How European regulations are transforming family offices
Evolving governance requirements around private transactions, such as the EU’s 2024 package of anti-money laundering regulations, are steering families towards more institutional investment practices (Simon Wohlfahrt/Bloomberg)
Once considered esoteric guardians of inherited wealth, family offices are increasingly seen as legitimate, and even preferred, investment partners.
Evolving governance requirements around private transactions, such as the EU’s 2024 package of anti-money laundering regulations, are steering families towards more institutional investment practices.
The AML package comes into force this year with the aim of combatting money laundering and terrorist financing, and promises to have a knock-on impact on the operations of investors like Virtus Family Office, which manages around $105mn in assets for a clientele of professional athletes in Europe and South America.
“Banks and asset managers now apply the new and harmonised… standards when they’re onboarding private investment vehicles, which means families are having to provide governance, ownership and control documentation at a level resembling the institutional allocators,” director Fábio Alves tells AOX.
“This is still unfolding through 2025 and into 2026, and will be interesting to observe.”
For Virtus, “in practical terms, it has meant slight tightening and standardising onboarding and governance docs”, including ownership and control charts, documented decision-making authority and written risk processes.
The compliance burden for a larger multi-family office is likely to be even greater. “[They will] perhaps start requiring dedicated in-house or outsourced teams to manage documentation and onboarding processes,” Alves predicts.
And this is just one current in an overall trend towards the increasing institutionalisation of family office operations.
“[Family offices] already have become very credible co-investors in private equity and real estate with governance and discipline that is on par with institutional funds,” according to Alves.
“Over the next decade, family offices are going to increasingly become institutional players much less than private ones.”