Executive Summary
Family offices are evolving and becoming more powerful, complex, and visible. What were once secretive stewards of generational wealth are now active global investors, expanding into private equity, private credit, global real estate, sports teams, and digital assets in search of diversified, uncorrelated returns.
This shift, driven in part by the hiring of institutional professionals, has increased regulatory and compliance risks. Challenges now range from insider trading concerns and fiduciary ambiguities to cybersecurity threats and potential violations of the Investment Advisers Act.
While regulatory challenges can be complex, the first step toward managing risk is a thorough review of the current compliance infrastructure, policies, and procedures. A well-structured compliance strategy is no longer a bureaucratic burden, it is a strategic asset, preserving wealth, ensuring continuity, and protecting privacy for future generations.
Key Findings
• Governance continues to be a critical vulnerability. In a recent Ocorian survey, 86% of family offices identified governance challenges as their primary risk exposure.
• State regulators are increasingly active, particularly in areas where federal oversight is limited due to political constraints, most notably in emerging sectors such as cryptocurrency and decentralized finance (DeFi). According to a recent RBC/Campden survey approximately 16% of North American family offices currently have exposure to cryptocurrency
• Complex activities, such as board participation, digital asset investing, and cross-border transactions, can trigger unexpected legal and regulatory obligations, even for family offices that are otherwise exempt from registration.
• Investment complexity is increasing, as expanded allocations to private equity, private credit, and digital assets elevate both regulatory exposure and portfolio risk.
• Fiduciary responsibilities tied to trusts, ESG mandates, and family foundations demand formal documentation, consistent processes, and ongoing oversight to meet legal standards.
• Compliance staffing gaps remain a significant concern. Deloitte reports that family offices in North America devote approximately 27% of their working hours to legal and compliance matters, underscoring the critical need for dedicated, specialized expertise in this area.
• Cybersecurity is a persistent threat. Deloitte found that 43% of family offices experienced a cyberattack within the past 12 to 24 months. Larger family offices were more likely to suffer attacks and experience losses from the attacks.
• Artificial intelligence introduces new risks, including challenges around data privacy, documentation, and oversight that may complicate compliance efforts.
• ESG and sustainability initiatives are introducing additional layers of complexity, particularly as rising generations assume greater influence over governance and investment decision-making.
Introduction
Family offices are expanding rapidly in size, scope, and sophistication. Deloitte estimates that as of 2024, there were approximately 8,030 global family offices, with 3,180- a number projected to reach 4,490 by 2030- located in North America. Currently, assets under management are estimated at $3.1 trillion globally, with $1.3 trillion located in North America. According to Deloitte, AUM attributable to global family offices could approach $5.4 trillion by 2030.
According to Deloitte, global family wealth represented by family offices will approach $9.5 trillion by 2030.
As offices pursue broader investments—from interests in startups, venture capital, and private credit to real estate development and digital assets—their compliance risks increase accordingly. Regulatory bodies, especially the SEC, are paying closer attention to the family office behemoth. A proactive compliance strategy is essential to safeguard innovation and protect long-term goals.
PART I:
Regulatory Exposure and Legal Risks
Are You Really a Family Office?
A fundamental but often overlooked risk is failing to meet the criteria for exemption from SEC registration under the 2011 Dodd-Frank reforms. Not every entity that labels itself a “family office” qualifies for SEC exempt status. The Dodd-Frank Act defines a family office narrowly.
The firm:
Must provide advice solely to family clients
Must be wholly owned and controlled by family members or entities
Must not market itself as an investment adviser
While the overall requirements for a registration exemption for single-family office (SFO) are relatively clear, there are several potential triggers that may cause a family office to fall outside the scope of the SEC exemption.
Common risks include:
Involving non-family investors
Taking influential board seats in non-family entities
Participating in joint ventures with unrelated parties Managing assets for friends or extended network
Unintentional violations are common, and losing the exemption can subject the office to burdensome SEC registration, filings, and compliance standards.
