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Risk Fraud & Compliance

ACAMS: Crypto scams targeting seniors are on the rise, but so are efforts to prevent them

Tad Simons  Technology Journalist/Thomson Reuters Institute

Tad Simons  Technology Journalist/Thomson Reuters Institute

Panelists at a recent ACAMS event discussed how the type of financial fraud that targets seniors with cryptocurrency scams is unfortunately increasing

LAS VEGAS — One of the fastest-growing forms of fraud involves scammers who target seniors and convince them, one way or another, to convert their money into cryptocurrency in order to receive a huge investment return, lottery prize, or other enticing — but entirely bogus — benefit.

At the 21st Annual Anti-Money Laundering & Anti-Financial Crime Conference, held by the Association of Certified Anti-Money Laundering Specialists (ACAMS), Rebecca Kiethley, a Federal Bureau of Investigation (FBI) fraud specialist, explained that people over 70 years of age control 75% of the wealth in America, and over the next 10 years somewhere between $30 trillion and $68 trillion in assets is expected to be transferred from the Baby Boomer generation to their Gen X and Millennial generation heirs.

Criminals know all of this, of course, and they are preparing to steal as much of that money as they can.

According to the FBI’s 2021 Elder Fraud Report, seniors over 60 lost more than $1.7 billion to fraud last year (a 74% increase from 2020), with the average victim losing $18,246. In fact, people over 60 lost $239 million in 2021 to investment schemes alone, many of which were get-rich-quick scams involving digital assets, or cryptocurrencies. And it is estimated that for every 1 complaint the FBI receives, 44 go unreported.

Crypto scammers target seniors for several reasons. In addition to seniors being more trusting of people, they also tend to be less knowledgeable about technology in general, and digital assets in particular. Worse yet, many people currently in their 60s who have not saved enough for retirement are now trying to “catch up,” which makes them vulnerable to investment schemes that promise quick, large returns.

An abuse of trust

Speaking at the ACAMS conference, Kiethley said that seniors are most likely to fall victim to investment scams, but they can also be taken in by romance scams, Ponzi schemes, fake lottery prizes, tech-support scams, real-estate swindles, or people pretending to represent a government agency such as the IRS, Medicare, or Medicaid.

Unfortunately, victims of such scams are much less likely to get their money back if the scheme involves crypto, due to the anonymous, decentralized nature of digital currencies. The FBI has created a special virtual-asset investigative unit to combat an expected rise in crypto crime, and the unit has already had some success in recovering stolen digital assets using sophisticated financial forensics. The odds of recovering money lost to a crypto scam, however, are still very long.

When targeting seniors, many scammers make initial contact via social media or over the phone, pretending to have dialed a wrong number. Scammers often research their target on the internet or social media, then use that information to establish a sense of personal connection with their victim. After gaining the person’s trust through a few friendly interactions, the scammers will move to the next phase: extracting money from their victim.

In a typical crypto investment scam, for instance, the scammer might mention a great crypto investment opportunity and invite the victim to participate by giving them a small amount — $100, for example. A week later, the scammer might show the victim a crypto wallet with $1,000 in it as proof that the investment has paid off. Then the scammer might persuade the victim to “invest” more money — $500 or $1,000 this time — and claim soon after that the victim has made $10,000. Excited by such gains, the victim might then be willing to part with $10,000 or more, after which both the scammer and money disappear.

Investment scams are the most common ones involving cryptocurrency, but other types of fraud can involve digital assets as well. Indeed, according to the FBI’s Elder Abuse report, “cryptocurrency is becoming the preferred payment method for all types of scams,” because digital assets are so difficult to trace.

How to recognize elder fraud

Because seniors are so vulnerable to such tactics, government agencies, law enforcement, regulators, and bank personnel are all ramping up efforts to educate the public and encourage training that teaches front-line personnel how to recognize signs that a senior is being scammed — and if so, where to report it.

Mike Brunow, who oversees the criminal money laundering and fraud division of the United States Postal Service, told the ACAMS audience that there are a number of red flags for elder abuse of which front-line bank workers and other financial personnel should be aware. These red flags include:

      • customer behavior that is out of character;
      • a sudden change in deposit habits;
      • someone unfamiliar showing interest in the customer’s financial affairs;
      • a customer adding someone unexpected to their bank security card;
      • a customer who purchases a large number of pre-paid cards; and
      • unorthodox transactions or money transfers.

Bank employees who suspect foul play can try to engage a customer in conversation to find out more, or, failing that, file a Suspicious Activity Report (SAR) detailing the circumstances and reasons for suspicion. Also, anyone can file a complaint with the FBI’s Internet Crime Complaint Center.

Trying to help seniors who are experiencing some form of cognitive decline can be tricky, however. Bank employees and police investigators are not doctors, after all, and bank customers are technically free to do whatever they wish with their money.

According to another ACAMS speaker — Jessica Clemens, assistant VP of risk management with Timberline Bank in Grand Junction, Colo. — another problem is that even if a scam is uncovered, it is sometimes difficult to convince seniors that they are being duped.

“These people often don’t realize that they are victims,” Clemens says, adding that then the question becomes, “What do we need to do as a community to educate them — to say you are being taken advantage of, that the lovely individual at the other end of the line is never coming to see you, and the car full of cash is never going to show up?”

Approximately 17% of the US population is over 65 years of age, and that number will climb to more than 20% by 2030, according to Statista. And to crypto scammers, those numbers mean opportunity. To everyone else, they should be a wake-up call — a push to expand awareness and prevention efforts and ensure that the oldest among us are not being fleeced by criminals posing as friends.

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