An elderly woman and her adult daughter are joint owners on a demand deposit account. The daughter believes that her brother is taking advantage of their mother and would like to prevent her mother from making withdrawals from the account. The daughter also has a power of attorney for the account. What documentation do we need to comply with the daughter’s request? Do we need a court order declaring the mother’s incompetency before we can restrict her access to the account?

We recommend reviewing the daughter’s power of attorney document and the documentation setting up the account to determine whether the daughter has the authority to completely control the mother’s interest in the account.

The Illinois Statutory Short Form Power of Attorney for Property provides the power to execute “financial institution transactions” in line item (b). This power includes the authority to “control all accounts and deposits” — assuming that this line has not been crossed out on your customer’s power of attorney document. We believe this power, if operative, would include the authority for the daughter to limit the mother’s withdrawals from the account, and it even would authorize the daughter to close the account and establish another one on behalf of the mother that does not grant her withdrawal privileges (although obtaining a court-ordered guardianship would be preferable for this approach to minimize intra-family challenges after the fact).

We should note that the mother, as the principal granting the power of attorney, may amend or revoke her daughter’s authority as power of attorney at any time if she wishes to have greater access to her account. However, as a joint owner on the account, the daughter may choose to withdraw all of the account funds and close the account to prevent her mother from making further withdrawals.

Importantly, 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. Also, federal law may require you to file a suspicious activity report (SAR) if certain conditions are met. Your bank must file a SAR for suspected elder financial exploitation when a transaction aggregates at least $5,000, and your bank may voluntarily report suspected elder financial exploitation even when this threshold has not been met.

We also note that both state and federal privacy laws provide safe harbors for banks when reporting suspected elder financial exploitation. In addition, the recently enacted Senior Safe Act confers certain protections for banks from being sued for reporting suspected elder exploitation, provided the report is made by a bank employee who serves “as a supervisor or in a compliance or legal function” (such as a Bank Secrecy Act officer) and the employee has received adequate training and makes the disclosure in good faith and with reasonable care.

For resources related to our guidance, please see:

Illinois Power of Attorney Act, 755 ILCS 45/3-4 (“Explanation of powers granted in the statutory short form power of attorney for property. . . . (b) The agent is authorized to: open, close, continue and control all accounts and deposits in any type of financial institution (which term includes, without limitation, banks, trust companies, savings and building and loan associations, credit unions and brokerage firms); deposit in and withdraw from and write checks on any financial institution account or deposit; and, in general, exercise all powers with respect to financial institution transactions which the principal could if present and under no disability.”)

Illinois Power of Attorney Act, 755 ILCS 45/3-3 (The statutory short form power of attorney for property states that “this power of attorney may be amended or revoked by you at any time and in any manner.”)

Joint Tenancy Act, 765 ILCS 1005/2(a) (“When a deposit in any bank or trust company transacting business in this State has been made or shall hereafter be made in the names of 2 or more persons payable to them when the account is opened or thereafter, the deposit or any part thereof or any interest or dividend thereon may be paid to any one of those persons whether the other or others be living or not, and when an agreement permitting such payment is signed by all those persons at the time the account is opened or thereafter the receipt or acquittance of the person so paid shall be valid and sufficient discharge from all parties to the bank for any payments so made.”)

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, describes 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.”)

FRB Suspicious Activity Report 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.”)

Senior Safe Act, 12 USC 3423(a)(2)(A) (S.2155 § 303A) (“An individual who has received the training described in subsection (b) shall not be liable, including in any civil or administrative proceeding, for disclosing the suspected exploitation of a senior citizen to a covered agency if the individual, at the time of the disclosure (i) served as a supervisor or in a compliance or legal function (including as a Bank Secrecy Act officer) for . . . a covered financial institution; and (ii) made the disclosure (I) in good faith; and (II) with reasonable care.”)