Shared employees across multiple single-family offices
When You Might Need to Register
Certain behaviors may trigger registration under the Investment Advisers Act:
• Providing securities advice, even informally
• Pooling assets for investment beyond the family
• Managing outside capital
Were a family office to become subject to SEC registration, the resulting increase in regulatory complexity, cost, and operational burden can be significant, diverting time and resources from core investment and asset management activities. Potential filing obligations may include but not be limited to:
• Form ADV (registrations as an adviser)
• Form D (private offering disclosures)
• Form 13F (equity holdings > $100 million)
• Form PF (private fund reporting under specific thresholds)
Increasing Regulatory Burden at the State Level
State-level regulatory activity is becoming increasingly prominent. While the current administration has expressed an interest in reducing the regulatory burden at the Federal level, many states, including California, Texas, New York, Florida, Massachusetts, and Illinois have been increasing regulatory requirements and pursuing enforcement actions. These 6 states, which account for the majority of family offices by count as well as AUM, have been increasingly active in examination and enforcement. This shift is partly driven by states’ ability to act more swiftly than the federal government. Recent enforcement and audit activity has largely focused on the crypto and DeFi sectors. These areas currently lack regulatory clarity and well-defined rules, though that landscape is rapidly evolving.
Conflicts of Interest and MNPI Risks
Family office professionals often hold board seats, co-invest, or maintain strategic relationships, exposing them to material nonpublic information (MNPI). While actual “insider trading” enforcement at family offices has been relatively limited historically, there are other aspects which can expose a family office to enforcement action, including:
INSIDER TRADING EXPOSURE
UNEVEN INFORMATION ACCESS AMONG FAMILY BRANCHES
PERSONAL TRADING CONFLICTS
SELF-DEALING AND PREFERENTIAL TREATMENT
FCPA AND PEP TYING
INFORMATION BARRIERS AND CONTROLS
Robust policies around personal trading, information barriers, and conflict resolution are essential, not just legally, but to preserve family trust and avoid reputational risk.
Investment Complexity and Operational Risk
Private Markets: Tempting but Treacherous
Private investments now represent approximately 30% of family office portfolios (RBC/Campden, 2024), with 83% of North American family offices allocating to private equity; 43% of such allocations through funds or fund-of-funds structures and 40% through direct investments. As exposure increases, so too does the importance of maintaining disciplined oversight. Lapses in due diligence, such as relying on incomplete financials or omitting key documentation, can expose fiduciaries and employees to significant regulatory and civil liability, particularly in the context of intra-family disputes.
Private credit, another increasingly prominent allocation, presents distinct diligence challenges. The sector’s rapid expansion has raised concerns about mispriced risk, constrained liquidity, and the potential for widespread restructurings during economic stress. These dynamics underscore the necessity of comprehensive and ongoing diligence. Across both private equity and private credit, a rigorous and methodical approach remains essential to safeguarding assets and mitigating liability.
Entity Complexity: A Hidden Trap
Family offices often rely on LLCs, LPs, trusts, and offshore entities to achieve privacy and asset protection. However, without centralized oversight and coordinated governance, these structures can introduce significant compliance and operational risks, including:
• Regulatory Reporting Obligations: Compliance with the Corporate Transparency Act and accurate beneficial ownership disclosures;
• AML and Surveillance Requirements: Robust KYC/AML processes, ongoing transaction monitoring, and timely Suspicious Activity Report (SAR) filings;
• Jurisdictional Constraints: Awareness of geographic restrictions on trading, investment activities, and order flow;
• Product and Strategy Complexity: Distinctions in required expertise for direct vs. co-investments, and the need for specialized knowledge when utilizing structured or derivative products; and
• Valuation Governance: Need for consistent and defensible valuation policies and procedures across entities and asset classes
• Multiple Branches: According to Deloitte, 28% of global family offices have more than one branch and another 12% are expecting to open an additional branch..Without proper controls, even well-intentioned structuring can expose the office to regulatory scrutiny and reputational risk.
Mapping ownership and control across entities is critical, especially in multigenerational families. With complex structures, including feeder funds and funds of funds, due diligence and ownership attribution can be burdensome. Aside from investment complexity, there can be additional risk through third-party vendors, fund administrators, custodian agreements, governance issues, and decision-making authority. None of these are “exciting” or “interesting” aspects of risk but together can provide painful and expensive lessons to a family office.
