How HMRC and Regulation Are Driving Family Office Compliance Hiring

How HMRC and Regulation Are Driving Family Office Compliance Hiring

The compliance burden on UK single family offices has increased materially over the past five years, and the pace of change shows no sign of slowing. Developments in HMRC’s approach to family structures, the FCA’s extension of SMCR and regulatory oversight to an increasing share of the family office population, and the strengthening of the UK’s anti-money laundering framework have collectively created a compliance environment that many family offices are finding difficult to manage without dedicated professional resource. The result is a growing wave of first-time compliance appointments at offices that have previously relied on external advisers, and an upgrading of existing compliance arrangements at offices that have outgrown their initial approach.

This guide is written for principals, trustees, and Family Office Directors who are considering whether and how to add compliance resource to their office — and for advisers who are guiding family offices through the regulatory environment. It covers the specific regulatory developments driving compliance hiring demand, the different compliance functions a family office may need, and the professional profiles relevant to each. It draws on the compliance appointments Exec Capital has run across the family office population and on published guidance from the FCA, HMRC, and the Joint Money Laundering Steering Group. For compliance recruitment services, see our Family Office Compliance Recruitment page and our Head of Compliance (SMF16) and MLRO (SMF17) recruitment pages.

The HMRC dimension: what has changed

HMRC’s approach to family wealth structures has become significantly more active and more technically sophisticated over the past five years. Three specific developments are most relevant to compliance hiring decisions at family offices.

The Register of Overseas Entities (ROE) was introduced under the Economic Crime (Transparency and Enforcement) Act 2022 and requires overseas entities that own UK property or land to register beneficial ownership information with Companies House. Many family offices that hold UK real estate through offshore structures are within scope — and the penalty regime for non-compliance includes criminal sanctions. Managing the ongoing ROE obligations requires compliance expertise that most families’ existing external advisers are not set up to provide on a continuous basis.

The Trust Registration Service (TRS) has been significantly expanded and now requires the registration of most UK express trusts — including many family trusts previously outside the scope of the earlier HMRC anti-money laundering regime — regardless of whether they generate a tax liability. The TRS registration obligation, and the ongoing obligation to keep the register up to date as trust circumstances change, requires someone in the family office structure to own the compliance process. For multi-trust family structures, this is a material ongoing workload.

Increased HMRC disclosure requirements relating to offshore structures, non-domicile arrangements, and the taxation of non-UK income and gains have collectively increased the compliance complexity of managing UHNW family wealth. HMRC’s offshore disclosure regime — and the increased use of Common Reporting Standard data from foreign tax authorities — means that the information available to HMRC about family wealth structures has grown dramatically. Family offices that are not actively managing their HMRC compliance posture are increasingly at risk of inadvertent disclosure failures with material financial consequences.

The FCA dimension: which family offices are in scope

Not all single family offices are within the FCA’s regulatory perimeter — but a significant and growing proportion are, and the boundaries are not always obvious. The key question is whether the family office is carrying on regulated activities as defined in the Financial Services and Markets Act 2000.

A family office that manages investments on a discretionary basis — making investment decisions on behalf of the family without seeking their approval for each individual transaction — is likely to be carrying on a regulated activity (managing investments) and will typically require FCA authorisation unless an exemption applies. The most relevant exemption for family offices is the group exemption, which applies where the family office manages investments only for its own group (that is, for entities within the family corporate structure). This exemption is narrower than many family offices assume — it does not cover management of investments for individuals within the family as opposed to entities — and professional legal advice is essential to establish whether it applies to a specific family structure.

Where a family office is FCA-authorised, it is subject to the full suite of FCA regulatory obligations including SMCR, Consumer Duty where relevant, AML obligations under the Money Laundering Regulations, and the FCA’s conduct of business rules applicable to its permission set. At this point, the family office needs designated compliance leadership — typically a Head of Compliance (SMF16) and, where the office handles client money or falls within the AML regime, an MLRO (SMF17). See our Head of Compliance (SMF16) Recruitment and MLRO Recruitment (SMF17) pages for the specific hiring considerations.

