Why Modern Family Offices Need a Centralised Compliance and Governance Framework
In a multi-jurisdiction family structure, the same beneficial owner is described to banks, trustees and service providers by several people, through several channels, at different moments. A centralised compliance and governance framework makes those descriptions consistent, evidenced and current, and that consistency is now what institutions expect to see.
One family, many versions
Consider how information about a principal leaves a family office. The CFO answers a bank's periodic review. A personal assistant sends a passport copy to a corporate service provider. The principal mentions a property sale to a relationship manager over lunch. A tax adviser in one country and a lawyer in another each prepare a summary of the family's wealth for a trustee. Each is answering the question in front of them with the information to hand.
The difficulty is that every recipient keeps a record. Banks write call notes after informal conversations. Trustees file what they are sent. Corporate service providers retain correspondence. Each institution then compares what it holds against public registers, court records, press coverage and commercial risk databases. When the versions do not match, the institution concludes not that the family office is disorganised but that it does not yet understand the client, and it asks again, more formally.
This is the central weakness of many family structures built up over a generation: there is no single point through which information about the family is prepared, checked and released.
How fragmentation shows up in practice
Contradictory refreshes. One bank is told that a business was sold for a gross figure; another is given the net proceeds after debt and earn-out adjustments; a trustee holds a third number taken from an older memorandum. Each figure may be defensible. Together, without explanation, they look like an inconsistency.
Source of Wealth gaps. The narrative of how the family's wealth was built often exists only in people's memories. When a bank asks for evidence of a dividend stream from fifteen years ago, or for the completion accounts of an early disposal, the documents are scattered across former advisers, dormant companies and personal archives.
Unreported changes. A family member acquires a second residence permit, a company is liquidated, a non-cash transaction such as a share swap or set-off alters the structure. When institutions learn of such changes from a third party or a public source, the change itself is rarely the problem; the silence is.
Unmanaged public information. An unfavourable press article about a former business partner, or a social media post showing the family living somewhere other than the declared residence, can trigger an escalation that no one in the family office is aware of until a transfer is held.
Delay, and then exit. A request for information becomes a further request, then a hold on a transaction, then, if the institution cannot reach comfort, a decision to end the relationship. An account closure can itself become a question the next bank asks.
None of this requires wrongdoing. It is the predictable result of an information process that nobody owns.
The regulatory direction: accurate, consistent and current
The Financial Action Task Force (FATF) strengthened its Recommendations on the beneficial ownership of legal persons (Recommendation 24) and of legal arrangements such as trusts (Recommendation 25). Its guidance on legal persons, published in March 2023, emphasises that competent authorities must have access to "adequate, accurate and up-to-date" information on the true owners of companies, and favours a multi-pronged approach that draws on several sources at once. Guidance on trusts and similar arrangements followed in March 2024.
In the European Union, Regulation (EU) 2024/1624, the Anti-Money Laundering Regulation (AMLR), was adopted on 31 May 2024 and published in the Official Journal on 19 June 2024. It will apply from 10 July 2027 (from 10 July 2029 for certain categories of obliged entity). It is not yet applicable: until then, national laws transposing the existing directives continue to govern. Once it applies, the Regulation will require legal entities created in the Union, and trustees of express trusts, to obtain and hold adequate, accurate and up-to-date beneficial ownership information. Its enhanced due diligence measures include obtaining additional information on the source of funds and source of wealth of the customer and of the beneficial owners, and it sets maximum intervals for updating customer information: one year for higher-risk customers subject to enhanced measures, five years for others. A new EU Authority for Anti-Money Laundering and Countering the Financing of Terrorism (AMLA) is based in Frankfurt.
