Recent U.S. regulations require Homeowners Associations (HOAs) to disclose beneficial ownership information under the Corporate Transparency Act (CTA), enforced by the Financial Crimes Enforcement Network (FinCEN). These rules enhance transparency and prevent financial crimes.
Important Dates
CTA Effective Date: January 1, 2021
Initial Filing Deadline for Existing Entities: January 1, 2025
Filing Deadline for New Entities: Within 30 days of creation
Deadline for Updates: Within 30 days of change
Description of the New Law
The CTA mandates entities, including HOAs, to report beneficial ownership information to FinCEN. The goal is to increase transparency and accountability and to prevent illicit activities such as money laundering and fraud.
Are HOAs Impacted and Required to File?
Yes, HOAs are required to file beneficial ownership information if they meet specific criteria, such as having board members or individuals who significantly control the association's operations or own substantial interests.
Impact on Homeowner Associations
HOAs must disclose detailed information about their beneficial owners, including full names, dates of birth, residential addresses, and identification numbers. This transparency helps build trust and ensures compliance with regulatory standards.
Penalty for Noncompliance
Failure to comply with the beneficial ownership filing requirements can result in significant penalties. These may include civil penalties of up to $500 per day and criminal penalties of up to $10,000 in fines and two years of imprisonment.
How to File the Required Forms
Identify Beneficial Owners
Determine who the beneficial owners are based on regulatory criteria. This includes individuals with significant control over the HOA.
Gather Necessary Information
Gather information for each beneficial owner, including names, addresses, dates of birth, and identification numbers.
Complete the Beneficial Ownership Forms
Use FinCEN-provided forms to disclose beneficial ownership. Ensure all information is accurate and complete.
Submit the Forms
Submit the completed forms through the Beneficial Ownership Secure System (BOSS). For new entities, you must file within 30 days of creation. For entities existing before January 1, 2024, the initial report is due by January 1, 2025.
Regular Updates
Report any changes in beneficial ownership within 30 days to keep information current.
Ensure Confidentiality and Security
Ensure disclosed information is protected and accessible only to authorized regulatory bodies.
Conclusion
All Homeowners Associations (HOAs) are now required to file beneficial ownership information with FinCEN by January 1, 2025. This mandate aims to increase transparency and accountability. By complying with these requirements, HOA boards can enhance governance practices, build trust within their communities, and meet regulatory standards..
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