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Corporate Transparency Act (CTA)

by | May 23, 2024 | Real Estate Law

Attorney Barba has just returned from presenting a seminar on the Corporate Transparency Act (CTA) at the Community Association Institute National Conference and Exposition in Las Vegas, Nevada.

The CTA is creating quite a stir in the community association field throughout the country.  The CAI national legislative action committee has made considerable efforts to meet with and gain concessions from the Financial Crimes Enforcement Network (FinCEN) trying to gain an exemption or delay.  FinCEN is a bureau of the United States Department of the Treasury that collects and analyzes information about financial transactions in order to combat domestic and international money laundering, terrorist financing, and other financial crimes.

After meeting with the government officials, FinCEN posted a notice making it clear that Homeowners Association (those that are organized as corporations or limited liability companies) were absolutely required to file Beneficial Ownership Interest (BOI) reports by January 1, 2025.  Some found hope that the rule might be unenforceable after an Alabama District Court Judge ruled the FinCEN requirement as unconstitutional.  That hope was dashed after the court and FinCEN made it clear that the ruling narrowly applied to the plaintiff and no others.  There are also bills raised in both houses of Congress, but given the election year politics, the likelihood of passage into law is low.


It’s time to plan on complying with the Rule.  Every community association board of directors must be prepared to collect and file the information necessary to comply with the FinCEN rule.  Each director must provide their full name, birth date, address (residential or business) and a copy of their unexpired driver’s license or passport.

Note: this is not just another federal regulation that associations can ignore.  The penalties for willful violations of the Rule involve $500 per day fines up to $250,000 and up to two years in prison.  You can educate yourselves by finding the FinCEN website at https://www.fincen.gov/

While compliance with the Rule is relatively straightforward, ensuring that all your directors comply may not be.  Some individuals may object to providing personal information and may decide not to comply.  Such a position places the association in real jeopardy.

To avoid the potential conflict, Board’s should consider amending the Association’s Bylaws to make FinCEN compliance a qualification to run for and serve on the Board.  Since the statute prohibits Boards from unilaterally changing the number or qualifications for Board membership, owners must vote to approve the amendment.  That takes time so don’t wait too long before addressing the need.

Stay tuned for any FinCEN updates.

Click here to contact our office to discuss ensuring compliance for your Association.