On September 24, 2013, the CFPB joined the CFTC, the SEC, the FTC, the NCUA, and the prudential bank regulatory agencies (the Federal Reserve, the OCC, and the FDIC) in the issuance of an Interagency Guidance on Privacy Laws and Reporting Financial Abuse of Older Adults. The release exempts from the strictures of the financial privacy provisions of the Gramm-Leach-Bliley Act (GLBA) the reporting of suspected financial abuse of the elderly to appropriate state, local, and federal agencies.
According to prepared remarks by CFPB Director Cordray, financial institutions have expressed concern that in many circumstances they are forbidden from disclosing the information unless they have informed the consumer and provided an opportunity to opt out, as required under GLBA. Indeed, Section 502(a) of GLBA establishes a default rule prohibiting the disclosure of personal, nonpublic financial information about consumers to unaffiliated third parties.
Section 502(e) contains exceptions to that default rule, however, and the new Interagency Guidance interprets paragraphs (e)(3)(B), (e)(5), and (e)(8) thereof as authorizing an exemption from the default rule for any disclosure by a financial institution to appropriate government agencies for the purpose of reporting suspected financial abuse of older adults. In addition, of course, disclosure of nonpublic personal information is permitted with the consent of the consumer or his legal representative.
The Interagency Guidance also notes with approval a February 2011 advisory from FinCEN that describes potential signs of elder financial exploitation that might trigger the filing of a Suspicious Activity Report. The potential signs are grouped into two main categories: (i) erratic or unusual banking transactions or changes in banking patterns, and (ii) unusual interactions with other adults or caregivers.
Footnote 2 of the Interagency Guidance clarifies that it deals solely with reporting permissible under GLBA and addresses neither any other federal or state laws that may regulate such reporting nor risk management expectations for financial institutions related to the reporting of elder abuse.