In the wake of increasing scrutiny on corporate activities, the United States has ushered in a new era of transparency with the implementation of the Corporate Transparency Act (CTA) in January 2024. The goal of the law is to stop illegal activities such as fraud and money laundering by requiring certain businesses to disclose their ownership information to the Financial Crimes Enforcement Network (FinCEN), a branch of the U.S. Department of the Treasury.
While the primary focus is on corporate entities, Condo Associations and Homeowners Associations might also need to follow the reporting requirements of the CTA. This depends on how the association is legally structured, specifically if the association is classified as a domestic reporting company.
Starting January 1, 2024, the CTA requires action and compliance from board members, property managers, and anyone with influence or decision making power on behalf of the community. They will need to first verify if the association is required to report their ownership information to FinCEN. If so, they will need to provide the requested personal information and required documentation.
This filing will not be something that needs to be renewed annually after the initial filling, however, if there is change to the beneficial ownership (e.g. a board member change) that information will need to be updated within 30 days when the change occurs.
Although the deadline to submit this information isn’t until January 1, 2025, we suggest that board members and property managers talk to the association’s legal and accounting experts to stay informed, be prepared, and avoid any issues. This process will take time, so we recommend getting it started as soon as possible. Embracing transparency is not just a legal obligation but a proactive step towards fostering trust and accountability within these entities.