How does a multifamily office prevent wire fraud, identity theft, and unauthorized transfers?
A multifamily office uses written payment procedures, independent callbacks, dual approval, multifactor authentication, limited access, and regular account review. The team verifies every new or changed instruction through a trusted channel, protects sensitive records, trains staff to spot pressure tactics, and responds quickly when suspicious activity appears.
Verify every payment instruction
Wire fraud often starts with a convincing email, text, or phone call. A criminal may impersonate a family member, adviser, vendor, or bank employee. We require a callback before sending money, especially when the request is urgent, involves a new recipient, or changes existing bank details. The callback uses a phone number already stored in our records. We do not rely on contact details supplied in the new message. The FBI recommends independent phone verification for transfer requests.
A second authorized person reviews the request, beneficiary details, purpose, and supporting documents. One person should not be able to create and release a high value transfer alone. Banks may also offer transaction limits, alerts, and payment filters. These controls create time to stop a questionable request.
Protect identities and account access
We use separate user accounts, least privilege access, strong passwords, and multifactor authentication for email, banking, custody, and portfolio systems. Access is removed promptly when a staff member changes roles or leaves. Sensitive information, including account numbers and identity documents, is shared only when needed and stored in approved systems. The SEC advises investors to safeguard Social Security numbers, financial account numbers, usernames, passwords, and related personal information.
Staff training matters. Team members learn to recognize spoofed domains, unexpected login prompts, secrecy demands, and pressure to bypass normal procedures. We keep payment instructions out of ordinary email whenever practical and record approvals so another person can review the history.
Develop your 100-point due diligence checklist so that you can refer to it, not that you're going to go through all 100 points with every deal, but you can ask yourself, what else should we be asking about this deal? What are we afraid of?
Monitor, rehearse, and respond
Account alerts and reconciliations help identify unfamiliar beneficiaries, unusual login activity, unexpected withdrawals, and changes to standing instructions. We review who can move money and whether permissions still match each person’s role. Periodic access reviews and incident exercises expose gaps before a real event.
If we suspect fraud, we contact the sending bank immediately and ask it to contact the receiving institution. We preserve emails, messages, invoices, call details, and transfer confirmations. For identity theft, the CFPB recommends closing compromised accounts, reporting the theft, and placing fraud alerts or security freezes on credit reports. These steps are educational controls, not legal, tax, or investment advice.
Related guides
- Access to Alternatives Through an MFO: A Practical Guide for Families
- Cross-Border Families and Multifamily Offices: A Practical Guide
- Family Governance With a Multifamily Office