CTA Reporting - Director's Initial Refusal!

95 townhomes in CA, President here. Well it happened, the Directors initial response to the CTA act requirements was a big fat NO!. It's not an easy sell and our large country wide Association and Property Manager did no selling/explaining, just emailed information and instructions. So I guess I now have to get involved as the President as I don't want the community to go into receivership. Are any other Presidents in this unfortunate position? Sue

At the moment, the penalties are these (according to an AI generated article):

A "willful violation" of federal CTA (Corporate Transparency Act) regulations refers to knowingly and intentionally failing to comply with the requirements of the CTA, which mandates reporting beneficial ownership information to FinCEN, potentially leading to significant civil penalties like daily fines and even criminal penalties including jail time depending on the severity of the violation.

What constitutes a violation: Deliberately not filing required beneficial ownership information, providing false or incomplete information, or failing to update information when changes occur are considered willful violations.

Penalties:

* Civil penalties: Fines of up to $500 per day for non-compliance (aka $3500 a week, $14K a month)

* Criminal penalties: Potential fines of up to $10,000 and imprisonment for up to two years.

Who is liable:

Individuals responsible for managing a company, including officers and directors, can be held liable for willful CTA violations

I believe there are pending lawsuits on this, but that's a slow process and I don't know if Congress will act to fix this (God only knows with the crackpots about to debut on Jan. 20), so this should give your board something to think about. That said, I fully understand concerns about posting that information in these days of cybercrime - aren't knee jerk reactions to serious problems wonderful? (said no one ever)

If the next session of Congress does not exclude volunteer non paid directors, do you feel this will lead
to more HOA's going into receivership because of lack of willing participants?

Regarding management companies, some boards delegate some of their duties to the manager and even give the manager some limited authority. If you read the letter of the law, then i believe these managers are "beneficial owners". Another criterion for determining who is a beneficial owner is the ability to remove and replace board members. No individual director or even the entire board can remove directors. But guess what? The membership can! And given the sometimes low quorum requirements for holding annual meetings, this power is concentrated in relatively few hands (which admittedly change constantly).

I was also wondering what sort of effect the CTA will have on corporate investors who are accumulating property with the goal of converting the units to rentals. Once they hit 25% ownership, they also must report their information. And a number of these corporate owners are foreign. Since the CTA is targeting international networks of bad actors and property is a pretty good place to launder money, perhaps this group is worth a closer look. But this group is far removed from the "parking and dog poop" crowd - and as I've observed many times, their interests are contrary to those of the typical owner-occupant.

As they say in the law biz, if you're guilty you need a lawyer. If you're innocent, you REALLY need a lawyer.