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Press Release

February 27, 2015

Contact: Matt Anderson, 212-709-1691

DFS ISSUES REGULATORY GUIDANCE TO FINANCIAL INSTITUTIONS ON IDENTIFYING AND STOPPING ELDER FINANCIAL ABUSE

DFS Urges Adoption of Best Practices to Spot and Report Red Flags Indicating Financial Exploitation of New York Senior Citizens

Benjamin M. Lawsky, Superintendent of Financial Services, announced today the Department of Financial Services (DFS) is issuing regulatory guidance to financial institutions doing business in New York, urging the adoption of best practices that help prevent financial exploitation of our state’s senior citizens. Among the best practices in DFS’ guidance are procedures to help financial institutions spot and report red flags indicative of elder financial abuse. DFS is also issuing a survey to banks and credit unions seeking information on the policies those institutions currently have in place to protect customers from elder financial exploitation.

Superintendent Lawsky said: "Elder financial exploitation is often a silent crime committed by a person the victim trusts. That makes it all the more important that we use every tool at our disposal – in partnership with our state’s financial institutions – to identify and stop those who would seek to prey on New York's senior citizens. It is important to be proactive in fighting this crime, and these procedures will help banks spot red flags before it is too late. I urge all financial institutions to implement these guidelines and help ensure that no transaction exploits our senior citizens."

"As our population ages, older New Yorkers can become an even bigger target for perpetrators of elderly financial exploitation,” said Beth Finkel, State Director of AARP in New York State. "It’s often a hidden problem, as many people are reluctant to report being victimized. AARP applauds Governor Cuomo and Superintendent Lawsky for their efforts to ensure financial institutions and their employees are equipped to detect and report abuse."

A 2011 Weill Cornell study found that although financial exploitation is the leading form of elder abuse in the state of New York, cases of financial exploitation have been severely underreported to authorities. Elder financial exploitation is the illegal or improper use of an elderly adult’s funds, property or resources by another individual. Perpetrators are generally those who are in a position of trust with an elderly person or strangers who target the elderly for scams. Common forms of elder financial exploitation include fraud, embezzlement and property transfers involving the improper use of powers of attorney.

Financial institutions are in a unique position to prevent such abuse by training the staff on the front lines of combating elder financial exploitation: those that frequently work directly with elderly customers and their caretakers, including bank tellers and those overseeing investment accounts or offering investment advice. The Department urges financial institutions to adopt the following best practices:

  1. Develop a plan to detect and report suspected elder financial exploitation, including the use of "red flag" procedures;
  2. Train employees regularly on the organization’s policies and procedures to prevent elder financial exploitation;
  3. Appoint staff within the organization to investigate suspected elder financial exploitation and to report this information to Adult Protective Services (APS) or other authorities

Financial institutions should conduct careful, but prompt, investigations when employees observe red flags that could indicate abuse.  Examples of these red flags include:

  • unusual banking activity;
  • excessive interest in the elder’s finances by a caregiver or another individual;
  • an elderly customer exhibiting fear in the presence of a caregiver or another individual.

New York State Office for the Aging Director, Corinda Crossdale said, "Those who prey on older New Yorkers financially by violating their trust not only victimize the older individual but also the state’s taxpayers by costing the state billions of dollars annually for investigation, prosecution and providing services to the impoverished victims. Many older adults who live on limited incomes can experience financial, physical and psychological trauma after being victims of financial fraud.  I applaud Governor Cuomo and the Department of Financial Services for their efforts to protect older New Yorkers from financial abuse and exploitation.  These procedures will provide additional opportunities to detect and prevent financial fraud against older New Yorkers."

The guidance also reminds financial institutions that, if they suspect financial exploitation, federal law permits them to report certain nonpublic financial information of their customers to authorities. New York law also provides immunity from civil liability for financial institutions, and individuals working for them, who in good faith report suspected financial exploitation.

When financial institutions suspect that an elderly customer may be a victim of financial exploitation, they should contact the authorities, including Adult Protective Services (APS).  APS units are administered by the New York State Office of Children and Family Services, and are located in every county in the state. They are authorized to investigate suspected financial exploitation of vulnerable adults and intervene as appropriate.

The action today by DFS is part of an ongoing effort to protect elderly New Yorkers from financial exploitation. In January of 2013, DFS adopted New York Insurance Regulation 199, which protects elder consumers from misleading and fraudulent senior-specific certifications and professional designations in the solicitation, sale or advice made in connection with a life insurance policy or annuity contract. In July of 2013, DFS adopted New York Insurance Regulation 187, which sets forth suitability standards and procedures for agents and brokers when making recommendations for annuity contracts to consumers.

To see a list of APS units that are in all counties in the state of New York, please visit http://www.ocfs.state.ny.us/main/localdss.asp.

To report suspected elder financial exploitation, individuals and financial institutions should contact their local APS unit. Telephone numbers for all local APS units in the State of New York can be found at the link above or by calling the statewide Adult Services Helpline at 1-844-697-3505.

To view a copy of the DFS guidance issued today, please visit, link.

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