Episode 16: Senior$afe Act (Part 2)

CEO Michelle Jacko picks up where she left off on our two-part series covering the Senior Safe Act. In this segment, she covers the integral definitions, training requirements and other essential know-how regarding the reporting process, under the Senior Safe Act.


Hello, this is Michelle Jacko, CEO of Core Compliance & Legal Services.

On this week’s CCO Buzz, we are going to be picking up where we left on part two of Senior Client Issues, and specifically we will be covering the Senior$afe Act. Now for some of you that may not be aware of this, on May 24th President Donald Trump actually signed into law the Economic Growth Regulatory Relief and Consumer Protection Act; which included the Senior$afe Act of 2017.

The importance of the Senior$afe Act is its intention to really help protect against financial exploitation of senior citizens through the promise of immunity certain covered financial institutions and individuals; who would disclose suspected financial exploitation to a covered agency.

So we have a lot of different definitions. And the first that I’m going to cover is…

Who exactly is a Covered Financial Institution (CFI)?
Well that would include a credit union, a depository institution, an investment adviser or broker-dealer, an insurance company, an insurance agency, or transfer agent.

And if you were to think about who’s a Covered Agency – that would be the Securities and Exchange Commission (SEC), Adult Protective Services, or another regulatory agency such as FINRA.

Now, the Senior$afe Act defines exploitation as the fraudulent or otherwise illegal act or process that would use resources of a senior citizen for monetary or personal benefit. And so in other words, you know where you see situations where by a senior citizen could be deprived of rightful access to the use of their benefits, resources, assets – that’s truly where the exploitation is coming in.

What makes this act so unique is its promise of immunity from civil or administrative proceedings. When a Covered Financial Institution reports a suspected financial exploitation to this covered agency – so long as that CFI, as I will now call the Covered Financial Institution, has provided certain requisite training and reporting is made to the reporting individual, which is in good faith and reasonable care.

Now what does that mean to us?

For those of you that are in compliance in the investment advisory or broker-dealer space, what you need to think about is:

  • How will you be conducting this type of training?
  • What actually is required?

The training to be provided by the CFI has to be made available to regulatory agencies; and first and foremost, it must address how the CFI is able to identify and report suspected exploitation, both internally and externally to law enforcement.

So for example, when conducting this training it would be important to go through certain “red flags;” how are you able to detect various signs of financial exploitation?

And then, if you detect such exploitation – what are the processes internally for you to escalate that to compliance, for compliance to do further investigation, for you to perhaps call an outside expert? And what kind of reporting form should be used?

What many of our client firms have done is they’ve actually created their own standalone form for the type of information that should be captured. And then, that is then adopted within the firm’s policies and procedures.

So the training is two-fold. It is, number one, practical from identifying what are the “red flags” that we should be aware of to detect financial exploitation; and, two, its practical – it’s walking through, if we suspect financial exploitation, what are the various considerations that we should be memorializing and documenting in writing to respond to that external reporting to law enforcement.

Now, with regards to additional training topics you will also need to emphasize the need to protect privacy and the integrity of that individual. It’s important for you to think about who within your organization is going to come into contact with a senior investor. Then you’ll need to customize the training program for those teams – identifying common signs of dementia or financial exploitation and what types of events would lead to reporting.

For example, a caregiver that shows a lot of interest in the senior’s account and restricts access to the senior. You’ll want to address how that individual should report the suspected diminished capacity or exploitation of that individual. With the development of an internal form, you could then use this as a foundational document to gather essential information for external reporting to law enforcement or Adult Protective Services.

The training would also need to inform that individual on how to protect the privacy and respect the integrity of the affected individual. It’s important to stress that the suspected exploitation must not be discussed outside the institution without the consent of the senior. And I’ll give you an example, if you happen to have a client that completed a trusted contact form, that would be a form of consent that you could talk to that person outside of the institution. You could also speak with a covered agency, such as the SEC.

You need to stress that the suspected exploitation must not be discussed outside the institution, without the consent of the senior, such as with a trusted contact. So, when you’re completing the new account forms and you happen to get that trusted contact information, whomever that trusted contact is, can be shared your concern about financial exploitation. You can also, of course, report that to a covered agency, such as the SEC.

But remember, this training should occur within the first year of hire. And so, it’s going to be important for you to develop within your [Human Resources] HR department and other training teams within the organization – what is the timing of the training? What is the content? And how do we ensure that the more appropriate persons, that may be shifting to new roles within the organization are receiving proper training?

Importantly, for an individual who is seeking immunity – not only must that individual have received the requisite training, but that individual must also serve as a supervisor, such as being in the compliance or holding a legal function within the Covered Financial Institution or if they are registered representative or investment advisor representative, must be affiliated and associated with that Covered Financial Institution. You also have to ensure that any kind of disclosure that is made is within good faith and reasonable care.

In order to obtain immunity for Covered Financial Institutions, the institution that’s seeking immunity has very similar requirements. The individual who is representing the CFI and making the reporting on behalf of the CFI, must be employed by the CFI at the time of the disclosure. And in the case of the registered representative or investment adviser representative, must be affiliated or associated with the CFI at the time of the disclosure. And in addition, that same individual must’ve received the requisite training before the disclosure to a covered agency.

So as you can see from this guidance, it is imperative for firms to take time to develop a robust training program that will comply with the various constituents of the Senior$afe Act. And to ensure that all training is documented accordingly, so if that institution or individual need to seek immunity they will have the back-up documentation to show that all of the requisites have been followed.

For more information, feel free to contact us at (619) 278-0020 or email us at info@corecls.com. Thank you.

CCO Buzz: Well that’s it for this week’s episode. If you’d like additional information, please check out our website at www.corecls.com. You can also follow us on Facebook, LinkedIn or Twitter @CoreCLS. Thank you and we hope you tune into next week’s episode of the CCO Buzz.



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