The Corporate Transparency Act

In 2021, Congress passed the Corporate Transparency Act with the intention of strengthening efforts to detect and combat money laundering and terrorist financing. While the law may sound like it primarily concerns large corporations and financial institutions, it has implications for smaller entities, including community associations. In this blog post, we will delve into the details of the Corporate Transparency Act, explain how it applies to community associations, and highlight the key reporting requirements that community associations need to be aware of.

Key Points for Community Associations:

  • Reporting Requirements: Community associations must provide certain information to FINCEN annually. The filing process is expected to be electronic. The information to be reported includes:
    1. Business name
    2. Legal name, birthdate, home address, and an identifying number (e.g., driver’s license, state ID, or passport) of each board member.
    3. Identity of the individual with substantial control: This includes the same information (name, birthdate, home address, and identifying number) of individuals who exercise substantial control over financial reporting for the community association corporation. It is currently unclear whether community managers or management companies qualify as individuals with substantial control.
  • Reporting Deadlines: The BOI reporting program is set to be implemented, with filings beginning on January 1, 2024. Existing corporations must file by January 2025. However, the filing portal is not yet open.
  • Timely Updates: Community associations must promptly report any changes, corrections, or additions to the filing within 30 days of becoming aware of such changes. This could include board member changes or replacements.

Consequences of Noncompliance

Noncompliance with the Corporate Transparency Act can have serious consequences. Failing to meet reporting obligations can result in:

  • Civil penalties of $500 per day for each day of noncompliance.
  • Criminal penalties of up to $10,000.
  • Potential imprisonment for up to 24 months.