Laws governing the mutual fund industry and its relationship with shareholders are predominately federal regulations; however, some state-issued mandates need to be considered. While the industry has been highly focused on new federal fiduciary rules related to Investors and their retirement savings, fund managers and service providers must also be mindful of Connecticut’s Mandatory Elderly Abuse Training Law established earlier this year, for one.
Here’s a brief summary of the law (Public Act 15-236) as provided by Connecticut’s Legislative Commission on Aging:
Requires financial agents to participate in mandatory training (this is different than mandatory reporting) to detect potential elderly fraud, exploitation, and financial abuse, including using the commission’s portal. Financial agents must complete the training within the later of six months after the commission established its portal or beginning employment. The portal was established on January 1, 2016 and accessible at http://coa.cga.ct.gov/index.php/basics.
The objective of the law is to protect the financial resources of the elderly who reside in Connecticut. When assessing the applicability of this rule, funds and providers should be aware that an organization is considered to be doing business in Connecticut if its funds are blue skied for the state.
By now, employees at such firms should have undergone at a minimum the training tool provided by Connecticut (a short YouTube Video). But fund providers should also consider adding employee training specific to their businesses.
The training program should provide additional guidance to employees on how the escalation process works and who should be notified. The training should be developed with a mindset that other states have adopt a similar law and definitions for the elderly and abusive behavior may vary state by state.
A good escalation process for suspected elder abuse should contemplate: Who should call the hotline? What information should be shared? How will the escalation be documented? Who should call the broker on the account and when? Should an SAR be filed? How should the account be flagged? What is the process for open requests? For joint accounts? Should your AML/Fraud team review all cases?
Financial institutions have an established AML/CIP/Fraud escalation process in place. Adding suspected elder abuse to this process is a logical approach since many of the red flags used to identify elder abuse are similar to those to identify theft and suspicious activity.
Keep in Mind: Financial institutions have immunity from civil and criminal liability for good faith reporting under Section 17b-451 © and (d) of the Connecticut General Statutes.