Earlier this week, the Consumer Financial Protection Bureau joined various other financial-related agencies in issuing an Interagency Guidance on Privacy Laws and Reporting Financial Abuse of Older Adults. The CFPB joined with the CFTC, the FTC, the NCUA, the SEC, and the prudential bank regulators (FDIC, OCC, and Federal Reserve) to issue the guidance. The guidance exempts the reporting of financial abuse of older adults from the specific privacy provisions of the Gramm-Leach-Bliley Act. Director Cordray stated in his prepared remarks that “reporting suspected elder financial abuse to the appropriate authorities is typically the right thing to do and generally will not violate the Gramm-Leach-Bliley Act.” He also referenced recent studies that show financial exploitation is the most common form of elder abuse.
The CFPB and other agencies issued this guidance because financial institutions have expressed concerns that in many circumstances they may not disclose such information unless they have informed the consumer and provided an opportunity to opt out. The GLBA establishes a general rule that a financial institution may not disclose any nonpublic personal information about a consumer to any third party unless the financial institution first provides the consumer with a notice that describes the disclosure and a reasonable opportunity to opt out of the disclosure, and the consumer does not opt out. However, as the guidance states, section 502(a) of the GLBA enumerates exceptions to this general prohibition. The CFPB and other agencies interpret several exceptions in section 502(a) as permitting financial institutions to share nonpublic personal information about consumers with local, state, or federal agencies for the purpose of reporting suspected financial abuse of older adults without the consumer’s authorization and without violating the GLBA. See 15 U.S.C. § 6802(e)(5), (e)(8).
The interagency guidance further explains with approval an advisory issued by the Department of Treasury that describes potential signs of elder financial exploitation that might trigger the filing of a Suspicious Activity Report (SAR). Numerous signs are listed in the guidance, but they generally relate to (a) changes in banking patterns, including erratic or unusual transactions and (b) interactions with older adults or caregivers.
As many community banks and other financial institutions deal with aging populations and customers, it is important to be on the lookout for signs of potential financial abuse of older adults. If your institution believes that reporting certain activities to local, state, or federal agencies, you may now do so without authorization and without violating the GLBA.
If you have questions about the implementation of this guidance and its impact on your organization, please contact Spilman or other knowledgeable counsel.