Digital Assets: Fast-Growing, Poorly Regulated
Crypto is now mainstream but remains a regulatory gray zone. In fact, at a recent Crypto Task Force Roundtable, the Head of the SEC highlighted the Agency had a goal of providing “clear regulatory rules of the road” for digital assets as well as custodians. The fact that the SEC Crypto Task Force has plans for at least 4 panels, as well as a Summit at the White House, should highlight the importance of this topic to regulators.
Digital asset investments continue to present unresolved custody challenges, with uncertainty around how and where assets are held, and by whom, raising legal and operational concerns. Tax treatment remains complex, particularly for activities such as staking, airdrops, and token swaps, which can trigger unintended reporting and liability issues. Meanwhile, regulatory enforcement is intensifying, especially at the state level, where agencies are taking a more active role in oversight and examinations.
Every crypto or digital asset strategy should undergo a formal legal and compliance review, addressing custody, valuation, reporting, and jurisdictional risk.
Cross-Border Challenges
In today’s landscape of geopolitical tension, sanctions, and trade restrictions, expanding globally introduces a range of compliance risks, including OFAC sanctions, export controls, AML obligations, and foreign reporting requirements (e.g., FATCA, FBAR).
Among the primary risks are:
SANCTIONS VIOLATIONS –
Often indirect, such as through foreign fund ownership
FCPA AND ANTI-BRIBERY EXPOSURE –Especially in emerging markets
TAX AND REPORTING FAILURES –Including FATCA, CRS, and IRS compliance gaps
UNFAMILIAR LOCAL REGULATIONS –
Often overlooked by domestic fund managers
WEAK INTERNAL CONTROLS –
Undermine the ability to detect and manage crossborder risks
Family offices should consult qualified local counsel before entering new jurisdictions and remember that U.S. laws, particularly those involving sanctions and anti-bribery, often apply extraterritorially.
Cybersecurity & Data Integrity Matter More Than Ever
Family offices safeguard highly sensitive information, including financial records, estate documents, health data, and travel plans, making them attractive targets for cybercriminals. Threats such as phishing, ransomware, and impersonation attacks are growing in frequency and sophistication.
Many family offices, however, lack the cybersecurity infrastructure of larger institutions, leaving them vulnerable. A single compromised account can expose personal data, enable financial theft, and trigger regulatory scrutiny following a breach.
• According to Deloitte, 43% of Family Offices have suffered a cyberattack over the past 12-24 months. 57% of those attacked were located in North America. It also appears that larger family offices (AUM >$1B) were the target in roughly two-thirds of the attacks.
• 25% of those attacked have suffered 3 or more attacks, with phishing the most common modality.
• Approximately one-third of those surveyed suffered a loss of data and/or a financial loss.
• According to Deloitte, approximately 31% of family offices do not have a cyber incidence response plan in place.
Cybersecurity is no longer optional. Strong passwords, encrypted communications, and multifactor authentication are now basic requirements. Access to sensitive information should be strictly limited, employees must be trained to recognize and respond to threats, and third-party vendors must be rigorously vetted for cybersecurity compliance.
Artificial Intelligence: Balancing Innovation and Oversight
As family offices explore artificial intelligence (AI) for everything from investment research to operational efficiency, a new set of compliance and regulatory concerns are emerging. While AI offers speed and scale, it also introduces complexity and risk. Many AI tools operate as “black boxes,” making it difficult to document or explain how key decisions are made, creating challenges when fulfilling fiduciary duties or responding to regulatory scrutiny. Some points to consider regarding Artificial Intelligence and compliance for family offices include:
• Data privacy and protection, especially under laws like GDPR (EU) and CCPA
• Third-party vendor oversight, as many AI tools are sourced externally
• Inadequate recordkeeping
• Cybersecurity vulnerabilities, with AI systems expanding the points of contact
To manage these risks, family offices should take proactive steps: implement clear AI usage policies, strengthen vendor due diligence, have strong data governance in place and ensure their compliance programs are equipped to oversee new technologies. As the regulatory landscape evolves, staying ahead of AI-related risks will be essential for protecting privacy, preserving trust, and avoiding costly surprises.
