Former SWAT officer Jeff Talley is a hostage negotiator in Los Angeles. One day, Talley negotiates with a man who has taken his wife and son hostage after learning his wife was cheating on him. Shortly after Talley denies a SWAT commander's request to give snipers the order to open fire, the despondent man kills his wife, son, and himself. Traumatized, Talley moves with his family and becomes police chief in Bristo Camino, a suburban hamlet in Ventura County, California.
A year later, Talley finds himself in another hostage situation. Two teenagers, Dennis and his brother Kevin, and their accomplice Marshall "Mars" Krupcheck take hostage Walter Smith and his two children, teenage Jennifer and young Tommy, in Smith's house after a failed robbery attempt. The first officer to respond is shot twice by Mars just before Talley arrives. Talley attempts to rescue the officer, but she dies in front of him. Traumatized and unwilling to put himself through another trauma, Talley hands authority over to the Ventura County Sheriff's Department and leaves.
Smith has been laundering money for a mysterious criminal syndicate through offshore shell corporations. He was preparing to turn over a batch of important encrypted files recorded on a DVD when he was taken hostage. To prevent the incriminating evidence from being discovered, the syndicate orders someone known only as the Watchman to kidnap Talley's wife and daughter. Talley is instructed to return to the hostage scene, regain authority, and stall for time until the organization can launch its own attack against Smith's house.
Dennis forces Kevin and Mars to tie up the children, while he knocks out Walter and finds a large amount of cash. In an attempt to end the standoff and secure the DVDs himself, Talley meets with Dennis and agrees to provide a helicopter in exchange for half of the money. When the helicopter arrives, Dennis and Kevin bring the money to Talley and prepare to leave, but Mars refuses to leave without Jennifer, with whom he has become infatuated with. Talley says the helicopter will only carry three additional people and insists that Jennifer stay behind, but the deal breaks down and the boys return to the house. Talley learns that Mars is a psychopathic killer who could turn on the hostages and his own accomplices at any moment. Mars does, in fact, kill Dennis and Kevin, just as Kevin is about to release the children.
The syndicate sends fake FBI agents to recover the DVD and they storm the house; Talley is instructed to not go near the house. Jennifer stabs Mars and locks herself and Thomas in the panic room. Hearing their screams, Talley breaches the house and is attacked by Mars, who then kills most of the fake agents using his pistol and multiple Molotov cocktails. Mars is then shot in the side by the only surviving agent. The agent tracks down Talley and the children, and demands the encrypted DVD. After Talley gives him the DVD, Mars reappears, distracting the agent long enough to be killed by Talley. Mars then prepares to throw his last Molotov, but collapses to his knees, weakened by his injuries. He makes eye contact with Jennifer, then drops the Molotov and immolates himself.
Talley escapes with the children by shooting the indoor glass waterfall, which extinguishes the fire. He and a recovered Walter then go to a rundown inn where Talley's wife and daughter are being held captive by the Watchman and his crew. Smith, feigning hatred for Talley, is freed in exchange for the family. While demanding that the Watchman kill Talley, Smith shoots the Watchman. This allows Talley to kill the other gunmen and rescue his family.

Question: Who kidnaps Talley's wife and daughter?
Answer: The Watchman
Alternative answer: The Watchman.