The Front Line Against Elder Financial Abuse

Research from professors Bruce Carlin and Tarik Umar finds that allowing financial professionals to flag suspicious activity and delay risky transactions reduces elder financial exploitation.

Elder financial abuse is a growing and often underreported threat, rooted in the intersection of aging, cognitive decline and concentrated wealth. More often than not, the perpetrators are not strangers but trusted caregivers, friends and family members.

To address the vulnerability for seniors, the Model Act to Protect Vulnerable Adults from Financial Exploitation (2016) gave financial professionals permission to report suspicious activity and pause questionable transactions.

Has the Model Act made a difference? Can a flag or wire transfer delay actually deter elder financial abuse? Professors Carlin and Umar discuss their findings:

What did the Model Act change for financial professionals, and why did that matter?

Carlin: Before the Model Act, financial professionals could notice that something seemed off, but they often had very little room to respond. A client might appear confused, pressured or unusually eager to move money, yet privacy rules made it difficult to step in without risking overreach.

The Model Act changed that by giving advisers and broker-dealers permission to report suspected exploitation, place a temporary hold on a suspicious disbursement and contact a trusted person designated by the client. That may sound like a small legal change, but in practice it was significant. In cases like these, timing matters. Once the money leaves the account, it can be very hard to recover.

Umar: And what matters is that the law did not require financial professionals to act. It allowed them to act. A permissive policy lowers the barrier to intervention without turning every questionable transaction into a compliance exercise. It gives advisers legal cover to use their judgment when they see red flags. In that sense, the Model Act created an early-warning system. Sometimes the most effective intervention is just a minor delay, or a call to a trusted contact, or simply an extra layer of scrutiny.

How did you study whether those new protections were actually reducing elder financial abuse? What did the data show?

Carlin: We wanted to know whether this legal change had a measurable effect, so we looked across all 50 states from 2014 to 2020 and compared states that adopted provisions of the Model Act with states that did not.

To do that, we used two main sources of evidence: reports filed with the Treasury Department’s Financial Crimes Enforcement Network, or FinCEN, and state-level crime data from the FBI’s National Incident-Based Reporting System. That gave us a way to study the policy from more than one angle. Rather than relying on anecdotes, we could look for broad patterns in both reporting behavior and actual incidents of exploitation.

Umar: The data showed this was not just a symbolic policy. In states that adopted the Model Act, elder financial exploitation fell by about 15% relative to the average level of abuse.

We also found that the effect was strongest in places with a higher concentration of financial professionals, especially in counties with more presence from large bank holding companies. The results were strongest where there were more people in a position to notice suspicious behavior and act on it. In other words, once professionals were given the legal room to intervene, many of them did, and the decline in exploitation was meaningful.

Why did a policy without a mandate still work, and where else could this kind of approach help protect vulnerable people?

Umar: We think it worked because it changed the timing of intervention. The law gave financial professionals a chance to act before the damage was done, not after. If an adviser can pause a suspicious transaction, or contact a trusted person, that can be enough to stop exploitation before funds leave the account.

Carlin: There is also a deterrent effect. Once people know those protections are in place, they may be less likely to attempt something improper in the first place.

Just as important, we found no evidence that financial professionals abused this authority. Customer complaints did not rise, and regulatory actions against advisers did not increase in states that adopted the law. That suggests the policy created a useful safeguard without creating a new problem.

Umar: That is what makes this finding so encouraging. The policy did not rely on a new mandate, a new penalty or a heavy enforcement regime. It simply gave professionals permission to use their judgment. More broadly, it points to a model that could apply in other settings where vulnerable people depend on expert intermediaries, including healthcare, law and social work.

Carlin: Yes, one lesson from this research is that a well-designed policy does not always need to force action. Sometimes giving people clear legal cover to step in responsibly is what makes meaningful intervention possible.

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