RELATING TO FINANCIAL EXPLOITATION.

HB1640

HOUSE OF REPRESENTATIVES

H.B. NO.

1640

THIRTY-THIRD LEGISLATURE, 2026

STATE OF HAWAII

A BILL FOR AN ACT

relating
to financial Exploitation
.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

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SECTION
1.
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Chapter 412, Hawaii Revised Statutes,
is amended by adding a new part to article 4 to be appropriately designated and
to read as follows:

"
PART
.
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FINANCIAL
EXPLOITATION PREVENTION

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412:4-A
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Definitions.
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As used in this article, unless the context
otherwise requires:

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"Caregiver"
means a parent or other relative responsible for the health and safety of an
individual, or a guardian, conservator, or any other person with legal or
fiduciary obligations to an individual.

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"Covered
financial exploitation" means financial exploitation of an individual
through deception, manipulation, coercion, or intimidation, or through improper
leveraging of a caregiver relationship.

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"Examination
and enforcement authority" means one of the following:

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(1)
�
For the division, any and all applicable
authority provided under this chapter;

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(2)
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For the Federal Deposit Insurance Corporation,
any and all applicable authority provided under title 12 United States Code
sections 1811 to 1835a;

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(3)
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For the Federal Reserve System, any and all
applicable authority provided under title 12 United States Code sections 221 to
522;

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(4)
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For the National Credit Union Administration,
any and all applicable authority provided under the Federal Credit Union Act,
title 12 United States Code sections 1751 to 1795k; and

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(5)
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For the Office of the Comptroller of the
Currency, any and all applicable authority provided under title 12 United
States Code sections 1 to 5710.

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"Financial
exploitation" means either of the following:

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(1)
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A fraudulent or otherwise illegal,
unauthorized, or improper act or process of an individual who uses or attempts
to use the financial resources of another individual for monetary or personal
benefit, profit, or gain; or

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(2)
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A fraudulent or otherwise illegal,
unauthorized, or improper act or process of an individual that results or is
intended to result in depriving another individual of rightful access to or use
of benefits, resources, belongings, or assets.

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"Unauthorized"
means without permission, or utilizing permission obtained from a person
through deception, manipulation, coercion, or intimidation or through the improper
leveraging of a caregiver relationship.

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"Vulnerable
adult" means an adult who, because of mental or physical impairment or
advanced age, is unable to protect oneself from covered financial exploitation.

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"Written"
means inscribed in a tangible or electronic medium.

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412:4-B
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Policy on procedures; training.
�
(a)
�
A
financial institution shall develop and implement a policy for training
relevant employees to recognize signs of covered financial exploitation of
members or customers of the financial institution, and for reporting that
activity to a law enforcement agency or the department of human services.

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(b)
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A policy developed under this section shall
apply generally to all members or customers of the financial institution, shall
provide for training on and procedures for recognizing signs of, preventing,
and reporting covered financial exploitation of vulnerable adults, and may
provide for specialized training on and procedures for recognizing signs of,
preventing, and reporting covered financial exploitation of certain categories
of potentially affected members or customers other than vulnerable adults.
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The policy shall provide for all of the
following:

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(1)
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Employee training, including instruction on
all of the following:

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(A)
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Common types of covered financial
exploitation;

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(B)
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Signs of potential covered financial
exploitation;

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(C)
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Relevant federal advisory opinions or guidance
on elder financial exploitation;

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(D)
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Internal procedures developed under paragraphs
(2) to (4); and

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(E)
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Reporting procedures under paragraph (6);

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(2)
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Procedures to follow when covered financial
exploitation of a member or customer is suspected or detected based on
available facts;

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(3)
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Procedures to follow when, after examination
or investigation of available facts, covered financial exploitation of a member
or customer is no longer suspected;

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(4)
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Procedures to follow for delaying or placing a
freeze on transactions or assets relative to a member's or customer's accounts,
individually or jointly held, if covered financial exploitation is suspected or
detected;

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(5)
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Designation of one or more employees to make a
report described in paragraph (6);

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(6)
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Except as provided in subsection (c) or as
prohibited under federal law, reporting of suspected or detected covered
financial exploitation of a member or customer to which the policy created
under this part applies to a law enforcement agency or the department of human
services.
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If a financial institution
elects to report to the department of human services instead of law
enforcement, a report made to the department of human services shall be made
according to procedures established by the department of human services under
applicable law.
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In determining whether
and to what entity to make a report, the policy shall, at a minimum, require:

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(A)
�
Consideration of relevant federal advisory
opinions or guidance on elder financial exploitation and applicable employee
training;

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(B)
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Consideration of the safety of employees, the
customer or member that the financial institution believes is the target of
covered financial exploitation, or other customers or members;

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(C)
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Consideration of the need and ability to
preserve funds or assets of the customer or member that the financial
institution believes is the target of covered financial exploitation; and

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(D)
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Consideration of whether the financial
institution can discern, from available facts and knowledge of the member or
customer that is the potential victim of covered financial exploitation, that
that member or customer is an adult in need of protective services under part X
of chapter 346; and

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(7)
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A citation to this part, indicating the policy
was drafted to comply with this part.

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(c)
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A policy developed under this section shall
not require a report of suspected or detected covered financial exploitation
if, after investigation or examination of available facts, the financial
institution makes a determination that covered financial exploitation has not
occurred or is not occurring and no action is necessary.

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(d)
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All initial trainings under a policy
developed under this section shall be provided to a new employee within three
months of the new employee's hire date.
�

Any additional training, including refresher training, shall be at the
discretion of the financial institution.

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412:4-C
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Reporting covered financial exploitation.
�
(a)
�
A
report of suspected or detected covered financial exploitation made by a
financial institution, or by any other person under section 412:4-F(c), shall
include the name of the individual believed to be the victim, a description of
the suspected or detected covered financial exploitation, and a designated
contact for notices required under subsection (b) if the reporter is a
financial institution.
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If a report under
this subsection is made by telephone, the law enforcement agency or department
of human services, whichever receives the report, shall make a written record
of the information provided in the telephonic report.

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(b)
�
Within ten business days after it receives a
report of suspected or detected covered financial exploitation from a financial
institution under this section, the law enforcement agency or department of
human services, whichever receives the report, shall provide written
notification to the designated contact of the financial institution that clearly
indicates whether a reported incident is under investigation or has been
referred to a law enforcement agency for investigation.
�
As soon as practicable after the investigation,
the law enforcement agency or department of human services shall notify the
financial institution of the disposition of the reported incident.

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(c)
�
Within ten business days after it receives a
report of suspected or detected covered financial exploitation from a financial
institution under this section, the law enforcement agency or department of
human services shall notify the office of the county prosecuting attorney.
�
Notification shall be made in a manner
prescribed by the attorney general and shall include, at a minimum, a copy of
each report submitted to or committed to written form by the law enforcement
agency or department of human services and the response to, or actions taken
based on, the report by the law enforcement agency or department of human
services.

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(d)
�
If a financial institution that attempts to
make a report of suspected or detected covered financial exploitation under
this section is unable to communicate with a law enforcement agency or the department
of human services to make the report, or if the law enforcement agency or
department of human services, whichever receives the report, fails to provide
notification to the financial institution under subsection (b), the financial
institution may notify the office of the county prosecuting attorney.
�
Notification under this subsection shall be
made in a manner prescribed by the attorney general.

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(e)
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A law enforcement agency, the department of
human services, or the county prosecuting attorney shall not disclose the
identity of an individual or financial institution that makes a report of
suspected or detected covered financial exploitation without the consent of the
individual or financial institution.
�
However,
this subsection does not prohibit a disclosure that is made by the department
of human services to a law enforcement agency or by a law enforcement agency or
the department of human services to the county prosecuting attorney as required
under subsection (c), or a disclosure required in a civil or criminal
proceeding.
�
A law enforcement agency, the
department of human services, or a county prosecuting attorney shall not
disclose the identity, or personal or account information, of an individual
that is the subject of a report of suspected or detected covered financial
exploitation as a victim without that individual's consent, except as required
under subsection (c) or as required in a civil or criminal proceeding.

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(f)
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The identity of an individual or financial
institution that makes a report of suspected or detected covered financial
exploitation under this section shall be exempt from disclosure under chapter
92F.
�
The identity of an individual that
is the suspected or confirmed victim of covered financial exploitation or that
individual's personal or account information shall be exempt from disclosure
under chapter 92F.
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This subsection does
not limit the applicability of any other exceptions to disclosure under chapter
92F to all or any part of a report made under this part.

