October 2024

WHAT IS THE CORPORATE TRANSPARENCY ACT
The Corporate Transparency Act (hereinafter referred to as “CTA”) is a new federal law that was enacted to combat illegal activities by corporations, including but not limited to money laundering and financing of terrorist groups. The CTA requires that all corporations, including non-profit homeowners associations, report corporate beneficial ownership information (which includes Board Member information) to the Department of the Treasury’s Financial Crimes Enforcement Network (hereinafter referred to as “FinCEN”).

The CTA requires that the following Board Member information be filed with FinCEN each time a new Board Member is elected or appointed:

• Full legal name;
• Date of birth;
• Current address;
• A copy of the Board Members’ driver’s license, state ID, or passport.

COMPLIANCE DEADLINE
The CTA compliance deadline for initial reporting is January 1, 2025, for all communities developed prior to January 1, 2024. To comply, associations must submit a Beneficial Owner Information report (BOIR), detailing the Board Member information outlined above. Additionally, associations must submit updated BOIR forms within thirty (30) days of any Board Member change.

PENALTIES FOR NON-COMPLIANCE
Penalties for non-compliance are significant, including fines of $500.00 per day, up to $10,000.00, imprisonment, or both.

HOW PMP CAN ASSIST WITH COMPLIANCE
PMP has partnered with a third-party company, FinCen Report Company, LLC, to administer the BOIR for each of our association clients to comply with the CTA. Since our current management agreement does not discuss CTA services, we are presenting all clients with a contract service addendum. As stated in the addendum, the association can utilize or decline to utilize PMP’s partnership with FinCen Report Company according to the terms therein. If the association should decline, the association accepts full responsibility for compliance and agrees to indemnify PMP under the terms of our management agreement.

FUTURE UNCERTAINTIES
While the process of submitting the required Board Member information to FinCEN is straightforward, we join you and many others in raising concerns regarding the CTA, including the obligation for volunteer association Board Members to share private personal information, the administrative burden created for
associations given how often Board Members change, and the exorbitant fines and penalties. Due to these legitimate concerns, there is pending litigation attempting to exempt homeowners’ associations from the CTA, including a lawsuit filed by the Community Association Institute (CAI) earlier this month.

Although we fully understand and share these CTA concerns, we have a duty as your management company to inform you of this new legal requirement, recommend compliance, and assist with compliance processing efforts.

In the coming days and weeks, all PMP Board Member clients will be presented with the above-mentioned CTA services addendum for your review and approval.

Should you have any questions, please do not hesitate to contact PMP’s Compliance Department at compliance@pmpmanage.com.