Such is the increase in the number of new single family offices (SFO) appearing all over the world; it can not be long before the Regulator decides to cast it eye over this whole emerging sector. Why would that be?
As these 'investment' offices increase the complexities of their investments, many struggle with the resources needed to carry out proper due diligence and will often rely on co-investors to do the 'heavy lift' and 'stone turning.' Is this good enough and can the family office satisfy itself sufficiently to be comfortable with due diligence?
Such is the rush to find the next 'gold mine', SFO's are investing further and further away from their fundamental core knowledge, where the original money was made. So the chances of a slip-up such as money laundering are a possibility.
Stick to your knitting. That is what the winning SFOs do. Stick to the sector or genre they know. They know it inside and out and are experts in that field. They will be able to 'smell a rat' if there was one or tell if the 'atmospherics' are not right. SFOs should stay close to the sector that they know intimately.
For sure as hell, if it goes wrong or there is criminal intent, the broker of the deal will have fled long before it is discovered and the SFO will be faced with the embarrassment of a rotten and/or corrupt deal and no knowledge how to fix it.
Stick to your knitting. There will be fewer surprises.
Aside from ascertaining the worth of the company, we’re finding global single-family offices are digging deep to make sure there are no possible illegal actions going on with their direct investments. Screening for any evidence of illegality, such as money laundering and criminal financing, has become a very big deal. While this has always been an important aspect of the due diligence process, it has become increasingly critical. Global single-family offices are intent on making sure they do not mistakenly get mixed up in supporting terrorists or any form of criminal activities.”