Silent exploitation: Strengthening AML defenses against elder financial abuse

Jul 2 / Leonard Nwogu-Ikojo
In this fictional case study, a long-time client’s subtle shift in behavior leads Luc and his compliance team to uncover a case of elder financial abuse hidden in plain sight. Through timely escalation and cross-functional collaboration, the institution prevented further harm and enhanced its monitoring framework. This article explores how financial institutions can recognize and respond to elder exploitation as a financial crime risk—and why AML programs must adapt to protect vulnerable clients.

This article is intended for educational and informational purposes only and does not constitute legal, regulatory, or professional compliance advice. The scenario and recommendations provided are illustrative and may not capture all applicable requirements or risks in specific cases. Readers should follow their organization’s internal policies, data protection requirements, and seek professional advice tailored to their circumstances.

Case study: The unusual pattern

Luc was reviewing transactional alerts when one particular case stood out—not because of volume or complexity, but because of its subtlety. A long-time client, Mr. Jansen, in his late 70s, had suddenly begun making regular transfers to an unfamiliar account labeled “Consulting Services.”

What raised eyebrows wasn’t the destination, but the frequency and timing. These weren’t payments aligned with his usual activity. More concerning was a recent call to customer service where Mr. Jansen seemed confused about the nature of a €4,000 transfer he’d authorized just hours earlier.

Luc escalated the matter to Ella, the AML lead. After reviewing the account and internal notes, she suggested they perform a vulnerability assessment and contact the branch manager for additional context.

The branch team confirmed the client had recently begun visiting the bank with a much younger “advisor,” introduced as a friend helping him with “investments.” The bank’s financial crime and fraud team initiated a safeguarding protocol.

After further review and a welfare check by local authorities, it emerged that Mr. Jansen was being manipulated by a distant relative who had pressured him into making repeated transfers under false pretenses.

The bank filed aSuspicious Activity Report (SAR)and froze further transactions pending investigation. Mr. Jansen’s financial autonomy was preserved through a legal support mechanism, and the institution took steps to enhance its monitoring framework for elder abuse indicators.

Regulatory insight: Elder abuse as a financial crime risk

Elder financial exploitation is an under-recognized yet growing form of abuse. It often manifests not through large, abrupt withdrawals but through subtle, sustained manipulation—a domain where AML and fraud teams must collaborate.

In the EU, financial institutions are obligated under both AML laws and broader consumer and investor protection frameworks to mitigate the misuse of accounts—especially when vulnerable populations are involved. While not always explicitly defined as a financial crime in every AML law, elder abuse can be a predicate offense for money laundering—especially when exploitation involves coercion, fraud, or undue influence.

Key guidance stems from:


  • EU financial services directives that emphasize investor and consumer protection, such as MiFID II (Directive 2014/65/EU), which mandates firms to act in the best interest of their clients, including those with vulnerabilities.
  • The EU Charter of Fundamental Rights, Article 25, which recognizes the rights of the elderly.
  • National AML/CFT frameworks, which increasingly include specific elder protection mechanisms (e.g., reporting duties, safeguarding referrals) and often incorporate provisions from EU AML Directives (e.g., the 4th and 5th AMLDs) requiring firms to assess and mitigate risks related to vulnerable customers.


Best practices: Recognizing and responding to elder financial abuse

Red flags to watch for:


  • Sudden changes in transaction behavior or account beneficiaries
  • Large withdrawals inconsistent with a client’s profile
  • Unexplained appearance of a new “friend” or “caregiver”
  • Client confusion about transactions or recent financial decisions
  • Frequent visits to branches accompanied by others speaking on their behalf


Internal controls to strengthen:


  • Implement vulnerability flags in customer profiles
  • Train frontline staff on behavioral indicators of coercion
  • Use data analytics to detect micro-patterns in transfers and withdrawals
  • Establish clear protocols for reporting and escalation, including SARs and safeguarding referrals
  • Partner with social services or elder advocacy groups to align protective interventions


Staff awareness:


  • Add modules on elder abuse typologies to AML and fraud training
  • Encourage a culture of “speak up” when things seem “off,” even if technically compliant
  • Include real case studies in learning materials to increase empathy and vigilance


Conclusion

Financial institutions are the front line in identifying and preventing elder financial abuse. While the exploitation may be silent, the harm is profound—and often irreversible.

By embedding vulnerability awareness into AML programs and encouraging cross-functional detection, institutions can safeguard both compliance and dignity. Elder abuse is a financial crime. And it's time we treated it as such.


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