PART II:
People, Policies, and Planning Ahead
Who’s In Charge of Compliance?
In many offices, compliance is “everyone’s side job,” leading to potentially critical gaps and unquantifiable risks. In a recent analysis of data supplied by FinTrx, CRC-Oyster found approximately one-half of family offices with AUM under $2 billion do not have a dedicated compliance officer listed as a current employee.
A growing solution: outsourced compliance services, offering deep expertise without full-time costs and the flexibility to add compliance solutions on a short-or-medium term basis. These services can include temporary Chief Compliance Officers, AML experts, assistance completing or replacing documentation as well as training and testing.
Training: Building Culture and Reducing Risk
Assuming everyone “knows the rules” is dangerous. Building a strong, positive culture around compliance is of utmost importance as a family office grows in scale, scope and complexity as AUM expands. An important aspect of this environment is regular, structured training that aims to:
Align expectations across diverse backgrounds
Build a culture of accountability and trust
Reduce operational risks during generational transitions
Fiduciary Duties: Document, Review, Repeat
Managing trusts, foundations, or ESG mandates creates fiduciary obligations, some of which may be underserved or underappreciated. Requirements include:
Duty of loyalty, good faith and prudence
Duty of disclosure, transparency and diversification (Uniform Prudence Investor Act)
Compliance with IRS regulations and state nonprofit laws
Avoiding self-dealing; document related party deals
Risk management policies and procedures
Formal investment policies, meeting documentation, and annual reviews are essential to meeting fiduciary standards and defending against future challenges. Important documentation to consider includes, but is not limited to:
Investment due diligence
Conflict of interest policy
Investment policy statements
Contingency, emergency and succession planning
While these may seem like common-sense practices, breach of fiduciary duty claims can come from a family at any point, and it is best to be prepared to show solid documentation, good governance, and the appropriate level of internal controls to defend against any potential litigation.
Conclusion
As family offices grow in complexity and ambition, regulatory scrutiny will only intensify. A thoughtful, tailored compliance strategy is critical—not merely to survive scrutiny, but to thrive as responsible, resilient stewards of family wealth.
One of the most effective ways to evaluate the strength of a family office compliance program is through a comprehensive Gap Analysis. This strategic review can encompass the following core areas, culminating in a detailed Outcomes Analysis, consisting of:
• Evaluation of Written Policies and Procedures
• Review of Compliance Testing and Exception Reporting
• Assessment of Books and Records / Recordkeeping Obligations
• Information Technology, Cybersecurity, and Privacy Controls
• Review of Form ADV and Other Regulatory Disclosures
• Code of Ethics Compliance and Attestations
• Anti-Money Laundering (AML), Know Your Customer (KYC), and Suspicious Activity Reporting (SAR) Protocols
The Outcomes Analysis will identify current deficiencies and emerging risks, offering prioritized, actionable recommendations to enhance program effectiveness and meet evolving regulatory expectations.
Beyond these core components, including registrations and required filings, the review will also include strategic discussions with leadership on long-term objectives, ESG mandates and constraints, governance structures, due diligence protocols, staffing considerations, and system or software optimization opportunities.
SOURCES + DISCLAIMERS
Source: “The North America Family Office Report 2024,” Campden Wealth & Royal Bank of Canada (RBC), 2024.
Source: “The Family Office Insights Series - Global Edition, The Family Office Cybersecurity Report,” Deloitte Private, 2024.
Source: “Ocorian’s 2024 Global Family Office Report,” Ocorian, 2024.
Source: “The Family Office Insights Series - Global Edition, Defining the Family Office Landscape,” Deloitte Private, 2024.
Disclaimers
The opinions expressed herein represent the current, good faith views of the authors as of the date hereof and are provided for limited purposes. The information presented in this letter has been developed internally and/or obtained from sources believed to be reliable; however, CRC-Oyster does not guarantee the accuracy, adequacy or completeness of such information. Predictions, opinions, and other information contained in this letter are subject to change continually and without notice of any kind and may no longer be true after the date indicated. Any forward-looking statements speak only as of the date they are made, and CRC-Oyster assumes no duty to and does not undertake to update forward-looking statements.