Corporate Transparency Act Deadline Looms for Co-ops and Condos

The clock is ticking. Boards of co-ops, condominiums and homeowners associations have until the end of the year to comply with the Corporate Transparency Act (CTA). If you haven't already done so, now is the time to start the process.

The CTA was enacted a few years ago to combat money laundering and corruption by requiring most businesses to identify and provide information about their beneficial owners. The law requires that most companies disclose to the Financial Crimes Enforcement Network of the U.S. Treasury Department information on the company and its beneficial owners, along with annual reports of those who own more than 25% or have substantial control. This initial report is due by Dec. 31, 2024.

In a recent newsletter, the law firm Fox Rothschild explains that the term “beneficial owners,” as used in the law, would include all members of co-op, condo and HOA boards — that is, any individual who exercises “substantial control” over the company. Since the board makes all decisions in regard to governance, the law firm says that all board members would have to register.

There are 21 types of corporations that are exempt from the law, but the only one that might apply to a cooperative or condominium is the exemption for businesses with more than 20 full-time employees and more than $5 million in annual gross receipts.

The Fox Rothschild newsletter states that a law firm cannot be responsible for such filings, as a new report must be filed every time there is a change in the board. Therefore, the task of reporting should be with management, the board itself, or a third party hired to make the initial report and keep a regular, ongoing log of those whose who are on the board.

And failure to comply with this law will have consequences. Willful violations can result in civil penalties of up to $591 (adjusted for inflation) per day for any violation that has not been remedied, as well as criminal penalties of up to $10,000 and/or two years of prison.

If you are required to file, Beneficial Ownership Information (BOI) reports can be filed directly at https://boiefiling.fincen.gov/.