HOAs/COAs and the Corporate Transparency Act

From the Department of Unintended Consequences:

HOAs Inadvertently Caught in Federal Crossfire

Quote:

The CTA is intended to enhance “beneficial ownership” transparency for “reporting companies.” The law requires “reporting companies” to submit “beneficial ownership information” to the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (“FinCEN”). In other words, the federal government wants a better idea of who owns or controls companies so it can better monitor corruption and financial crimes.

Some of this is still up in the area, but the bad news is that community associations are probably considered reporting companies. In this case, the association must report the full legal name, date of birth, current address, a driver’s license or passport number, and a scanned copy of such driver’s license or passport of each beneficial owner - with the term "beneficial owner" defined as board members and those who own or control at least 25% of the ownership interests.

** A fine of $500.00 per day up to $10,000.00, plus criminal fines or prison time for willful failure to report or filing erroneous reports. **

Since this new law was intended to go after money launderers and persons of that ilk, it's likely that lawmakers didn't intend to catch community associations in their net, in which case there is a chance that The Powers That Be will add an exemption for community associations before reporting has to begin in 2024.

But if this doesn't happen, this is one more thing that boards and community managers will have to deal with, and I expect that many of these people won't even know about this new law or that it applies to them. And what happens if some stubborn board members refuse to provide a copy of their license or passport to the association? I can see that happening.

Oh, I'm on the side of the community associations because I don't believe that they were the intended targets of the new law - although the business with the the Hammocks HOA lawsuits makes me reconsider. Many community associations are too small to be tempting targets for professional crooks, though.

Mostly I object to disclosing personally identifying information to entities that have no legitimate reason to know that info. It's also another hoop to jump through for folks who already have too much to do, and the penalties are stiff for volunteers who forget.

Which reminds me....

There appears to be a contradiction between the legal protections afforded by the Volunteer Protection Act (which covers board members and others) and other laws that try to impose civil or criminal penalties on these folks for failure to perform. IMHO, either we want our associations to be run by volunteers and we accept the limitations of that - or we decide that we want professional competence and accountability, and we hire *and pay* professionals. We can't have it both ways whenever it suits us.