What is our bank’s responsibility when we have reason to believe that an elderly customer’s daughter may be abusing her access to her mother’s account? The daughter also may be violating her fiduciary duties as established in a Department of Veteran Affairs Fiduciary Agreement naming the elderly customer as the beneficiary of veteran benefits and the daughter as the fiduciary of the funds.

If your bank suspects the financial exploitation of an elderly customer, state law encourages you to report the activity to the Illinois Department of Aging, and federal law may require you to file a suspicious activity report (SAR) if certain conditions are met.

Under the law in Illinois, banks are permitted (but not required) to report suspected elder financial abuse to the Illinois Department on Aging. To encourage reporting, Illinois law provides civil and criminal immunity to banks that file a report of suspected abuse if they believe that it is in the individual’s best interest to make the report.

In addition, the Financial Crimes Enforcement Network (FinCEN) requires banks to file a SAR for suspected elder financial exploitation when a transaction aggregates at least $5,000 and the bank knows, suspects, or has reason to suspect that a transaction involves funds derived from illegal activities; the transaction is designed to evade any Bank Secrecy Act requirements; or the transaction has no apparent lawful purpose or is not the sort in which the particular customer would normally be expected to engage. You should review the activity in this case to determine if these criteria are met. This is a fact-specific inquiry, but we note that FinCEN takes permissive approach, allowing banks to report suspected elder financial exploitation even when a SAR is not required.

We also note that both state and federal privacy laws provide safe harbors for banks when reporting suspected elder financial exploitation.

For resources related to our guidance, please see:

Adult Protective Services Act, 320 ILCS 20/4(a) (“Any person who suspects the abuse, neglect, financial exploitation, or self-neglect of an eligible adult may report this suspicion to an agency designated to receive such reports under this Act or to the Department.”)

Adult Protective Services Act, 320 ILCS 20/4(a-5) (“A person making a report under this Act in the belief that it is in the alleged victim's best interest shall be immune from criminal or civil liability or professional disciplinary action on account of making the report, notwithstanding any requirements concerning the confidentiality of information with respect to such eligible adult which might otherwise be applicable.”)

FinCEN Advisory, FIN-2011-A003 (February 22, 2011) (Identifies red flags that could indicate the existence of elder financial exploitation, requires SARs when the red flags are consistent with the general standards for reporting suspicious activity, and encourages voluntary reporting when not required)

FinCEN Rules, 31 CFR 1020.320(a)(2) (Requires banks to file SARs when a transaction involves or aggregates at least $5,000 in funds or other assets, and the bank knows, suspects, or has reason to suspect that “(i) The transaction involves funds derived from illegal activities…(ii) The transaction is designed to evade any requirements of this chapter or of any other regulations promulgated under the Bank Secrecy Act; or (iii) The transaction has no business or apparent lawful purpose or is not the sort in which the particular customer would normally be expected to engage, and the bank knows of no reasonable explanation for the transaction after examining the available facts, including the background and possible purpose of the transaction.”)

FinCEN Rules, 31 CFR 1020.320(a)(1) (“A bank may also file … a report of any suspicious transaction that it believes is relevant to the possible violation of any law or regulation but whose reporting is not required by this section.”)

Regulation P, 12 CFR 1016.15 (Lists exceptions to opt-out requirements, including “[t]o comply with Federal, state, or local laws, rules and other applicable legal requirements”)

FRB Suspicious Activity Reports Rules, 12 CFR 208.62(k) (Creates a safe harbor from liability for the disclosure of “reports of suspected or known criminal violations and suspicious activities to law enforcement and financial institution supervisory authorities, including supporting documentation, regardless of whether such reports are filed pursuant to this section or are filed on a voluntary basis”)

Illinois Banking Act, 205 ILCS 5/48.1(b)(16) (Creates exemption from privacy requirements for furnishing information to law enforcement authorities, the Illinois Department on Aging and its regional administrative and provider agencies, the Department of Human Services Office of Inspector General, or public guardians “if there is suspicion by the bank that a customer who is an elderly or disabled person has been or may become the victim of financial exploitation”)