Family offices, long valued for their privacy and agility, now find themselves under increased regulatory scrutiny and evolving global sanctions regimes. As 2025 unfolds, compliance becomes a fundamental issue, with sanctions exposure and risk management climbing to the top of the agenda for legal and financial advisors. This article explores key developments and practical strategies for robust family office compliance in a world where sanctions risk is more complex and more consequential than ever.
The New Sanctions Landscape
Sanctions regimes in the UK, EU, and US have grown in both scope and complexity, driven by geopolitical tensions and a renewed focus on enforcement. The UK government’s 2025 cross-government review signals a shift towards “robust action” against sanctions evasion, with new enforcement tools and a coordinated intelligence strategy. The EU and US have also tightened their sanctions frameworks, particularly concerning Russia by introducing new compliance tools and guidance for financial institutions.
For family offices, this evolving landscape raises the risk of inadvertent breaches and the need for proactive compliance measures.
Why Family Offices are under the Microscope
Family offices often manage diverse, cross-border portfolios involving complex asset structures, making them susceptible to sanctions exposure in several ways:
- Direct investments in sanctioned jurisdictions or entities
- Indirect exposure via funds, trusts, or intermediaries with links to designated persons
- Real estate transactions in markets subject to increased scrutiny (e.g., UK property sector)
- Cross-border payments and the use of offshore vehicles
Regulators now expect family offices to demonstrate the same level of sanctions compliance as large financial institutions. Informal or ad hoc risk management practices may no longer be appropriate, instead robust, documented processes are now essential on a daily basis.
2025: What’s Changed?
- Enhanced Enforcement and Penalties
Sanctions enforcement has moved beyond fines to include criminal prosecutions, director disqualifications, and asset freezes, applying increasingly more pressure to ensure compliance. In the UK, new Director Disqualifications Sanctions have been introduced to target loopholes, preventing individuals from acting as a director or being involved in the promotion, formation, or management of a company. Moreover, the Office of Financial Sanctions Implementation (“OFSI”) has a sanctions alert service in place which offers real-time updates with notifications on all sanctions related developments. Recently, in England, a well-established law firm received a fine (albeit nearly symbolic) from OFSI due to unintentional breach of a licence related to sanctions.
In the US, the Office of Foreign Assets Control (“OFAC”) has continued its robust enforcement stance against both individuals and corporate entities, particularly in relation to sanctions against Russia and Iran. There are known cases of OFAC issuing fines and taking legal action against executives, advisers, and compliance officers who played a role directly or indirectly in sanctions violations. Even inadvertent breaches are subject to penalty where insufficient due diligence or controls have been demonstrated.
- New Reporting Obligations
From May 2025, new regulations in the UK require a broader group of professionals, including high-value dealers, art market participants, insolvency practitioners and letting agencies to report any suspected breaches of financial sanctions to OFSI, regardless of the transaction’s size or value.
The standard of what constitutes a reportable suspicion has now been reduced, placing greater onus on professionals to exercise judgement and err on the side of disclosure. This development is expected to expand further into other advisory sectors, significantly impacting how family offices operate. Given their reliance on a network of external advisors and cross-border transactions, family offices must now ensure that both internal teams and third-party partners understand and comply with these obligations. Failure to report could lead to civil or criminal penalties, making proactive compliance essential.
- Coordinated Intelligence and Transparency
Governments are increasingly adopting joint intelligence frameworks and more transparent notification systems to enhance the enforcement of sanctions regimes.
This shift involves closer coordination between national agencies, cross-border regulatory bodies, and financial intelligence units, allowing for faster information sharing and improved targeting of high-risk activities.
As a result of the evolution of enforcement and deterrence tools, it is becoming significantly more difficult for family offices to claim ignorance or rely on outdated information when assessing compliance risks. The expectation now is that family offices will integrate these tools into their compliance workflows and maintain continuous awareness of the relevant developments.
Practical Steps for Family Office Compliance
The following steps outline how family offices can build and maintain a robust compliance framework that identifies risk, ensures ongoing monitoring, and demonstrates readiness for regulatory engagement:
- Conduct a Comprehensive Sanctions Risk Assessment
- Map all direct and indirect investments, counterparties, and service providers.
- Identify exposure to high-risk jurisdictions and sectors flagged by recent sanctions updates.
- Review ownership structures for hidden links to designated persons or entities.
- Implement Robust Screening and Monitoring
- Use up-to-date screening tools to check all counterparties and transactions against sanctions lists.
- Subscribe to official sanctions alert services for real-time updates on designations and legislative changes.
- Ensure ongoing monitoring, not just point-in-time checks.
- Strengthen Internal Controls and Documentation
- Develop clear policies and procedures for sanctions compliance, tailored to the family office’s structure and activities.
- Document all due diligence, risk assessments, and decision-making processes.
- Train staff and advisors regularly on their obligations and red flags.
- Prepare for Regulatory Engagement
- Maintain records demonstrating proactive compliance efforts.
- Establish protocols for responding to regulator queries and reporting potential breaches.
- Engage external legal and compliance experts to review and stress-test your framework.
Conclusion
Family offices can no longer afford a reactive approach to sanctions risk. In 2025, regulators expect comprehensive and proactive family office compliance frameworks that go beyond box-ticking. By investing in robust risk assessments, real-time monitoring, and transparent processes, family offices can not only navigate the current wave of regulatory scrutiny but also strengthen their long-term resilience. The message from global regulators is clear: compliance is not optional, and ignorance is no defence.
At Linkilaw, we assist clients in navigating the complexities of sanctions compliance with confidence. Our team provides tailored legal guidance, due diligence support, and risk assessments to help family offices, HNWIs, and their advisors stay ahead of evolving regulatory requirements. Whether you need help understanding your exposure, responding to a potential breach, or building a robust compliance framework, Linkilaw is well positioned to provide practical, informed support at every stage.
