Suspicion Activity Reports

Statistics show that abuse and neglect are rampant in the long term care industry. However, fines and prosecutions lag behind because of the lack of interest, the lack of good faith investigations, and the lack of funds and authority for investigators. Another issue plaguing vulnerable adults are scams and financial exploitation especially in the assisted living industry.

The Bloomberg Article “Separating Belief from Suspicion in Elder Abuse Investigations” explores how financial institutions can and should respond to elder abuse. The article shows that institutions can place a hold on transactions when they have “reasonable beliefs” that exploitation may occur.

This standard, which is both vague and inclusive, subjective and objective, is part of the NASAA Model Act adopted in nearly 40 states. The NASAA Model Act is a series of model state laws developed by the North American Securities Administrators Association (NASAA) to provide guidance for state regulators and legislators when creating their own laws and regulations. These model acts address various aspects of securities regulation, including protecting vulnerable adults from financial exploitation, providing restitution assistance funds for victims of securities violations, and protecting whistleblowers. 

Separately, institutions must file Suspicion Activity Reports (SARs) with FinCEN where the is “reasonable suspicion” of criminal activity, a lower threshold based on observable red flags such as unusual transactions or client distress.

To meet the standards, financial institutions are advised to follow several practices: contacting financial advisors, reaching out to the client and any trusted contacts, reviewing all account activity and documents, keeping thorough records of the investigations, and consulting with colleagues to ensure their assessment is objective.

By distinguishing between “belief” and “suspicion” and adhering to these protocols, institutions can better protect elderly clients from abuse while minimizing their legal risks.