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US Developments in Addressing Suspected Elder Financial Abuse

On the one year anniversary of passage of The Senior Safe Act, regulators have issued a fact sheet to help raise awareness among financial institutions about The Senior Safe Act and how its immunity provisions work.

The Senior Safe Act became federal law on May 24, 2018. It does not mandate actions by financial institutions and regulators. Rather, it provides immunity from liability in any civil or administrative proceeding for reporting potential exploitation of a senior citizen to a “covered agency”. Covered Agency includes a state financial regulatory authority (such as a state securities regulator or law enforcement authority and a state insurance regulator, a state or local adult protective services agency or “APS”), the Securities and Exchange Commission; the Financial Industry Regulatory Authority (“FINRA”), and federal law enforcement. Such immunity can be helpful as firms may want to report to a regulatory agency but, for example, fear that such reporting could violate a privacy requirement.

Immunity is provided if the following conditions are met: (1) certain employees receive training on how to identify and report exploitative activity against seniors before making a report; and (2) reports of suspected exploitation are made “in good faith” and “with reasonable care”. Note that the reporting is not to third parties but to those who meet the definition of “covered agency”.

The training must be provided “as soon as reasonably practical” and no later than one year from the date of hire. It must:

(1) instruct the person on how to identify and report the suspected exploitation of a senior citizen internally and, as appropriate, to government officials or law enforcement authorities, including common signs of exploitation;

(2) it must discuss the need to protect the privacy and respect the integrity of each individual customer and

(3) be appropriate to the job responsibilities of the individual.

In addition to The Senior Safe Act, in 2016 the North American Securities Administrators (“NASAA”) (an organization of U.S., Canadian and Mexican securities administrators) adopted Model Legislation to Protect Vulnerable Adults From Financial Exploitation. The model legislation has been adopted into state legislation in certain states (for example Alabama, Indiana, Vermont and Louisiana).

FINRA, a self-regulatory organizations that regulates brokerage firms and exchange markets, also made amendments to its rules to help address financial exploitation of older adults. FINRA requires firms to make reasonable efforts to obtain the name and contact information of an adult trusted contact person for retail clients and to permit qualified persons who reasonably believe that financial exploitation has occurred, is occurring, has been attempted, or will be attempted, to place temporary holds on disbursements of funds or securities from the accounts with an accompanying limited safe harbor from certain FINRA Rules. FINRA’s amendments came into effect on February 5, 2018. FINRA’s rules are in addition to state laws, which in many states has mandatory reporting requirements. Earlier, in 2015, FINRA launched the Securities Helpline for Seniors which provides personalized assistance to seniors, and refers elder financial abuse concerns to APS.

The United States Department of Justice also has an Elder Justice Initiative to support and coordinate the Department’s enforcement and programmatic efforts to combat elder abuse, neglect and financial fraud and scams that target seniors.

These are some, but by no means all, of the efforts going on south of our border.

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