Readers of this blog may recall we reported on two new FINRA regulations on February 7, 2018. These govern securities professionals and among other things allowed a securities professional concerned about elder abuse to put a hold on disbursement of funds for up to 25 days. The regulation did not require the securities professional to report the suspected abuse, but if their own inquiries did not quell their concerns, the professional would be in a bind, as those new regulations did not provide immunity for disclosing confidential client information when reporting suspected financial abuse to state authorities.

In May, President Trump signed into law the Senior Safe Act. The Senior Safe Act applies to all financial institutions (including banks, not merely institutions dealing in securities). Subject to a few conditions, it now provides immunity for disclosure of confidential client information when reporting suspected financial elder abuse. Like the FINRA regulation, however, it does not mandate reporting. Now by statute, financial institutions have the ability to report suspected financial elder abuse without worrying about violating client privacy. You can learn more detail here and here.

What is particularly important about adding banks is that banking personnel see some of the early signs of cognitive decline, such as when a customer begins missing payments, sending duplicate checks, bouncing checks because of confusion over balances, or sending money to unrelated people.

Reporting on a client’s behavior is a grey area, but in response to the Senior Safe Act, some companies are enhancing their ability to identify problems. The use of Artificial Intelligence (AI) allows banks to monitor and analyze massive amounts of data that may reveal cognitive declines. In addition to relying on AI, institutions are training staff members to watch for behavior markers that may indicate decline or fraud. It helps if the banks have contact information for other family members, which can happen if the customers will permit family members to access their accounts. You can read more about some of these efforts in the Wall Street Journal (subscription required).

Of course it is hard to know where to draw the line. Go too far in protecting elders, and you may cross the line and diminish too many elders’ autonomy and civil rights. In fact, a few states have gone so far as to make financial professionals mandated reporters of suspected elder financial abuse. (For example, California Welfare and Institutions Code Section 15630.1.) Go too far the other way, and we leave too many elders with diminished capacity vulnerable to unscrupulous operators.


Learn more about Special Needs Law Group of Massachusetts here.

This blog post does not constitute legal or tax advice, even if you are presently a client of Special Needs Law Group of Massachusetts, PC, nor is an attorney-client relationship created by reading it. If you want legal or tax advice, you should retain a licensed attorney or tax advisor for that purpose.