The Corporate Transparency Act and your HOA

What is the Corporate Transparency Act?

The Corporate Transparency act, or CTA as it is sometimes referred to, is an amendment to the Bank Secrecy Act passed in 2021 and enacted on January 1, 2024. The intention of the legislature was to ensure corporate financial transparency and thus combat money laundering, tax fraud, and even terrorism. Any entity created by filing documents with an office of the United States is subject to this law, whether a limited liability company or a corporation.

While compliance is politely requested, there are significant consequences when it isn’t received by the deadline. Violations can mean as much as $500 each day, while proven willful non-compliance can mean a felony. Failing to file will incur fees of up to $250,000 in addition to up to 2 years of prison. Needless to say, understanding your legal obligations is a necessity and not an option.

How Will This Affect Your HOA?

Currently, homeowner associations are included in the list of entities required to file with the US Department of the Treasury’s Financial Crimes Enforcement Network (“FinCEN”). As stated above, some violations can mean a quarter of a million dollars in fines or result in a felony. Refusal to file the necessary information could even result in a homeowner being barred from serving in an HOA’s board of directors role. As such, HOAs should take the necessary precautions as this matter is something to be taken seriously.

Understanding the law can be confusing and complex to navigate, assistance from an experienced management company means delegating to someone who has experience in this field. There may be a small charge for the service, but surely it is less than the fines and other complications associated with failing to file. The Financial Crimes Network absolutely must receive your information by December 31st!