Family office compliance is the combination of regulatory obligations and the internal controls that make your day-to-day work defensible. If you only “have policies,” but your approvals, documents, and numbers live in inboxes and spreadsheets, you are still exposed.
This article is educational, not legal or tax advice. The right requirements depend on your structure, services, and jurisdictions.
Key takeaways
- Define your compliance scope first. Compliance becomes manageable when you are clear on what you are (single family office, multi family office, registered adviser, etc.) and what activities create regulatory exposure.
- Controls beat heroics. Most compliance failures come from missing approvals, missing documentation, and unclear ownership of deadlines, not from a lack of guidance.
- Run compliance on a calendar. A monthly and quarterly cadence catches more issues than an annual “audit scramble.”
- Use systems that preserve evidence. Role-based access, audit trails, and linked source documents make it easier to prove what happened and why.
A simple compliance map for family offices
Most family offices can map compliance into four buckets:
- Regulatory status and advisory activity
- Financial crime controls (AML, KYC, sanctions)
- Tax and entity reporting (including entity-level filings)
- Data privacy and cybersecurity
Your job is not to build a bank-level program. Your job is to cover the risks your office actually has and make the work repeatable.
1) Regulatory status and financial crime controls
SEC status: the family office exclusion is fact-based
In the US, many single family offices rely on the SEC’s rule defining “family offices” that are excluded from the definition of an investment adviser under the Investment Advisers Act. Eligibility depends on facts like who the clients are, who owns and controls the office, and whether the office holds itself out to the public.
A practical best practice is to write down your eligibility logic and review it annually, especially after changes like adding clients, entities, or outside participants.
AML and customer identification: track direction even if you are excluded
Family offices are not automatically subject to the same AML requirements as banks. Still, AML-style controls matter because family offices move money, onboard counterparties, and invest through complex structures.
FinCEN issued an AML and suspicious activity reporting rule for certain SEC-registered investment advisers and exempt reporting advisers, while noting that the rule does not apply to family offices as defined in SEC regulations.
FinCEN later issued a final rule delaying the effective date of the investment adviser AML rule from January 1, 2026 to January 1, 2028.
The SEC and FinCEN have also proposed customer identification program requirements for registered investment advisers and exempt reporting advisers.
Even if you are not a covered adviser, these developments matter because custodians and banks often expect you to have basic identity and source of funds checks for counterparties and investment flows.
Sanctions screening: the quiet risk
A lightweight sanctions process can prevent painful mistakes. OFAC’s sanctions compliance framework is a practical reference for building a simple, risk-based approach to screening and escalation.
2) Tax and entity reporting: control the sprawl
Family office risk often comes from entity sprawl. Over time, LLCs, trusts, partnerships, SPVs, and blockers multiply. Each one brings filings, signers, accounts, and record retention.
Two operating tools reduce risk fast:
Maintain an entity inventory you can use
Your entity list should answer operational questions quickly, including: who owns it, what it is for, where it is registered, which accounts it controls, and who can sign.
Turn obligations into a filing calendar with owners
A filing calendar without ownership is just a list. Every obligation should have: an accountable owner, a preparer, a reviewer, and a place where evidence is stored.
Track beneficial ownership reporting changes
Beneficial ownership information reporting under the Corporate Transparency Act has shifted. In March 2025, FinCEN issued an interim final rule removing BOI reporting requirements for entities created in the United States and U.S. persons, and setting deadlines for certain foreign entities registered to do business in the U.S.
The key is not memorizing dates. The key is making “new entity created” an event that triggers a quick compliance review.
3) Privacy and cybersecurity: treat data as regulated even when it is not
Family office data is sensitive by nature. Privacy failures become compliance failures when you cannot explain who had access, what was shared, and why.
If you have EU exposure, GDPR sets obligations for controllers and processors, including implementing appropriate security measures based on risk.
If you have California exposure, the CCPA includes rights like the right to know, delete, and opt out of sale or sharing, subject to exceptions.
- Role-based access, reviewed regularly
- Approved sharing methods for sensitive documents
- Clear retention rules (what you keep, where, and for how long)
- A simple incident process (who to call and what to freeze)
4) Internal controls: the part that makes everything work
Most compliance programs fail operationally. Controls that matter most in family offices are plain and repeatable:
Cash controls and approvals
Set thresholds for dual approvals, require verification for new payees and wiring instructions, and document exceptions.
