Corporate Transparency Act (CTA)
The Corporate Transparency Act (CTA) is a piece of federal legislation designed to enhance transparency in corporate ownership in an effort to combat illicit activities such as money laundering, terrorism financing, and other forms of financial crime. The CTA requires certain entities to file Beneficial Ownership Information (BOI) with the Financial Crimes Enforcement Network (FinCEN).
Impact on HOAs
Under the Corporate Transparency Act (CTA), Homeowners Associations (HOAs) are classified as a “Reporting Party.” This means that HOAs are required to comply with the CTA’s mandates by filing Beneficial Ownership Information (BOI) with the Financial Crimes Enforcement Network (FinCEN). As a Reporting Party, each HOA must disclose detailed information about its beneficial owners to promote transparency and combat financial crimes. Compliance involves gathering and submitting specific data, including the full legal names, birth dates, addresses, and identification numbers of individuals who ultimately own or control the HOA.
What is Beneficial Ownership Information (BOI)?
Beneficial Ownership Information refers to detailed data about the individuals who ultimately directly or indirectly exercise substantial control over a reporting company or who own at least 25% of ownership interest. For the purposes of CTA compliance, this includes:
Full legal name
Date of birth
Current residential or business address
A unique identifying number from an acceptable identification document (e.g., passport, driver's license)
FinCen Exemptions
The Financial Crimes Enforcement Network (FinCEN) provides certain exemptions under the Corporate Transparency Act (CTA) to reduce the reporting burden on specific entities. These exemptions apply to entities already subject to substantial federal or state regulation, such as publicly traded companies, banks, and certain trusts. The industry is actively advocating for Homeowners Associations (HOAs) to be included in these exemptions, which would relieve them from the requirement to file Beneficial Ownership Information (BOI). Until such an exemption is granted, HOAs must prepare to comply with the CTA's reporting obligations.
What do HOAs need to do?
To comply with the Corporate Transparency Act (CTA), Homeowners Associations (HOAs) need to take several key steps. First, they must identify their beneficial owners, which involves determining the individuals who ultimately own or control the association. Next, HOAs must collect detailed information from these individuals, including their full legal names, dates of birth, addresses, and unique identification numbers from acceptable documents such as passports or driver's licenses. This information must then be filed with the Financial Crimes Enforcement Network (FinCEN). Additionally, HOAs should establish procedures for regularly updating these records to ensure ongoing compliance with the CTA.
Penalties For “willful” non compliance
Under the Corporate Transparency Act (CTA), "willful" non-compliance with the reporting requirements can result in severe penalties. Entities, including Homeowners Associations (HOAs), that fail to accurately file Beneficial Ownership Information (BOI) with the Financial Crimes Enforcement Network (FinCEN) may face civil penalties of $591 per day. Additionally, criminal penalties can include fines of up to $10,000 and imprisonment for up to two years.
Compliance and Monitoring
Ensuring compliance with the Corporate Transparency Act (CTA) requires diligent monitoring and accurate reporting of Beneficial Ownership Information (BOI). Homeowners Associations (HOAs) must establish robust procedures to collect and maintain up-to-date information on their beneficial owners. Regular audits and reviews should be conducted to verify the accuracy of the reported data and ensure ongoing compliance.
Changes & updates must be made within 30 days. Changes such as:
Board Member Changes
DL / Passport Expiration
Residential Address Changes
Name Changes
How To Update:
Entire BOI Report Must Be Refiled
There Is No “Update” Option
Submitter Must Save PII (Personally Identifiable Information) Locally
deadline
Deadline to file the initial report is January 1, 2025.
who has access to boi report information
Access to this sensitive information is restricted to authorized government authorities, including law enforcement agencies and regulatory bodies.