Recognizing the Signs and Taking Action Against Financial Manipulation of the Elderly in the Digital Age
June 15th, 2023 marks the 17th anniversary of World Elder Abuse Awareness Day (WEAAD), which was launched in 2006 by the International Network for the Prevention of Elder Abuse and the World Health Organization at the United Nations. WEAAD is a day to recognize the importance of eradicating elder abuse worldwide, including in the rapidly expanding cryptocurrency ecosystem.
The Growing Threat of Cryptocurrency-Based Elder Financial Exploitation
In recent years, the rise and prominence of cryptocurrencies have led to a significant shift in the landscape of elder financial exploitation. As digital currencies become increasingly popular and accessible, scammers and fraudsters have seized the opportunity to target the elderly, who may be less familiar with the rapidly evolving world of digital finance.
Illicit actors are exploiting many of the features and benefits of cryptocurrencies that legitimate consumers enjoy, including cross border transmission, near real-time settlement, a degree of privacy, and transaction irreversibility. This evolution in elder abuse calls for increased vigilance and education on the part of financial institutions, caretakers, and the general public, as safeguarding our elderly population now requires knowledge of both traditional and digital financial exploitation tactics.
FinCEN’s Role in Combating Elder Financial Exploitation in the Crypto Space
2022 FinCEN Advisory: Elder Abuse
In an effort to combat elder financial exploitation (EFE), the Financial Crimes Enforcement Network (FinCEN) released its first EFE Advisory in 2011 (FIN-2011-A003) and an updated advisory in 2022 (FIN-2022-A002). These advisories outline trends, typologies, and red flags associated with EFE, helping financial institutions and individuals identify and prevent elder abuse in various industries, including the cryptocurrency sector. These are must-reads for traditional and crypto financial institutions, their compliance departments, and all employees.
The Increasing Prevalence of Crypto Scams Targeting the Elderly
Elder financial abuse has increased in crypto, coinciding with growing mainstream awareness and popularity. It’s clearly in every financial institution’s best interest to develop policies, processes, and procedures that detect, prevent, and report suspected EFE as part of a comprehensive BSA/AML compliance program.
Scams targeting the elderly have long been a concern. Some examples of these nefarious activities include government imposter scams, lottery and sweepstakes scams, investor scams, and romance scams. For those with a background in traditional financial services, these scams are as old as the hills. Unfortunately, they have now found their way into the cryptocurrency industry, putting elderly individuals at an increased risk of financial harm. As we all know, the bad guys are technology and platform agnostic; in short, they don’t care who they hurt in the process. A sad thought on its own, but it becomes all the more somber when those most vulnerable are victimized.
To help combat EFE in the digital age, FinCEN has provided a list of behavioral and financial red flags that may indicate potential elder abuse:
Recognizing the Red Flags of Elder Abuse in the Digital Age
Behavioral Red Flags:
- Sudden and unusual changes in contact information or new connections to emails, phone numbers, or accounts that may originate overseas.
- Unexplainable or unusual account activity in the presence of known physical, emotional, and cognitive impairment.
- Mentioning online friends or romantic partners asking to receive and forward money or open a bank account for a “business opportunity.”
- Agitation or frenzy regarding the need to send money immediately to a seemingly unconnected third-party.
- Caregiver or individual showing excessive interest in the older customer’s finances or assets and not allowing the older customer to speak for themselves.
- New caretaker, relative, or friend suddenly conducts financial transactions without proper documentation.
Financial Red Flags:
- Sudden interest and purchase of cryptocurrency.
- Uncharacteristic, sudden, abnormally frequent, or significant withdrawals of cash or transfers of assets from an older customer’s account.
Taking Action and Reporting Suspected Elder Financial Exploitation
As we continue to fight against elder abuse, it is crucial that we adapt to these new threats and ensure that our elderly loved ones are protected in this ever-changing digital age. If you suspect that an elderly friend or loved one is being financially exploited, report it to the Federal Trade Commission here. Remember, awareness and vigilance are key in the fight against elder abuse.
BitAML’s Commitment to Prevention and Protection of Elders in the Crypto Industry
BitAML helped pioneer elder abuse protection and prevention policies specific to crypto, as early as 2018, making it a mandatory part of our client AML compliance documentation. For those in the cryptocurrency industry who need help developing an elder financial exploitation policy or have questions about EFE and crypto compliance, the experts at BitAML can assist. Contact us to schedule a free consultation and help protect the elderly from financial exploitation in the digital age.
