we saw a number of cases where somebody was taken
by a family member to a car dealership and essentially put under pressure to finance
a vehicle that the exploiter then would use on their own so we saw different types of
property, not just cash or financial products.>>Hector Ortiz: And I guess this is a question
for on the data file, itís do you know what percentage of the people are (Neo) versus
not so in about 10% of these SARs that we analyzed, the of course older adult was considered
a participant of the activity and those were cases that Naomi described. Itís a common pattern seen in SARs.>>Naomi Karp: And it wasnít always possible
to tell whether the person was doing that voluntarily or not so there were cases where
it appeared that the person was knowingly participating in some sort of an illegal scheme
whereas in other cases it appeared that the person did not realize they are being made
part of the financial scheme or being used as a conduit to launder money or transfer
money. Okay, so we have a question about whether
mandated reporting laws or rules are only at the state level or are there any federal
or local requirements so Iím not aware of local requirements. There are some federal requirements. One that pops into my mind off the top of
my head is that thereís a requirement that nursing facilities, nursing homes report elder
abuse crimes to law enforcement and that could include financial crimes so we do have a type
of mandatory reporting under federal law for nursing facilities so that is one type of
federal mandatory reporting laws. When we talk about mandatory reporting laws
generally we really are thinking about state level. Thatís where most of the legal prescriptions
arise but there are some federal.>>Hector Ortiz: And the last one, do you
know if thereís a role for technology here in FinTech?>>Naomi Karp: Well, thereís certainly a
role for technology and in terms of detecting that some of these kinds of illegal activities
are going on, financial institutions in order to comply with the Bank Secrecy Act generally
use detection, use technology to detect. They also have generally have fraud detection
technology. We have a section those 2016 recommendations
and report that we talked about for banks and credit unions where we talk about how
financial institutions can use technology to detect this kind of activity and as technology
becomes more sophisticated, you know, financial institutions are using machine learning and
artificial intelligence. So that, you know, not only do they spot this
type of activity generally but they can look at what is a typical pattern for an individual
consumer and then see something that might be out of pattern for that individual consumer
that might throw-up a red flag so definitely a role to that. As far as FinTech or you know, sort of developing
technologies in order to protect older people, that is certainly an up and coming area. There are some companies in the FinTech space
that are looking at our changing demographics, how we have so many more older people and
we have so many older people being preyed upon and looking at ways that we can use technology
in the private sector to protect them. So that may be in the form of apps and so
forth so it looks like we are coming-up on 3:00. We are just thrilled that so many of you tuned-in
for this Webinar and that you asked so many great questions and we hope weíve been able
to answer them in ways that are helpful that you have or will have when you get the deck
or our e-mail address, [email protected] And if you have questions, you can contact
us and also join our mailing list so thanks again and keep on looking for our future events,
Webinars and publications. Thank you.>>Hector Ortiz: Thank you.>>Coordinator: This concludes todayís presentation. You may disconnect at this time. Thank you.

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