Advisors, banks can report elder financial abuse
By National Underwriter
By Maria Wood
Financial institutions can report suspected financial abuse of the elderly under certain circumstances without violating the individual’s privacy. That was main takeaway from guidance issued by the Consumer Financial Protection Bureau and seven other federal agencies yesterday.
For advisors and employees of financial institutions like banks who believe an elderly person may be the victim of financial fraud, this statement provides guidance on whether they should report such possible wrongdoing to authorities. In general, if financial abuse is suspected, financial professionals can report the misconduct without violating privacy provisions under the Gramm-Leach-Bliley Act (GLBA).
Under GLBA, a financial institution cannot divulge any nonpublic personal information about a consumer to a non-affiliated third-party unless it first provides the consumer with a notice detailing the disclosure (as well as other aspects of its privacy policies and practices). The consumer must then be given a “reasonable opportunity” to opt out of the disclosure.
However, the bureau maintains that GLBA permits several exceptions to those notice and opt-out provisions that would allow an advisor and financial professional to report suspected financial abuse of an elder without violating the law or first obtaining consumer authorization.
“The central point is that reporting suspected elder abuse to the appropriate authorities is typically the right thing to do and generally will not violate the Gramm-Leach-Bliley Act,” said the bureau’s director, Richard Cordray in a prepared statement. “Financial institutions have expressed concern that in many circumstances they may not disclose such information unless they have informed the consumer and provided an opportunity to opt out. Today’s guidance makes clear that reporting suspected elder financial abuse generally is not subject to these same concerns and does not violate the Gramm-Leach-Bliley Act.”
For instance, the bureau states that financial institutions can report suspected financial abuse of a senior and disclose nonpublic information to local, state or federal agencies if an incident results in the taking of an older adult’s funds without actual consent, or if the elder signs over assets through what it terms “misrepresentation of the intent of the transaction.”
Older adults are frequent targets of financial exploitation, the bureau states, because they hold significant assets yet also may experience cognitive declines that may make them susceptible to manipulation by con artists, caregivers and even family members. Since financial institutions may be familiar with an elder’s financial activities, they are able to spot any irregular transactions or behavior, the bureau concludes. Therefore, “prompt reporting of suspected financial exploitation to adult protective services, law enforcement, and/or long-term care ombudsmen can trigger appropriate intervention, prevention of financial losses and other remedies,” the bureau concludes.
Also signing onto the guidance document were Board of Governors of the Federal Reserve, Commodity Futures Trading Commission, Federal Deposit Insurance Corp., Federal Trade Commission, National Credit Union Administration, Office of the Comptroller of the Currency and the SEC.
Originally published on LifeHealthPro.com