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412:4-D
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Transaction delay or freeze; powers of
financial institutions.
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(a)
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Except as otherwise provided in this section,
if a financial institution suspects or detects covered financial exploitation
of a member or customer, the financial institution shall delay the related
transaction, and may place a freeze on any transactions or assets related to
that member's or customer's account, for further investigation or examination
of available facts.
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The delay and
freeze, if applicable, shall expire at the earlier of either:

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(1)
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The financial institution's determination that
the transaction is not related to any covered financial exploitation; or

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(2)
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Fifteen business days after the initial
transaction delay;

provided that if a court of competent jurisdiction issues
an order finding that reasonable suspicion of financial exploitation exists, expiration
of the transaction delay and freeze shall be tolled.
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If the financial institution places a freeze
on any transactions or assets related to that member's or customer's account,
the financial institution shall provide written notice to all owners on the
account of the freeze no later than business days
after the placement of the freeze.

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(b)
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If a financial institution is informed by a
law enforcement agency or the department of human services under section 412:4-C(b)
that suspected or detected covered financial exploitation that has been
reported is under investigation, the financial institution may extend the term
of a transaction delay and freeze, if applicable, until:

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(1)
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The financial institution is informed of the
dismissal of the reported incident; or

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(2)
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The financial institution reasonably believes
there is no continued risk of covered financial exploitation of the targeted
individual,

whichever is later.

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(c)
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A financial institution may provide for the
processing of any transaction necessary to preserve the health, safety, or
financial well-being of a member or customer during the period of a transaction
delay or freeze, unless that transaction is related to the suspected covered
financial exploitation or the financial institution is directed otherwise by
court order.

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412:4-E
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Examination and enforcement; immunity.
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(a)
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Except
as provided in subsections (b) and (c), only the federal or state regulatory
agency that authorized the financial institution to organize and commence
business in its current form and that has examination and enforcement authority
over that financial institution may enforce this part.

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(b)
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If a financial institution is organized under
the laws of another state or territory of the United States and maintains one
or more branch offices in this State, only the division may enforce this part.

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(c)
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In addition to the general authority of a
federal regulatory agency described in subsection (a), the Federal Deposit
Insurance Corporation and Federal Reserve System may refer a suspected
violation of this part discovered under their examination and enforcement
authority to an appropriate agency described in subsection (a) or (b) or take
appropriate action under its examination and enforcement authority.

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(d)
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Except with regard to the examination and
enforcement authority of the division or a federal regulatory agency described
in subsection (a), (b), or (c), a financial institution and any of its
employees, officers, directors, or affiliates shall be immune from any
liability or penalty under law or rule of this State for an action,
determination, omission, or process under this part or under a policy governed
by this part.

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(e)
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There shall be no private right of action
against a financial institution, or any of its employees, officers, directors,
or affiliates, either in law or in equity, for an action, determination,
omission, or practice under this part or under a policy governed by this part.

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412:4-F
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Construction and application.
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(a)
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This part shall not be construed as limiting the responsibilities of a
law enforcement agency to enforce the laws of this State nor as precluding a
law enforcement agency from reporting and investigating, as appropriate,
alleged criminal conduct.

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(b)
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This part shall not be construed as limiting
the ability or authority of a financial institution to take otherwise lawful
actions under federal or state law or private agreement; nor to report or
prevent fraud or other illegal activity related to its operations or the assets
of a member or customer that are held by the financial institution.

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(c)
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This part shall not be construed as
restricting or prohibiting a person, other than an individual who is acting as
an employee of a financial institution, that suspects or finds that covered
financial exploitation of an individual has occurred or is being attempted by
another individual from making a report to a law enforcement agency or the
department of human services.

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(d)
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This part shall not be construed as limiting
the responsibilities of the department of human services to investigate, as
appropriate, alleged abuse of any adult in need of protective services."

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SECTION 2.
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In codifying the new sections added by
section 1 of this Act, the revisor of statutes shall substitute
appropriate section numbers for the letters used in designating the new
sections in this Act.

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SECTION 3.
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This Act shall take effect upon its approval.

INTRODUCED BY:

_____________________________

Report Title:

DCCA; AG;
DHS; County Prosecuting Attorneys; Financial Institutions; Financial
Exploitation; Transaction Delays; Freezes

Description:

Requires
financial institutions to establish policies for identifying financial
exploitation and the training of employees.
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Establishes procedures for reporting suspected financial
exploitation.
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Requires financial
institutions to delay transactions, and allows freezes on assets, when there is
suspected financial exploitation.
�
Provides
immunity from liability for financial institutions for any action,
determination, omission, or practice related to this Act.

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