Segregation of duties, even with a small team
Segregation of duties is a core internal control idea: avoid letting the same person initiate, approve, and reconcile the same activity. Small teams can use compensating controls such as independent review.
Documentation and audit trail
If you cannot show evidence, you do not have control. Audit logs are a practical feature to look for because they help answer who changed what and when. For example, Addepar describes audit logs that track changes and provide access through an Audit API.
Some platforms also market purpose-built compliance tools. For example, Masttro describes a compliance module focused on AML, KYC, alerts, and risk reviews.
Vendor access reviews
If you do one thing quarterly, review admin access across vendors and remove stale users. This reduces real risk with little cost.
Table: a practical compliance ownership model
| Area | What can go wrong | First control to implement | Owner |
| SEC status and advisory activity | Scope creep creates adviser-like behavior | Annual status review tied to your actual services | COO or counsel |
| Cash movement | Fraudulent wires or unreviewed payments | Dual approvals and payee verification | Controller |
| Entity reporting and filings | Missed deadlines, inconsistent entity data | Entity inventory plus filing calendar with owners | Tax lead |
| Financial crime controls | Counterparty risk not screened or escalated | Onboarding checklist and escalation path | Compliance lead |
| Privacy and access | Over-sharing, uncontrolled document access | Role-based access and access reviews | IT or Operations |
| Audit readiness | Numbers cannot be supported later | Linked documentation and audit trail | Controller |
A checklist you can actually run
Monthly (30 minutes)
- Review cash reconciliations and open exceptions
- Spot check one transaction end-to-end (support, booking, approval, report output)
- Confirm upcoming filings and payments in the next 30 days
- Review new payees or changed banking details
Quarterly (60 to 90 minutes)
- Review vendor and system user access and remove stale users
- Update the entity inventory (new entities, closed entities, new accounts)
- Review document access and sharing practices
- Do a quick incident tabletop (what happens if email is compromised)
Annual (half day)
- Refresh regulatory status assumptions (including family office exclusion logic)
- Confirm retention rules and archive or purge consistently
- Review core vendors for security and access controls
- Validate that major reports can be tied back to source records without hunting
Event-driven triggers
Run a short compliance review when you form a new entity, open an account, add a vendor that touches sensitive data, add a new family stakeholder, or introduce a new investment type.
Where FundCount fits
FundCount positions its platform around a real-time general ledger and describes keeping partnership and portfolio data connected so you can produce a consolidated view across multi-layer entity structures. In compliance terms, that can reduce “off-system” rollups and make it easier to keep entity reporting consistent as structures grow.
On the distribution side, FundCount’s reporting page describes sharing reports through the secure FundCount Investor Portal with encryption and layered approvals, and its investor portal page describes features such as encryption, MFA, and an optional approval workflow for compliance sign-off. FundCount also references tax reporting support in its general ledger content, including mapping accounts to IRS Forms 1065 and K-1.
Common mistakes to avoid
- Treating compliance as an annual project instead of an operating cadence
- Running filings from a calendar that does not have owners and reviewers
- Letting one person control the money movement end-to-end
- Never reviewing vendor access and administrator rights
- Storing documents, but not tying them to the transactions and reports they support
Closing thought
The best family office compliance programs are boring. They are clear on scope, clear on ownership, and consistent on cadence. Once you have that foundation, your technology choices can reinforce it instead of fighting it.
Family office compliance FAQ
Do we need a dedicated compliance officer?
Not always. Many offices assign compliance ownership to the COO, GC, or Controller and keep the program lightweight. What matters is clear accountability, a calendar, and evidence of reviews.
What is the minimum documentation standard?
Aim for “rebuildable history.” For any meaningful number or decision, you should be able to trace from the report output back to the underlying transaction and the supporting document, plus who approved it.
How do we handle compliance with a lean team?
Use thresholds and sampling. Put dual approvals on the highest risk activities (cash movement and access changes), and then spot check a small number of transactions each month. Small, consistent reviews beat big, irregular cleanups.
