The Corporate Transparency Act (the “CTA”) was passed in 2021 to safeguard national security and the U.S. financial system by helping to detect and report suspicious activity related to money laundering and terrorist financing.
How the CTA Effects Homeowners, Cooperatives and Condos
The CTA applies to all corporations, limited liability companies and limited partnerships, with few exceptions. Since Homeowners Association, Cooperatives and some Condominiums are incorporated, Boards are now responsible for complying with the 51 question report.
Affected community associations must file information about “beneficial owners”—those individuals who control or own 25 % of the entity’s interests, which includes Board members. Board members are required to provide their birthdates, home addresses and a copy of a government-issued identification. Corporations filed before 2024 must file the required information prior to January 1, 2025.
Although corporations are only required to file this report once, all records have to be updated every time the Board changes. Compliance with the CTA will create extra work for Boards. Companies are available to help Boards procure the necessary information.
One of the Federal Courts recently struck down the legislation as unconstitutional. However, FINCEN, the government agency monitoring compliance, has said they still intend to enforce the law. There are also efforts to exempt community associations from compliance with this Act. Further guidance from FINCEN should be forthcoming over the next few months.
