The Corporate Transparency ACT (CTA) was enacted as part of the Anti-Money Laundering Act of 2020. The purpose of this act was to increase transparency and combat financial crimes, such as tax evasion and money laundering. While it primarily targets corporations, LLCs, and other legal entities, homeowners’ associations are also impacted by these new regulations.
Under the CTA, corporations need to disclose their “beneficial owners,” and this includes anyone who owns or controls at least 25% of the entity or anyone who has control over its operation. This information must be submitted to the Financial Crimes Enforcement Network and kept confidential. For HOAs, which are usually structured as nonprofit entities, the CTA requires that you comply with these reporting requirements if you fall under the definition of an “entity.”
For your HOA, this may require providing details about your board members, officers, or significant stakeholders who have a controlling interest in the association. While this will not directly affect your HOA’s day-to-day operations, noncompliance can lead to penalties, including fines.
Your HOA board should work with legal counsel, accountants, and our team of property management experts to make sure you are meeting necessary requirements. Failing to file the required reports or providing incorrect information could result in costly fines and potential legal trouble for your association.
You can stay up to date on new information about the CTA by clicking here. Our team is also happy to answer any of your questions, so please don’t hesitate to reach out to us.