Common AML Schemes: Elder Financial Exploitation

Money laundering and financial crimes pose large risks to financial firms, both from a reputational and regulatory perspective. However, these schemes can take many forms making it difficult for firms to do their due diligence to protect themselves and their investors.

We’ve put together a series of the most common forms of money laundering and financial crimes and what firms can do to combat each one.

Elder Financial Exploitation

Elder financial exploitation (EFE) and anti-money laundering (AML) are related in that both involve the misuse of financial resources for criminal or illicit purposes. EFE refers to the illegal or improper use of an elderly person's financial resources by a caregiver, family member, or other individual. This can include activities such as embezzlement, fraud, or identity theft.

AML, on the other hand, refers to the process of detecting and preventing money laundering activities, which are the efforts of individuals or organizations to conceal the illicit origin of funds. Money laundering may involve a variety of tactics, such as using shell companies or trusts to conceal the true ownership of assets or using virtual currencies to transfer funds between accounts.

Proceeds of elder financial exploitation may be laundered to hide their illicit origin. For example, a caregiver who embezzles funds from an elderly person may try to launder the stolen funds through a series of transactions or investments to make it appear as though the funds are the result of legitimate business activities.

It is important for financial institutions and law enforcement agencies to be vigilant in detecting and preventing both EFE and money laundering. Both types of activities can have serious consequences for the victims, and it is important to take steps to protect individuals from falling victim to these crimes.

EFE and Money Laundering Trends

• Technology: EFE is increasingly occurring through the use of technology, such as online banking, social media, and phone scams. Criminals may use these platforms to gain access to elderly individuals' personal and financial information, or to solicit funds under false pretenses. This type of EFE may also be related to money laundering, as the proceeds of the exploitation may be laundered through online transactions or investments.
• Complex financial structures: EFE often involves the use of complex financial structures, such as trusts or shell companies, to conceal the true ownership of assets or the source of funds. These structures may be used to launder the proceeds of EFE, making it more difficult to detect and prosecute the perpetrators.
• Exploitation by caregivers: EFE is often perpetrated by caregivers or other individuals who have a close relationship with the victim. These individuals may use their position of trust to gain access to the victim's financial resources and misuse them for their own benefit. This type of exploitation may also be related to money laundering, as the proceeds may be laundered to conceal their illicit origin.
• Increasing awareness: There is an increasing awareness of EFE and the need to protect elderly individuals from this type of crime. This is leading to increased efforts by law enforcement, financial institutions, and other organizations to detect and prevent EFE and related money laundering activities.
• International aspects: EFE and money laundering may have international aspects as criminals may try to transfer funds or assets across borders to hide their illicit origin. This can make it more challenging to detect and prosecute these crimes and may require the cooperation of law enforcement agencies in multiple jurisdictions.

Read about other common AML schemes

• Account takeover
• Business email compromise
• Environmental, social, and governance (ESG)
• Investment Companies
• Real Estate
• Cybersecurity Tactics

How we help

ACA’s AML and Financial Crimes practice offers advisory services and solutions to assist financial services firms in addressing threats and regulatory obligations associated with financial crime. We work with investment advisers and broker-dealers, among others, to assess risk, develop policies and procedures, and perform independent tests and gap analyses.

Our support can incorporate our ComplianceAlpha^® regulatory technology and managed services to help your firm meet its data screening, ongoing monitoring, remediation and reporting needs.

Reach out to your ACA consultant or contact us to find out how ACA can help you meet your AML requirements. 

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