Financial exploitation affects at least 10% of the elderly population in the U.S. and is a growing problem according to the U.S. Treasury’s Financial Crimes Enforcement Network. The 2022 Virginia General Assembly enacted legislation that seeks to address this problem.
For some time, Virginia law has provided that a financial institution:
- May refuse or delay to execute a transaction if it believes in good faith the transaction may result in adult financial exploitation or makes, or has actual knowledge that another person has made, a report to DSS stating a good-faith belief that a transaction may result in adult financial exploitation;
- May continue to refuse or delay such a transaction for no more than 30 business days after the transaction was requested, unless otherwise ordered by a court;
- Must report any refusal or delay to a local department of social services (DSS) within five business days of the refusal or delay; and
- May make voluntarily a report of suspected adult financial exploitation and provide supporting information and records to DSS.
Virginia law also grants immunity from civil or criminal liability to a financial institution and its staff for providing information or records as described above.
The 2022 legislation added to these laws already on the books. As of July 1, 2022, financial institutions doing business in Virginia have new duties in connection with efforts to combat the financial exploitation of the elderly.
The new legislation:
- Requires a financial institution to cooperate in any investigation of alleged adult financial exploitation by a local DSS;
- Requires a financial institution to make any financial records or information relevant to such an investigation available to DSS upon request;
- Allows a financial institution to provide voluntarily information or records to DSS or a court-appointed guardian ad litem relevant to a report or investigation for the adult who is the subject of an investigation of financial exploitation; and
- Provides immunity from civil or criminal liability to a financial institution and its staff for providing information or records as described above.
Thus, for the first time under the law, financial institutions are required to provide financial records of a customer who is the subject of a DSS investigation of alleged financial exploitation, to DSS upon its request. A financial institution should incorporate these changes into its policies and procedures to comply with the new requirements and to help protect its elderly customers from financial exploitation.