Minnesota Legislature Passes New Measures Empowering Financial Institutions to Take Action Against Financial Exploitation

On May 16, 2020, Governor Walz signed into law an amendment to Minnesota Statutes § 45A.06 allowing financial services providers to delay, or put on hold, a transaction if they reasonably believe that an adult falling under the "eligible adult" category is a victim of financial exploitation.

History of Minnesota Statutes § 45A.06

Prior to the statute's recent amendment, Minnesota Statute § 45A.06 required broker-dealers and investment advisors to delay or place a hold on a disbursement or transaction involving an account of an eligible adult, or an account in which they are a beneficiary, if the commissioner of commerce, law enforcement agency, or prosecuting attorney's office provided information to that broker-dealer or investment advisor that supported the reasonable belief that exploitation of the eligible adult had either occurred, may have been attempted, or is being attempted. It also gave broker-dealers and investment advisors discretion to place a hold on similar transactions if the broker-dealer or investment advisor suspected financial abuse of an eligible person and notified the appropriate parties.

An eligible adult under Minnesota Statute § 45A.06 includes any person that is 65 years of age or older, or anyone who is statutorily considered a vulnerable adult.

Expansion of Minnesota Statutes § 45A.06

The amendment to Minnesota Statute § 45A.06 expands these protections to financial services providers. This includes, among other entities, banks, trust companies, and credit unions.

Similar to the statute's provisions for broker-dealers and investment advisors, Minnesota Statute § 45A.06 requires a financial services provider to delay or place a hold on a transaction involving an account of an eligible adult, or an account that an eligible adult is a beneficiary of, if the "commissioner of commerce, law enforcement agency, or prosecuting attorney's office provides information to the financial services provider demonstrating that it is reasonable to believe that financial exploitation of an eligible adult may have occurred, may have been attempted, or is being attempted." It also authorizes a financial services provider to delay disbursement or place a hold on a transaction, where the financial services provider reasonably believes, after internal review, that financial exploitation of an eligible adult is present so long as the financial services provider also immediately provides written notification of the delay or hold to anyone authorized to transact business on the account (unless that party is believed to be a part of the exploitation that is the subject of the provider's concern); immediately notifies the entity responsible for receiving reports of alleged or suspected maltreatment of a vulnerable adult; and is able to provide documentation and updates of its internal review upon request to the commissioner, lead investigative agency, law enforcement agency, or prosecuting attorney's office.

The new statute allows a financial services institution to place a hold on the suspected transaction or disbursement for 15 business days with power to extend this hold for up to 25 business days (or until the financial institution, commissioner, law enforcement agency, lead investigative agency, or prosecuting attorney's office determines that the transaction will not result in the financial exploitation of the eligible adult).

How This May Apply to You

Minnesota Statutes § 45A.06 provides new powers to both individuals and financial services providers to combat financial exploitation of eligible adults, as summarized below:

• Individuals: If you are concerned about potential financial exploitation of a family member, it may be prudent to notify the family member's financial services providers of your concern. Doing so may help bring the issue to their attention, and at the very least, spark an internal investigation into the matter—if not effect a temporary hold on any transactions or disbursements from the accounts at issue until the matter is investigated and resolved.
• Financial Services Providers: The amended statute will raise new questions about if and when it is appropriate to place holds on, and report, suspicious transactions involving potentially vulnerable clients or customers, as well as related privacy concerns relating to the voluntary sharing of client or customer data with third parties. If you suspect that financial exploitation is occurring or is being attempted with respect to client or customer, consider contacting an experienced trust & estates litigation attorney for clear guidance as to next steps.

We Can Help

If you have any related questions about the amended statute—or need help to address concerns of a potential financial exploitation in process or attempted with respect to a family member, client, or customer, please contact Maslon's Trust & Estates Litigation Group. We are ready to help you with this important issue.