You’ve Identified Possible Financial Exploitation of Your Client – Now What?

Financial exploitation is evolving—and compliance professionals need to be prepared. As fraud tactics become more sophisticated, investment advisers and broker-dealers must strengthen their protocols to identify red flags, protect vulnerable clients, and comply with reporting requirements.

During the latest NSCP Currents Live Webinar last month, experts explored a framework for success that includes proactive client conversations, clear escalation paths, and effective use of regulatory tools such as trusted contacts and state/FINRA holds. The conversation focused on actionable practices for preventing and responding to suspected financial exploitation.

Key steps include:

• Inquiring and Assessing: Approach client withdrawals with curiosity and empathy. Ask open-ended questions like, “What is the money for?” and “Do you expect to need additional funds?”

• Pausing and Escalating: Create firm protocols to promptly review unusual requests, review state statutes, consider holds, and determine if you’re a mandated reporter.

• Taking Action: Intervene when appropriate, document firm actions, and create a firm library of tools to address different situations (i.e. compliance letters, bring in specialist for client call, or client education materials). Training frontline staff and engaging client family members can be instrumental in helping clients move forward.

• Resolution: Aim to prevent re-victimization through ongoing support, education, and follow-up. In some cases, it may be necessary to engage law enforcement or even end the client relationship.

The webinar emphasized that firms should not only focus on regulatory requirements, but also on building a culture of vigilance and empathy. This includes training staff, educating clients, and using resources such as AARP’s BankSafe program and FINRA’s Empowering Fraud Fighters guide.

This valuable discussion was led by Tara Ambrose, Vice President and Senior Manager of Client Risk Prevention at RBC Wealth Management*; Ronald Long, Consultant at Stevens & Lee; and Jennifer Szaro, Chief Compliance Officer at XML Securities and XML Financial Group.

To receive important information such as this and to stay informed on essential regulatory obligations and access expert guidance, join NSCP today to get access to NSCP Currents and stay up to date on issues that matter most for the financial services industry. Members can access the webinar here.

You can also be featured on an NSCP Currents Live webinar or in NSCP Currents, the lead compliance publication of the financial services industry. Find out how you can share your experiences, advice, and tried and tested strategies.

* Tara Ambrose is now in a new position, as Senior Financial Fraud Ombudsperson, Enforcement Division, at the Minnesota Department of Commerce.