Privacy has moved in parallel. On 22 November 2022, in joined cases C-37/20 and C-601/20 (WM and Sovim SA v Luxembourg Business Registers), the Court of Justice of the European Union held invalid the provision of the Fifth Anti-Money Laundering Directive that required beneficial ownership information on companies to be accessible to any member of the general public in all cases. Luxembourg suspended public internet access to its Register of Beneficial Owners (RBE) the following day. A Law of 23 January 2025, in force since 1 February 2025, now limits access to national authorities, professionals carrying out due diligence, self-regulatory bodies, persons able to show a legitimate interest in combating money laundering and terrorist financing (professional journalists among them) and public bodies where a law so provides. The same law allows the register's manager to request documents justifying the accuracy of what has been filed.
The practical lesson is easy to miss: narrower public access does not mean less scrutiny. The banks, trustees and administrators who hold a family's data still see it, cross-check it and are being asked to keep it current.
What a centralised framework looks like
A centralised framework is not another layer of bureaucracy. It is a decision that information about the family will be prepared once, checked once and then used consistently. Six elements do most of the work.
1. A single source of truth. One maintained KYC and Source of Wealth evidence file for each principal and family member, supported by a document register recording what exists, where the original is held, when it expires and to whom it has been provided. The Source of Wealth narrative is written once, reconciled to documents, and reused, so that every institution receives the same account with the same figures and the same explanations for any differences between them.
2. One coordinated point of contact. Banks and service providers deal with a designated person or team for compliance enquiries, rather than with whoever happens to be available. Requests are logged, answers are checked against what has previously been disclosed, and parallel requests from different institutions are answered consistently.
3. Clear governance on instructions. A written record of who may instruct banks, trustees and directors, on which matters, with which approvals. Where a principal or senior employee informally directs nominee directors or the trustees of a discretionary trust, that pattern can raise questions about who in fact controls the structure, whether someone is acting as a de facto or shadow director, and where a company is effectively managed. Decisions should be taken by the people formally responsible for them, on proper information, and minuted.
4. Centralised monitoring. Scheduled screening of the family and its entities against sanctions lists and adverse media, together with a calendar of expiring passports, residence permits, certificates and powers of attorney. When something unfavourable appears in the press, the family office should know before the bank does and be ready with a documented, factual response.
5. Coordination of advisers. Lawyers, tax advisers, auditors, trustees and corporate service providers often work on the same structure without seeing each other's work. A coordinating function ensures that a restructuring, a liquidation or a change of residence is reflected in every relevant disclosure, and that advisers in different countries are not describing the same transaction in different terms.
6. Periodic review. At least annually, and after any significant event, the file, the narrative and the structure chart are reviewed together. Dormant companies are either closed or properly maintained. Changes in family circumstances are assessed for their effect on how institutions will view the family.
The principle running through all six is lawful transparency. The aim is to provide complete, accurate and timely information through a controlled channel, not to limit what institutions are entitled to know.
An illustration
The following example is fictional. Names and details are invented and any resemblance to real persons is coincidental.
The Arden family's wealth originates in a manufacturing business sold in two stages. The family holds investments through a Luxembourg holding company and a discretionary trust administered offshore, with accounts at three banks in two countries.
During one year, two banks run periodic reviews within weeks of each other. The family's CFO tells the first bank that the business was sold for the headline price. A long-standing personal assistant sends the second bank an older summary showing the net proceeds after debt repayment, with a different completion date. Meanwhile, a regional newspaper publishes an article about litigation involving a former minority partner, in which the family is mentioned in passing.
The second bank, having found the article itself, places an incoming transfer on hold and asks for a full Source of Funds explanation. The trustee, which receives its own request from its bank, holds a third figure.
The family office pauses outgoing compliance correspondence and appoints one coordinator. The two sale stages are reconciled against the sale agreements and completion accounts into a single narrative that explains gross price, net proceeds and timing. A short, evidenced note sets out the family's actual connection to the litigation. The same package, with a covering explanation of the earlier discrepancy, goes to all three banks and the trustee. The hold is lifted, and the file is now maintained centrally.
Nothing in the example required anything to be hidden. Everything that resolved it was disclosure, made properly.