The AML dimension: broader than many families assume

The UK’s anti-money laundering framework, set out in the Money Laundering Regulations 2017 (as amended), applies to a broad range of financial and professional services activities — and the boundary of what is covered is wider than many family offices assume. Tax advisers, accountants, legal professionals, and estate agents who provide services to family offices are themselves subject to AML obligations; but so, in some circumstances, are the family offices themselves where they carry on activities within the regulated sector.

Even where a family office is not itself in scope of the AML regulations, the increasingly rigorous AML due diligence conducted by the banks, custodians, and counterparties with which the office interacts creates a de facto compliance burden. A family office whose beneficial ownership documentation, source of funds evidence, and trust structure information is not well organised and current will find that banking relationships, investment manager relationships, and property transactions are increasingly difficult to complete. Managing this proactively — maintaining current KYC documentation, being able to respond quickly to due diligence requests, and having someone in the office who understands what counterparties need — has become a compliance function in its own right.

What compliance resource a family office actually needs

The right compliance resource for a specific family office depends on its regulatory status, the complexity of its structure, and the volume and nature of its transactions and counterparty relationships. Four models are relevant across the family office population.

Embedded compliance generalist is appropriate for family offices that are FCA-authorised but below the scale that justifies a dedicated Compliance Director. The compliance generalist — typically a senior compliance professional with 8–15 years of relevant regulated firm experience — covers the monitoring programme, regulatory reporting, and AML function either alone or alongside a fractional specialist for the MLRO function. This model works for Core firm-classified FCA-regulated offices with focused permission sets.

Head of Compliance (SMF16) with MLRO support is the standard model for Enhanced firm-classified regulated offices and for larger Core firms where the compliance workload justifies a senior, dedicated function. The SMF16 holder carries personal FCA accountability for the compliance framework; the MLRO (SMF17) may be the same individual at smaller offices or a separate appointment at larger ones. See our Fractional Compliance Officer page for the part-time model that many smaller offices use.

Compliance and regulatory affairs manager is appropriate for unregulated family offices with material HMRC compliance complexity — Trust Registration Service management, Register of Overseas Entities obligations, offshore disclosure requirements — but without FCA-regulated activity. The relevant professional is typically an experienced tax and trust compliance specialist rather than a financial services compliance professional.

Outsourced compliance with in-house co-ordination is the model most relevant for smaller or newer family offices where the compliance workload does not yet justify an internal appointment. An in-house coordinator — often the Family Office Director or CFO — manages the relationship with external compliance advisers and ensures that the office’s internal processes are aligned with external advice. This model becomes inadequate as the office grows and should be reviewed against internal hiring economics annually.

The talent market for family office compliance professionals

The compliance professionals who are well-suited to family office roles are a subset of the broader compliance market. The relevant experience is not simply financial services compliance experience — it is compliance experience at a size and complexity level comparable to the family office, combined with the personal discretion and relationship quality that a principal-led environment demands.

A Head of Compliance who has spent their career at a large bank compliance function will find the family office environment structurally unfamiliar: the governance support, the team resource, and the institutional processes they are accustomed to do not exist. A compliance professional who has run the compliance function at a small to mid-size regulated investment manager — independently, with direct board access, managing the FCA relationship personally — is a much more directly comparable background. The pool of compliance professionals with this specific experience is smaller than the broad compliance market and is accessed most effectively through direct network outreach rather than advertising. See our Family Office Compliance Recruitment page for more on the search approach.

Related Family Office and Compliance Resources

• Family Office Compliance Recruitment — compliance hiring for family office structures
• Head of Compliance (SMF16) Recruitment — FCA-designated Head of Compliance appointments
• MLRO Recruitment (SMF17) — Money Laundering Reporting Officer for regulated family offices
• Fractional MLRO — part-time MLRO for smaller regulated family offices
• Fractional Compliance Officer — part-time compliance for offices not yet requiring a full-time appointment
• Family Office Executive Search — all senior family office appointments

Sources and Further Reading

• Money Laundering Regulations 2017 — AML obligations applicable to regulated sectors including family offices
• Economic Crime (Transparency and Enforcement) Act 2022 — Register of Overseas Entities requirements
• HMRC / Companies House — Register of Overseas Entities guidance and obligations
• HMRC — Trust Registration Service obligations and trust taxation guidance
• FCA SMCR — regulatory framework for FCA-authorised family offices
• JMLSG — Joint Money Laundering Steering Group guidance — AML standards for regulated firms