A practical checklist
Is there one current KYC and Source of Wealth file per principal and family member, reconciled to documents?
Does a document register show what each bank, trustee and provider has received, and when?
Is there a named point of contact for compliance enquiries, and do institutions know who it is?
Is it written down who may instruct which institution, on what, and with whose approval?
Are decisions taken and minuted by those formally responsible for them?
Are sanctions and adverse media screening run on a schedule, with a prepared response process?
Are expiry dates for identity documents, permits and powers of attorney tracked centrally?
Are changes to the structure or to family circumstances disclosed promptly to every relevant institution?
Do advisers in different jurisdictions see a common structure chart and narrative?
Is the whole file reviewed at least once a year?
How Kuts & Co can help
Kuts & Co supports family offices and their principals with KYC profiles, Source of Wealth and Source of Funds reports, Enhanced Due Diligence, UBO analysis, adverse media review and rebuttal reports, family governance support and the coordination of advisers across jurisdictions. We work alongside the family's existing lawyers, tax advisers and trustees.
This article is for general information only and does not constitute legal, tax or investment advice.
Sources
Financial Action Task Force — Guidance on Beneficial Ownership of Legal Persons — March 2023 — https://www.fatf-gafi.org/content/fatf-gafi/en/publications/Fatfrecommendations/Guidance-Beneficial-Ownership-Legal-Persons.html
Financial Action Task Force — Guidance on Beneficial Ownership and Transparency of Legal Arrangements — 11 March 2024 — https://fatf-gafi.org/en/publications/Fatfrecommendations/Guidance-Beneficial-Ownership-Transparency-Legal-Arrangements.html
Financial Action Task Force — Beneficial Ownership (topic page) — accessed 9 November 2026 — https://www.fatf-gafi.org/en/topics/beneficial-ownership
European Parliament and Council — Regulation (EU) 2024/1624 of 31 May 2024 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing, OJ L, 19 June 2024 — https://eur-lex.europa.eu/eli/reg/2024/1624/oj (text consulted via the Official Journal copy hosted by SEPBLAC: https://www.sepblac.es/wp-content/uploads/2024/06/Regulation_EU_2024_1624_eng.pdf)
European Parliament — Frankfurt will be the home of the EU Anti-Money Laundering Authority (press release) — 22 February 2024 — https://www.europarl.europa.eu/news/en/press-room/20240219IPR17818/frankfurt-will-be-the-home-of-the-eu-anti-money-laundering-authority
eucrim — Comprehensive AML/CFT Reform Finalised — 2024 — https://eucrim.eu/news/comprehensive-aml-cft-reform-finalised/
Court of Justice of the European Union — Joined Cases C-37/20 and C-601/20, WM and Sovim SA v Luxembourg Business Registers, judgment of 22 November 2022 — https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A62020CJ0037 (summarised via European e-Justice Portal, https://webgate.ec.europa.eu/e-justice/38576/EN/beneficial_ownership_registers__search_for_beneficial_ownership_information, and eucrim, https://eucrim.eu/news/cjeu-no-unrestricted-access-to-data-of-beneficial-owners/)
Government of Luxembourg, Ministry of Justice — press release on provisional suspension of public access to the RBE — 23 November 2022 — https://gouvernement.lu/fr/actualites/toutes_actualites/communiques/2022/11-novembre/23-justice-union-europeenne.html
Government of Luxembourg — Accès au RBE: accès rétabli en faveur des professionnels et de la presse — 21 December 2022 — https://gouvernement.lu/fr/actualites/toutes_actualites/communiques/2022/12-decembre/21-acces-rbe.html
Grand Duchy of Luxembourg — Loi du 23 janvier 2025 amending the RCS Law of 19 December 2002 and the RBE Law of 13 January 2019, Mémorial A No. 22, 27 January 2025 (text published by Luxembourg Business Registers) — https://lbrcontent.public.lu/dam-assets/code-legal/legislation/rbe/fr/loi-du-23-janvier-2025.pdf
